Coming to the experts on this thread for some answers. A few friends have recently pointed me in the direction of the high fees to be earned from lending in the crypto space. A brief search confirmed that I can lend USDC for 15% APY @ pokket. My skepticism aside, I'm wondering if anyone knows the mechanics behind what these firms are doing. I assumed it is something like converting to BTC and playing the spot futures basis (either directly themselves or lending to HFs doing the same thing, either way, I'm assuming rate is determined by the basis). What are the economic drivers of this rate, ignoring cpty risk?
As far as Blockfi goes, it is similar to what you described. They were putting the BTC into GBTC and selling the shares with a premium for a profit. But then they blew up on the trade and pretty much wiped their capital when GBTC went into a discount (https://ditchblockfi.com/), they had to be rescued by a $350M fund raise lead by idiots like Pomp. Its a hedge fund paying savings account returns, so IMO its not worth the risk. @johnarb might be able to tell you what Celsius does, because I'm yet to figure out it. The whole thing sounds ponziesque to me, the demand to short BTC is not as high as these firms claim, I dont think, so I dont buy it that they lend it out to institutions for shorting. I'm staying away from any of these firms
"It all starts with custody" "you got someone to sue in case something goes wrong" Good discussion here https://www.realvision.com/shows/th...e_collection=3c97f854117f4d3ea62350df2291bc62
I would not refer to myself as an expert, but I've watched way too many videos on what is a very simple subject lending/borrowing (i.e. bank deposit/credit), lol A few disclosures, I have very little Celsius tokens left and maybe 0 in the next day or so as I have been diversifying to other cryptos, due to CEL being stuck in the ~$5 price. I still have all my Nexo tokens (quarter of a million $ worth) and Nexo is in the same business (except more on the consumer side lending). I also do not have any deposits any more with BlockFi or Celsius so the only skin in the game I have in the space is the Nexo holding The 3 biggest players in the crypto lending/borrowing markets are BlockFi, Celsius and Nexo. There are many others, but buyer beware, Cred went out of business, lots of people got hurt. There's Ledn, and you mentioned another one Anyway, there are tons and tons of Celsius videos on YouTube. They produce several videos every week! Your nick Susquehanna is one of the clients that BlockFi and Celsius lend to at 17% APR for a few weeks. BlockFi got involved in that other business of arbing GBTC, but Celsius did not do that. Celsius is participating in yield farming (DeFi) according to one of their youtube videos. Celsius is lent out 80% of their deposits per one of their youtube videos The yields are generated natively. bitcoin over bitcoin, USDT over USDT, crypto over crypto Going forward, when bear market arrives, I'll be on stable coins earning interest on a portion of the pfolio using AAVE or XVS DeFi platforms https://elitetrader.com/et/threads/...monstrates-value-in-collateral-market.356744/ https://www.realvision.com/shows/th...us-network-regulations-yield-on-crypto-assets
I dont buy the 'we lend it out for institutions that want to short it or arb it'. At least on BTC, which is probably their biggest deposit base. Until recently any institution that wasnt completely clueless would never short BTC but rather use the futures and sell it a premium and earn the difference. It made no sense to short the asset. They are vague on how their earn their yield, IMO thats a huge red flag Tradestation Crypto lends out crypto to institutions for shorting, they pay 0.25% on BTC and 1% on ETH. And you have a highly regulated institution behind the whole thing. So to me, that's a lot closer to the actual value of BTC/ETH deposits. Celsius is probably doing something sketchy and doesnt want to admit, just like BlockFi did
Thanks, super interesting, especially BlockFi stuff. Yea I definitely agree, huge red flag that they only say "we just do what banks do but give you the benefit" without explaining any details. They are almost certainly trying to trade this on their own through futures basis or etf arb, rather than just sec lending. I left big institutions before crypto really took off. Any speculation around institutional limitations for USD/stablecoin funding? Hard to imagine them paying +15% for USD to post as margin to short the futures. They can definitely get USD cheaper. Maybe because compliance won't let them buy stablecoins with fiat? Seems odd that they'd then be allowed to borrow USDC to post. I suppose another driver of the high stablecoin yield is lending to exchanges that charge even higher rates on margin trading. These are probably looped into the "stable institutional" buckets mentioned by these lenders.
NTFs are so popular, they even made it to SNL. The last time SNL mentioned crypto, it was December of 2017 and bitcoin crashed. So with that in mind, I'm cutting back on my NFT coin exposure. I have some ENJ and MANA, I'm selling some today and will probably sell more tomorrow
You either take on counterparty risk going thru CEFI or hacking risk going thru DEFI to get those 10%+ yields on cash. Pick your poison. @Daal Shout out to you, forgotten I have some ENJ from 2017 and am dumping ASAP.
Picked up my 5th NFT today at Niftygateway... I don't know when the top will be for NFT's, but I can tell you what I've been seeing. I buy NFT's (open editions, they are cheaper) and after a a week or 2, they are worth more all 5 of them are worth more even the 1 I picked up today (Jose Delbo open edition). I have not sold a single NFT, but I am very much tempted to sell my hackatao which at the lowest price is more than double my purchase price and will more than recoup all my investments in all 5 NFT's, however, hackatao NFT at Makerspace released a day or so ago is priced at $23K, so it's got me conflicted Some of the crypto riches are fueling the NFT bubble and it's also sucking mainstream $ and stonk market $ and WSB $ into the bubble, fwiw Here's a twitter thread discussing the NFT ecosystem at Niftygateway