Bitcoin Forum

Greetings,

For some time now I have been considering the benefits of using a crypto lending platform to earn superior interest rates on fiat money that would otherwise be collecting dust in some abhorrent financial institution. I'm certainly not interested in depositing my BTC to such an account, but rather am simply interested in converting some of my fiat to USDC for the aforementioned purpose of obtaining a dignified return on my hard earned money. A few factors are leading to my current reluctance to initiate the process, which brings me here for some sound advice.

Amongst my concerns are 1) lack of insurance 2) the security of these networks 3) which network to choose and 4) how any regulation of stablecoins might affect this process, generally. For proponents of these platforms, which stablecoin would you recommend I utilize for my stated purpose? I'm leaning toward USDC as it seems, relatively speaking, that they are legitimate and transparent about the holdings underpinning the value of the asset.  Any insight into this process would be greatly appreciated. Is it worth it at all? Should I steer clear? Feel free to share any thoughts and thanks in advance for doing so

I don't know if my math is just wrong, but the returns one makes for locking up their money aren't worth in, IMO. For example, if the APY is 8%, and you look up 100,000 USDC in a platform. You are going to earn only 8000 USDC after risking your funds for a full year in a custodial platform.

Buying Bitcoin when the price is low and keeping it in your personal address gives a better APY with less risk in very short time IMO.

You can take a little time if you want. In that case you have to choose an exchange to trade. So you can buy a little something and then sell it for profit. Otherwise you can buy BTC and keep it in your wallet.

I'd personally pick USDC over USDT. Also, when you're using USDT or USDC, always remember that you're using a custodial asset. Not because it's a "cryptocurrency", it doesn't automatically mean that you're going to be fine as long as you're using a non-custodial wallet.

PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets https://bitcointalk.org/index.php?topic=5204055

Is it worth it? I was going to say it depends on how much you would stake, but then I realized that if the amount you would invest is relatively small then the APY and, of course, the risk wouldn't be worth it. At the same time, however, I also realized that if the investment amount is huge, then I would say the risk is too high for that amount. Which means to say, if I were you, I'd rather not get into it and just go for the safest way, which is getting Bitcoin and keeping it somewhere cold and beyond the access of nobody else but you.

The parties that are involved with USDC are a bit more transparent and have less of a history of running into trouble with regulators, so I'd also say it's slightly more trustworthy than USDT.

As far as lending is concerned: If you already got money on an exchange for trading purposes I don't see anything wrong with lending it for additional income. But moving money into a stablecoin and then onto a lending platform for the sole purpose of getting better APY than with classical means... hard to say. Even ignoring that there's plenty of scams out there. Maybe with money I could afford to lose but beyond that I'm not fully convinced it's worth the risk. The yield may be more stable compared to, say, index funds (if we're sticking with fiat-denominated investments), but whereas with index funds you're widely diversified across multiple companies, with crypto lending you're not only exposed to a single point of failure, but to two risk factors on top of each other (ie. the stablecoin issuer and the lending platform).

Now maybe those risks are neglibile enough to make it worth the extra gain in yield, but that's up to everyones own personal risk assessment. Let's just say you're right to be wary.

With everything written in previous posts, I can only add that making money by lending cryptocurrencies is completely contrary to the whole philosophy on which they were created. If we stick to the golden rule "not your keys, not your coins", then it's crazy to think about lending at all, although 8% a year sounds really tempting - but as @JeromeTash has already noted, it’s insane to risk $100k to get $8k after one year.

Long-term investment in Bitcoin (and a few more altcoins) has proven to be more than profitable, and you don't have to risk anything - my keys, my coins, my profit.

It's not lost on me that the concept of lending crypto for profit runs contrary to the initial vision set forth by the pioneers of the blockchain. Having the ability to be the ultimate custodian of my own money is something that I value tremendously. As big of a believer as I am in this new space, I must admit that I am still reluctant to go 'all in' (for lack of a better phrase) on the cryptos that I have chosen to invest in by dumping all my money into them. The notion of exiting the mainstream banking system entirely (or as close to entirely as is realistically possible while still being able to conduct the basic transactions that I need to) is appealing to me. However, being reared in a culture that has taught me to deposit my money in the bank blindly has ingrained in me an almost robotic impulse to do so without questioning whether or not it is the most productive way to store my rainy day funds (ie what's left over after basic expenses and investments).

Having said that, I was toying with the idea of checking out Celsius or some other equivalent platform in order to break the mold and try something new; something that didn't involve a gigantic financial institution that offers an insultingly low APY on my savings, while lending out those same savings for a much higher yield that will go into their own pockets. Initially, getting involved in DeFi seemed like a relatively safe and efficient way to utilize these extra savings.

You are 100% correct Lucius and JeromeTash, the risks ultimately outweigh the rewards, I see this now and will adjust my plans accordingly by allocating more funds to purchase BTC. Thanks for taking the time to share the wisdom it's appreciated