Stablecoin Farming

[kryptoner]

As we know, Yield farming is a great way to earn passive income on an invested crypto. In yield farming, we see that many stablecoin pair have much higher APY rates compared to the traditional rates.
Some examples are here from the defilama

https://ibb.co/W5LYKx4
https://ibb.co/tzHC0y9
https://ibb.co/ZKt9YvY

My question is that if anyone takes a loan at around 10 - 12% interest rates and invest in stablecoin pair to earn a decent 16 - 18% APY interest on various platform. Now there is a margin of 4 - 5% to earn. Is it possible in reality? Because many factors are working here.

• First of all, there is always a risk of hacking the platform, seeking higher APY, many users invested in small pools, where there is a always risk.
  
• The rates fluctuate regularly (every 3/15 seconds).
• Have a change to rug pull.

Despite all factors, is it will be profitable to follow this way, 'take a loan from one place and invest in another for getting higher APY %
Although the APY % is very low, investing a large amount could bring a large APY.

Can any one earn like this? If yes, what things need to remind before investing?

[livingfree]

My question is that if anyone takes a loan at around 10 - 12% interest rates and invest in stablecoin pair to earn a decent 16 - 18% APY interest on various platform. Now there is a margin of 4 - 5% to earn. Is it possible in reality? Because many factors are working here.

• First of all, there is always a risk of hacking the platform, seeking higher APY, many users invested in small pools, where there is a always risk.
  
• The rates fluctuate regularly (every 3/15 seconds).
• Have a change to rug pull.

Despite all factors, is it will be profitable to follow this way, 'take a loan from one place and invest in another for getting higher APY %
Although the APY % is very low, investing a large amount could bring a large APY.

Can any one earn like this? If yes, what things need to remind before investing?

Possible in theory. You've already mentioned the factor of being hacked and you don't hold the keys into those centralized platforms where you'll stake it.

And then the rates will changed over time, trust me I've observed many of them that are like 10%-12% but then dropped eventually.

The reality of these staking and stable coin farming is that it isn't sustainable. That's why if you're intrigued and trying to pursue this then be prepare for the worst or better not do it.

[vv181]

Can any one earn like this?

Why don't you think about it by yourself? Do 16-18% APY a legitimate and long-lasting number? Why do many prominent investors not put their money into this stuff? Another essential question is, do you know how it technically works? I mean how could it generate that kind of percentage of the rewards?

You mentioned three factors of risk tied to the strategy. An inherent risk of external factors (hacks) and internal factors (rate fluctuation). Certainly, the risk does not outweigh the reward. So it is simply not worth it. The above post also explains nicely, but I rather suggest it is not even worth to be tried of.

[Apocollapse]

That's what happen on banking sector, the banks offer 1% interest for their customers if they save their money, but the banks charge more than 1% when they lend money to their customers.

It's technically possible, but as you have mention it before, there are many risks involved if you want to invest using borrowed money. If it works then it's good for you, but what if you lose all of your money? how you can pay the loan?

[dansus021]

Can any one earn like this?

In Theories is yes but in reality we do know since

Why don't you think about it by yourself? Do 16-18% APY a legitimate and long-lasting number?

APY in most of the Dentralalized Finance is fluctuated meaning it keep changing not a fixed rate so it would be risky if you take a lon and the APY is change and last I know there is different between APY & APR

https://www.investopedia.com/personal-finance/apr-apy-bank-hopes-cant-tell-difference/

[vv181]

Can any one earn like this?

In Theories is yes but in reality we do know since

Why don't you think about it by yourself? Do 16-18% APY a legitimate and long-lasting number?

APY in most of the Dentralalized Finance is fluctuated meaning it keep changing not a fixed rate so it would be risky if you take a lon and the APY is change ~

Not even in theory, those kinds of numbers are unsustainable. Without a doubt, the rate won't stabilize. And if we consider the game theory aspect, such kind of rate is purely absurd.

The answers you provide are surely the reason why I raise such questions. It is technically improbable to sustain within the long term. By the time such a rate holds on for some time, it will attract another user to join the pool, in consequent the algorithm that set the economic system will kick in. In the end, the rate simply reduced.

Combined the fund came from the loaned fund, it will definitely increase the risk.