Binance Savings

[PrimeNumber7]

Even if an exchange has clauses saying that the exchange is guaranteeing against default risk in their TOS, most exchanges have been located in locations in which customers will have difficulty enforcing these clauses in court.

I don't keep up with Binance, but haven't they split their business in to multiple entities? US, global, Malta, Bermuda, Jersey. Does anyone actually know which one is handling their savings accounts? I suspect they have been deliberately vague about the whole set up.

The agreement for their savings account is here. It is not clear as to which specific legal entity the customer is entering an agreement with. Maybe it would be the one their Binance account is associated with.

[o_e_l_e_o]

Honestly, what seems more attractive to me than the BTC savings product is the USDT product - 6% p.a. is quite attractive by any means, actually higher than some of the p2p lending platforms even. Compared to only 1.2% on BTC savings, this product actually seems somewhat intriguing for the rewards that it offers, since you'd already be trusting a central institution in the first place by using USDT.

The problem with that being that you are earning 6% on USD, which is rapidly devaluing with trillions more being printed near constantly, as opposed to earning interest on BTC. If you put $1000 in to USDT a year ago and earned 6% interest, you would have $1060. If you put $1000 in to bitcoin a year ago and earned no interest at all, you could have bought around 0.16 BTC, which is now worth $8640.

And that's without all the additional risks that come with holding USDT, given that it is centralized, can be frozen at any time, is not backed up 1-to-1 as claimed, and its parent company is running a fractional reserve system.

It is not clear as to which specific legal entity the customer is entering an agreement with. Maybe it would be the one their Binance account is associated with.

You would certainly assume so, but I suspect Binance would find a way to fudge it in their favor if there was ever a legal challenge against them for some reason.

[TryNinja]

These APYs are terrible. If you're going to handle your coins to a third party, at least do to one that pays better (and are way safer) like Celsius or Blockfi.

I have changed my mind about Blockfi. If anyone is considering using them, read this first and be aware of the potential risks: https://ditchblockfi.com

[Saisher]

Like all the others here I have second thought of holding my coins in Binance because you are surrendering your control on your coins, even if it is profitable I don't know if it's worth the risk, I would like to be responsible on my coin and face my own risk then putting it in an exchange for a period of time.

[o_e_l_e_o]

I have changed my mind about Blockfi. If anyone is considering using them, read this first and be aware of the potential risks: https://ditchblockfi.com

This is wild if true. I would, however, take it with a pinch of salt for two reasons. First of all, they offer no source or evidence for their numbers. Secondly, if you look at an archive of that page (https://archive.ph/U7Yu4) it recommends a bunch of other platforms which are likely even worse than BlockFi, again with no evidence. Not entirely clear why that section has been removed.

Having said that, even if the numbers aren't accurate, the general principles hold true. You have no idea what these platforms are doing with your money, and you have to accept all the risks without even being told what these risks are. They could be so over leveraged that a single missed payment pushes them in to insolvency. You have no idea. This is true for every single one of these platforms, from BlockFi to Binance.

[PrimeNumber7]

These APYs are terrible. If you're going to handle your coins to a third party, at least do to one that pays better (and are way safer) like Celsius or Blockfi.

I have changed my mind about Blockfi. If anyone is considering using them, read this first and be aware of the potential risks: https://ditchblockfi.com

It appears that Blockfi is basically a bank. They take deposits and make collateralized loans, hoping to profit on the difference between the interest rates they charge for loans and what they pay to deposit holders.

I would say the above certainly carries risks, but I don't think that website is accurate. If it was accurate, they would simply lower the interest rate offered to customers.

[o_e_l_e_o]

It appears that Blockfi is basically a bank. They take deposits and make collateralized loans, hoping to profit on the difference between the interest rates they charge for loans and what they pay to deposit holders.

It is the same with all the services which offer these interest or savings accounts. So much of crypto is starting to mimic the traditional banking sector. USDT being printed out of thin air on a whim with nothing to back it up, just like USD. Exchanges running fractional reserve systems with customer deposits, and using customer deposits to make risky investments for their own benefit. Services like BlockFi turning themselves in to banks.

For all our talk of be your own bank, it seems there are an awful low of people in crypto willing to give up on the very foundation of not trusting third parties for some measly couple of percent profit. Honestly, if that's what you want, then you might as well go back to fiat banking. At least fiat banks have FDIC insurance, as opposed to sites like Binance and BlockFi which guarantee absolutely nothing.

[PrimeNumber7]

USDT being printed out of thin air on a whim with nothing to back it up, just like USD.

I don’t think there is evidence to support this statement. If it were true, USDT holders would be unable to redeem their USDT for dollars and there are not credible reports of this happening. It would also mean that Bitcoin would trade at a premium for USDT verses what it trades for on other exchanges, and this is also not true.

Exchanges running fractional reserve systems with customer deposits, and using customer deposits to make risky investments for their own benefit.

I am not sure which exchanges you are referring to. Some exchanges offer margin loans, but they are transparent about what happens to your coin when you lend it out on the platform.

Services like BlockFi turning themselves in to banks.

I voiced my concerns about these services in my first reply in this thread. People should be aware of the risks involved in depositing money into these services. Anyone offering to pay anything resembling interest is going to have to invest your deposit in some way in order to afford to pay the interest, unless they are planning on scamming their customers. Interest rates on FDIC insured savings accounts are around 0.1% APY, which is orders of magnitude lower than interest rates on stable coin based deposits.

[o_e_l_e_o]

I don’t think there is evidence to support this statement.

I've spoken before about how Tether quietly changed the claim on their website from being backed up 1-to-1 with USD to being backed up with a range of assets, including loan repayments from the loan they gave themselves to stop them going bankrupt. I've also linked before to statements from Tether admitting USDT are not fully backed up as they previously claimed. The latest "Proof of funds" on their website is 3 years old and shows assets of $2.5 billion, while there are currently 38 billion USDT in circulation. Until I see some evidence to the contrary, USDT is a scam as far as I am concerned.

I am not sure which exchanges you are referring to. Some exchanges offer margin loans, but they are transparent about what happens to your coin when you lend it out on the platform.

I was referring to these ones (https://cointelegraph.com/news/two-chinese-exchanges-help-themselves-to-user-funds), but I would bet that a lot of other exchanges are doing the exact same thing.

[PrimeNumber7]

I don’t think there is evidence to support this statement.

I've spoken before about how Tether quietly changed the claim on their website from being backed up 1-to-1 with USD to being backed up with a range of assets, including loan repayments from the loan they gave themselves to stop them going bankrupt. I've also linked before to statements from Tether admitting USDT are not fully backed up as they previously claimed. The latest "Proof of funds" on their website is 3 years old and shows assets of $2.5 billion, while there are currently 38 billion USDT in circulation. Until I see some evidence to the contrary, USDT is a scam as far as I am concerned.

Tether was repaid the entire loan balance early last month. They also have 1xx.xx% of reserves compared to USDT outstanding. Tether has to pay transaction fees when issuing USDT, and some of their reserves are in crypto for that purpose; my presumption, tether has >100% reserves of USD-like assets such as dollar-denominated deposits at banks, short term high rated government bonds, and similar.

None of what you presented can reasonably be described as USDT being "printed out of thin air".

I am not sure which exchanges you are referring to. Some exchanges offer margin loans, but they are transparent about what happens to your coin when you lend it out on the platform.

I was referring to these ones (https://cointelegraph.com/news/two-chinese-exchanges-help-themselves-to-user-funds), but I would bet that a lot of other exchanges are doing the exact same thing.

Depositing into Chinese exchanges has long been very risky. Around that time, those exchanges were also clearly presenting fake trading volumes to the public.

[o_e_l_e_o]

Tether was repaid the entire loan balance early last month.

But doesn't the fact that they could immediately conjure up $850 million in USDT when they needed it to save themselves from bankruptcy, immediately after losing a huge amount of their funds in a hack, not seem even a little bit suspicious to you?

They also have 1xx.xx% of reserves compared to USDT outstanding.

Do you have proof of that? A recent independent audit, for example?

None of what you presented can reasonably be described as USDT being "printed out of thin air".

In the absence of proof that USDT is 100% backed up (which Tether themselves have admitted is no longer correct, with last number they admitted being only 74% backed up), then there are few conclusions which can be reached other than "a proportion of USDT is not backed up, and therefore printed out of thin air".

[uneng]

I think that if you were to trust a centralised entity anyway, you might as well do margin lending on major exchanges as opposed to invest on Binance - you are likely to get at least 7-8% p.a. returns if not somewhere in the double digits.

Could you share in what trustful platforms is it possible to earn such interest rates by lending? Last time I checked, I don't remember in which platform, but it was a big one, I was able to earn 0,01% daily lending. Similar rates to the default interest paid annually by most crypto investment sites.

I once got involved in such stuff. There was a sort of a rebranding or a restructuring whatever and they're changing tokens. They give the clients a few months to do the swapping. I was not monitoring everything. I missed the deadline. Funds are gone. This is not your case. But, surely, there will be all kinds of troubles along the way.

Yes, that is a very disgusting approach from some investment sites. I consider it a kind of scam to say the truth. It happened to me twice. The first time I lost my funds, on the second I was monitoring the site and cashed out successfuly. You need to monitor these sites every week or few weeks when investing, and your email daily.

These APYs are terrible. If you're going to handle your coins to a third party, at least do to one that pays better (and are way safer) like Celsius or Blockfi.

I have changed my mind about Blockfi. If anyone is considering using them, read this first and be aware of the potential risks: https://ditchblockfi.com

I hope Nexo and Celsius don't go through the same way...

[TryNinja]

In the absence of proof that USDT is 100% backed up (which Tether themselves have admitted is no longer correct, with last number they admitted being only 74% backed up), then there are few conclusions which can be reached other than "a proportion of USDT is not backed up, and therefore printed out of thin air".

They do claim to be 100% backed by their "reserves".

Sure you did not listen to the podcast. We also clarify that's 100% backed

Tether is fully backed, full stop.

Now what do these reserves consist of? No idea.

I personally believe there is a chance they are partially backed by other not-so-traditional things (maybe even crypto or iliquid assets) but I don't think they are printing these just because they want and when they want.

Also, I believe most people take the "74% backed" statement without knowing that this (supposedly) only happened because of Crypto Capital running away with U$ 850 millions of their reserves. They then took the loan from Bitfinex to cover part of these losses and repaid it fully this year (there is also no evidence that they did all of this in USDT, which IMO wouldn't make any sense). It doesn't necessarily mean that they were just printing USDT out of thin air since the early days.

[slaman29]

Not really so keen to try it but on Binance Smart Chain I see some of the pools with almost 10% APY using wrapped Bitcoin. So from what I understand you just wrap you Bitcoin (so you still have it) and then pair it with another type of stablecoin like BUSD and then you get the APY within a year.

Feels safe to me, can anyone explain the catch?

[TryNinja]

Feels safe to me, can anyone explain the catch?

There are actually even higher APYs. For example, acryptos.com offers 20% APY on your BTC. You lend your coins on Venus (like Compound but from BSC) and earn XVS (their coin) on the proccess. ACryptoS optimizes the process by getting the XVS for you and selling it for more BTC, compounding into your position.

Each thing does its own thing.

[uneng]

Feels safe to me, can anyone explain the catch?

There are actually even higher APYs. For example, acryptos.com offers 20% APY on your BTC. You lend your coins on Venus (like Compound but from BSC) and earn XVS (their coin) on the proccess. ACryptoS optimizes the process by getting the XVS for you and selling it for more BTC, compounding into your position.

Each thing does its own thing.

I think to lend bitcoin and receive interest in another currency isn't a good idea. Btc is the most valuable coin here, so it seems these platforms want to take your btcs to make profit for themselves while paying you back with any stablecoin or altcoin. In my opinion that is the catch. On long run they will increase their bitcoin's portfolio, while you, as investor will keep the same bitcoin portfolio, but with an extra sum of miscellaneous tokens which will probably price much less than btc.

[TryNinja]

I think to lend bitcoin and receive interest in another currency isn't a good idea.

You are not receiving all the interest in another coin, read me post again.

ACryptoS optimizes the process by getting the XVS for you and selling it for more BTC, compounding into your position.

Part of the 20% APY is paid with their native token, but you can just instantly sell that for BTC. The part paid directly in BTC is still bigger than Blockfi, Celsius and other, though.

[uneng]

I think to lend bitcoin and receive interest in another currency isn't a good idea.

You are not receiving all the interest in another coin, read me post again.

ACryptoS optimizes the process by getting the XVS for you and selling it for more BTC, compounding into your position.

Part of the 20% APY is paid with their native token, but you can just instantly sell that for BTC. The part paid directly in BTC is still bigger than Blockfi, Celsius and other, though.

I'm not familiarized with this kind of investment. I thought it was like Celsius and Nexo's tokens.

The rates look pretty high. Isn't it a refined ponzi investment which generates interest from new investors' money?

As I understood they sell their native token and buy it again repeating this cycle, creating an artificial pump effect in market.

[TryNinja]

As I understood they sell their native token and buy it again repeating this cycle, creating an artificial pump effect in market.

That's not what I said. Look up what is "Compound.finance" on Ethereum and you will understand what they do.

Venus is a platform on BSC with over $5 billion in assets where people can lend and borrow cryptocurrencies. They have a program where they pay their native token (XVS) to incentivize the usage, so you can lend your BTC, borrow another asset and make money on the process (through the XVS you farm).

You can already make some money this way. But then there are other platforms (like acryptos, which I mentioned above) that pool all their users funds together to lend the BTC, borrow more BTC, lend BTC and repeat, while getting the farmed XVS from the platform and selling for more BTC (a.k.a compounding the interest). They also pay you some of their governance tokens to help out with the APY.

[o_e_l_e_o]

Now what do these reserves consist of? No idea.

It says what they consist of on their website:

Every Tether token is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).

"Other assets" handily includes literally anything and everything they want it to. Other crypto? Sure. Shitcoins? Maybe. Property? Who knows. Further, "receivables from loans made by Tether to third parties, which may include affiliated entities" is a complex way of saying "loan repayments from ourselves to ourselves". I don't care if that loan is now fully paid off - for several years Tether were "backing up" USDT with a loan they made to themselves. That is neither honest not trustworthy.

And if USDT is "fully backed up, full stop", then why have they not released any proof of funds, independent audits, bank statements, etc. in almost three years? It would be trivial to do so if what they said were true. Since my post higher up in this thread only 2 weeks ago, they have now pumped another 2 billion USDT in to circulation to a total of $40 billion. Their last "Proof of funds" accounts for around 6% of this total.

Feels safe to me, can anyone explain the catch?

In additional to all the usual risks with using lending platforms that have been detailed above, as soon as you start depositing bitcoin to a third party in order to receive wrapped tokens in return, then you add in yet another custodial third party and all the risks that that brings.