Risk/reward ratio

[crwth]

Aren't high APY coins subject to some regulations? For me, I see it as a Too good to be true type of thing that you just HODL, and then you would earn a lot.^{(depending on the amount of deposit you would have)}

Sometimes I thought about this yield stuff becoming more centralized, with the balance they own, and depending on the chain, they could dominate governance. There would be more power with the big validators. Just my thoughts.

[TastyChillySauce00]

Aren't high APY coins subject to some regulations? For me, I see it as a Too good to be true type of thing that you just HODL, and then you would earn a lot.^{(depending on the amount of deposit you would have)}

Yes it is regulated especially in the US, even stablecoin's passive yield is banned after the CLARITY Act, outside the US there are rules here and there about licensing, and so on especially in the EU with MiCA.
The key is to keep the coin from being classified as securities such as giving High APY with fixed returns and guaranteed yield. It's a lot of thing to talk to when it comes to regulation for a high APY coin.

Most sustaining staking activities are usually only giving 1% - 3.5% APY more or less the same as yield you'd get in traditional finance, the other offering higher APY comes with risk.
Some project just ignore the regulation by excluding certain region as far as I know to bypass the need for a complex legal drafting process.

[Abiky]

If you wish for a high risk, then you are doing it wrong. Bitcoin itself is risky enough, it has gone down in half already from just a few months ago, why would you want something that is even riskier?

You already have the golden ticket in your hands, buy bitcoin and wait for it to recover and you will make a lot of money, when you have that and you KNOW that is going to happen, why worry about some shitcoin that promises to get you 10x and more likely end up taking all of your money and crash instead?

Most people want quick results with their investment. They're impatient. So they will turn to "shitcoins" promising huge returns even if risk of loss is high. You can see why "meme" coins are still a thing these days, despite the fact that they serve no purpose in real life (lack of utility). If you choose a coin with a low risk/reward ratio, you'll end up waiting years (if not decades) to obtain a decent return in your investment. Especially when market prices of such a coin move at a slow and steady pace.

Ultimately, you decide what to do with your money. Just avoid investing more than what you can't afford to lose to play it safe.

[Webetcoins]

For me, stable stuff like bitcoin is better. I understand that we are seeing how things are giving out great rewards when they are very risky, but on the long run the better ones are better.

It's not even about just risk, it's about the fact that the bigger and better names are always bringing better money on the long run.

Surely there are people who invest into shitcoins, new tokens, launchpads and all of that just so that they could maybe make 10x return or whatever, but that to me has always been a bad move.

[Emitdama]

Most people want quick results with their investment. They're impatient. So they will turn to "shitcoins" promising huge returns even if risk of loss is high. You can see why "meme" coins are still a thing these days, despite the fact that they serve no purpose in real life (lack of utility). If you choose a coin with a low risk/reward ratio, you'll end up waiting years (if not decades) to obtain a decent return in your investment. Especially when market prices of such a coin move at a slow and steady pace.

Ultimately, you decide what to do with your money. Just avoid investing more than what you can't afford to lose to play it safe.

This is true, the amount of people who think they can do something treat is huge, and we are talking about something that will not be as simple as we think. We should not be considering how this could be different and difficult, this not the same and we should be aiming at something that will take a while for us to reach that level. I know it is not going to be easy, and I know that we are going to get a better approach if we just focus on the strong and valuable stuff instead of shitcoins that promises so much. When someone promises you wealth, know that it's a scam, because real money is made slowly but surely, not over night.

[Abiky]

For me, stable stuff like bitcoin is better. I understand that we are seeing how things are giving out great rewards when they are very risky, but on the long run the better ones are better.

It's not even about just risk, it's about the fact that the bigger and better names are always bringing better money on the long run.

Surely there are people who invest into shitcoins, new tokens, launchpads and all of that just so that they could maybe make 10x return or whatever, but that to me has always been a bad move.

Bitcoin is not even stable. It has its ups and downs, like the rest of the other cryptos on the market. The only difference is that Bitcoin is less volatile, while alts are not. They're widely unproven with much smaller liquidity and lower demand.

What investors find attractive about altcoins is their high risk/high reward ratio. Since many people are looking for quick results, they will choose alts over BTC anytime. Only those wanting to build long-term wealth, will choose Bitcoin. For an even lower risk, saving your money at the bank would be ideal. The decision is yours. Just remember to never invest more than what you can't afford to lose, and you'll have nothing to worry about.

[Alonso_]

I will prefer coins with low risk, because in cryptocurrency markets, anything that have to do with altcoins I don’t have complete trust in altcoins, high risk with high reward are always coins that would end up disappointing in the market and when it happens you will not understand what actually happened to you, so when making this decision you have to be very very careful with what you’re doing in the market.

Every investors have what they find attractive in the market, I believe there are investors who find high risk/high reward very attractive and they are always prepared for what will eventually happen.

[SirLancelot]

Aren't high APY coins subject to some regulations? For me, I see it as a Too good to be true type of thing that you just HODL, and then you would earn a lot.^{(depending on the amount of deposit you would have)}

Sometimes I thought about this yield stuff becoming more centralized, with the balance they own, and depending on the chain, they could dominate governance. There would be more power with the big validators. Just my thoughts.

It's not about regulations, it's about the price. It means, if you buy something that is 100 dollars ($1/coin), that offers 100% return, that means your 100 dollars should become 200 dollars. But if the price goes to 20 dollars for same 100 coins after 1 year ($0.2/coin), then your 100% gain would mean that you have now 40 dollars (200 coins * $0.2), a 60 dollar lost even after you have doubled your holding.

As you can see they are offering high APY but that is only for the token itself, not the price in dollar value and that is why in most cases people just sell it and trying to maximize their ROI but that would eventually lead to the complete downfall of the coin over the time. When a coin is not encouraging its adapters to hold (or using it on regular basis), it would bite the dust for sure.

[Abiky]

It's not about regulations, it's about the price. It means, if you buy something that is 100 dollars ($1/coin), that offers 100% return, that means your 100 dollars should become 200 dollars. But if the price goes to 20 dollars for same 100 coins after 1 year ($0.2/coin), then your 100% gain would mean that you have now 40 dollars (200 coins * $0.2), a 60 dollar lost even after you have doubled your holding.

As you can see they are offering high APY but that is only for the token itself, not the price in dollar value and that is why in most cases people just sell it and trying to maximize their ROI but that would eventually lead to the complete downfall of the coin over the time. When a coin is not encouraging its adapters to hold (or using it on regular basis), it would bite the dust for sure.

Fluctuating market prices will always be an issue when trying to make a profit off staking. You're better off lending stablecoins (preferably USD-backed) instead. They're often low risk/low reward. In some cases, the reward can be high if the platform you're lending your stablecoins into has a low number of borrowers. I'm talking about "De-Fi" platforms, of course. In centralized platforms (usually crypto exchanges), the returns are usually lower.

It's yet the day where altcoin season has to make a comeback. Without market prices "pumping", you'd stake PoS coins at your own risk. The choice is ultimately yours.

[Akbarkoe]

I will prefer coins with low risk, because in cryptocurrency markets, anything that have to do with altcoins I don’t have complete trust in altcoins, high risk with high reward are always coins that would end up disappointing in the market and when it happens you will not understand what actually happened to you, so when making this decision you have to be very very careful with what you’re doing in the market.

Every investors have what they find attractive in the market, I believe there are investors who find high risk/high reward very attractive and they are always prepared for what will eventually happen.

Indeed, it is better not to believe in altcoins and not to hold them in the long run whether, for short-term speculation it is very good sometimes very large profits are felt especially if the trend is bullish.
Basically, if you have been in the crypto ecosystem for a long time you will know the places where you can benefit with your own preferences, whether it's staking, trading or something else like LP.

Today I have a little ETH and BNB that I stake to get a small yield, at least lazy to make a lot of analysis on altcoins that are bigger risks I don't have time to monitor too long.

[HelliumZ]

It's not about regulations, it's about the price. It means, if you buy something that is 100 dollars ($1/coin), that offers 100% return, that means your 100 dollars should become 200 dollars. But if the price goes to 20 dollars for same 100 coins after 1 year ($0.2/coin), then your 100% gain would mean that you have now 40 dollars (200 coins * $0.2), a 60 dollar lost even after you have doubled your holding.

As you can see they are offering high APY but that is only for the token itself, not the price in dollar value and that is why in most cases people just sell it and trying to maximize their ROI but that would eventually lead to the complete downfall of the coin over the time. When a coin is not encouraging its adapters to hold (or using it on regular basis), it would bite the dust for sure.

It is not that you will always get positive returns, but if you can invest correctly at the right time and at the right price, then you will only get positive returns. Suppose you invested in an altcoin at a high price and held it and sold your holding at a time when the coin had decreased by 50% of the value you invested in. At this time, you took a risk, but you could not invest at the right time. That is, if you cannot invest at the right time, you will not get the right reward.

[Abiky]

It is not that you will always get positive returns, but if you can invest correctly at the right time and at the right price, then you will only get positive returns. Suppose you invested in an altcoin at a high price and held it and sold your holding at a time when the coin had decreased by 50% of the value you invested in. At this time, you took a risk, but you could not invest at the right time. That is, if you cannot invest at the right time, you will not get the right reward.

You meaning "timing" the market? It's not as easy as it sounds. Because you can end up losing more money than what you earn. Especially if we're talking about "meme" coins. These are extremely-risky investments. I'd prefer a low (but steady) risk/reward ratio for complete peace of mind.

People usually "flock" towards stablecoins since they fit the bill nicely. Those that are greedy, will choose a high risk/reward coin for obvious reasons. What's important is that you make a ROI on your investment. Play your cards right, and you'll have nothing to fear.

[Dunamisx]

In crypto land, do you prefer coins with a high risk/reward ratio? Or do you prefer crypto with a low risk/reward ratio? There are so many PoS coins to choose from, each with their own stake rates. Back then, there were PoS cryptos with an astronomical yield (APY). 808 and Tekcoin were one of them.

What's your choice? And why?

First of us are we have to think of the risk that's involved in any coin I'm going to consider for an investment, the next is to also consider about the reward I stand to gain from taking such risk if it is worth it or not, then I sit to analyze the two together and compare both to know whether I should combine them or afford to take one against the other as I invest.

[ImGenius]

What's your choice? And why?

I always prefer Low risk per Ratio, I also check multiple things like security, supply limit, how much team hold. My top priority in the list is always Bitcoin. I don't like high return coins because it feel like gamble to me. So i ignore them mostly. Those who have to make big money they will always choose high risk high return coins.

[cakir1]

There are many situations in the world where it takes a long time to calculate the risk and reward ratio. While I get that it may not be easy to make it as a newbie, if you are a veteran then it should be easy just by looking at tokens and coins to see the risk and the reward.

Many newbies go invest into silly stupid shitcoins to get 100x return and instead 99% of them end up with zero, and that is why they do it like a lottery and that's a sad thing, we should not be looking at this like it is a bad deal, we should be considering this as something decent instead.

[Abiky]

There are many situations in the world where it takes a long time to calculate the risk and reward ratio. While I get that it may not be easy to make it as a newbie, if you are a veteran then it should be easy just by looking at tokens and coins to see the risk and the reward.

Many newbies go invest into silly stupid shitcoins to get 100x return and instead 99% of them end up with zero, and that is why they do it like a lottery and that's a sad thing, we should not be looking at this like it is a bad deal, we should be considering this as something decent instead.

Newbies are simply looking to make a quick buck. They don't care whenever a specific coin has a higher risk of loss than others. Noobs just want the money. It's what ultimately leads them to bankruptcy ("rekt"). Poor investment decisions driven by hype or someone else's opinion. It's always best to take your time and do your own research to determine what works best for you.

Personally, I'd prefer a low risk/reward coin because it's much safer. Stablecoins fit the bill quite nicely. Between BTC and alts, BTC is far less riskier. The key is to diversify your investment into multiple crypto assets. Combine stablecoins with a few prominent alts and BTC, and you'll have nothing to worry about. You'll thank me later.