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The biggest crypto lending company is a ponzi scheme

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Re: The biggest crypto lending company is a ponzi scheme

#151

Post by roywiggins »

gzer0 wrote: post #127
marcinjachymiak wrote: post #77

I'm not a fan or user of Celsius, but this is an incredibly inflammatory title with very little evidence to back it up. Claims like that demand greater proof. This is an incredibly lazy article The author pretty much failed to do any research on DeFi investments (point 3 in the OP). Compound and Aave are just 2 of many places investors place their assets, and are definitely near the lower end of APYs. Badger, which C…

> Where do these high APYs come from? Well a lot of it is coming from incentives of these protocols and speculation in those native assets. But the author doesn't even know that, so I won't bother steelmanning his argument Is this not the very definition of a ponzi scheme? The returns coming from "incentives" of these protocols and "speculation" in those native assets sounds very ponzi-like to me.

If the yields are actually coming from speculation, it's not a Ponzi. Ponzis don't generate real yields, they just shuffle money from new investors to old investors. If it's actually making risky bets and winning them it's more like a hedge fund or something.

Of course hedge funds don't have steady 10% yields, they lose money when their risky bets don't pan out.

Re: The biggest crypto lending company is a ponzi scheme

#152

Post by [deleted] »

roywiggins wrote: post #118
azth wrote: post #69

Lending money (with interest obviously) is a ponzi scheme. It's not surprising to be honest, and this shouldn't be news. We've known this for literally thousands of years now. It has nothing to do with crypto currencies per se.

Ponzi schemes don't lend money to anyone, they just shuffle money from late investors to early investors.

[deleted]

Re: The biggest crypto lending company is a ponzi scheme

#153

Post by tiborsaas »

onlyrealcuzzo wrote: post #112
tomp wrote: post #43

Earlier quoted context omitted.

How is spending $1 000 000 on a "virtual image" (NFT) any different than spending it on a Picasso? There are equivalent/superior copies of both readily available, but some people value provenance ...

The Picasso is truly scarce. The NFT is artificially scarce.

But Picasso made his paintings artificially scarce too :)

He even made two versions with the same title: https://en.wikipedia.org/wiki/Three_Musicians

Re: The biggest crypto lending company is a ponzi scheme

#154

Post by tata71 »

gentleman11 wrote: post #10

We keep expecting crypto to die but then again, we still have antivirus software that is spyware (avast), a scammy vpn industry, and a thriving anti vax movement. No matter how absurd it is, it might stick around for a long time now

Yes, billionaires and little people will suddenly forget the easiest, fairest, securest way they've done finance on the internet.

Re: The biggest crypto lending company is a ponzi scheme

#156

Post by therealmarv »

A lot of fundamentals to fully understand any problems are not covered here. It can be the article is right or wrong but it's nevertheless inflammatory.

Just to prove my point: Look at the P2P micro credit market (which works in the similar direction and out of the scope of fed regulated money market) where it is no big problem to get 12% APY on established P2P institutions.

Re: The biggest crypto lending company is a ponzi scheme

#157

Post by adam_arthur »

sec400 wrote: post #141
adam_arthur wrote: post #128

Earlier quoted context omitted.

Can you explain some of the ways then? Not the user facing side, but the backend/underlying part that generates the returns necessary to sustain those yields.

Not Celsius specifically but you can see details about yearn's strats here: https://docs.yearn.finance/getting-started/products/yvaults/... Specific vaults strats: https://medium.com/yearn-state-of-the-vaults/the-vaults-at-y... Links to the actual contracts: https://yearn.watch/

I just glanced through these and don't see any explanation.

They basically just say "we put it in a vault and harvest the rewards".

What I'm asking is where do the rewards come from. What is the underlying mechanism that makes this model sustainable.

If you invest in a REIT, tenants earn money through their business and pay rents. If you invest in a BDC, the BDC makes loans to businesses and collects interest. Relationship and risks are quite clear here.

If you're Bernie Madoff you generated high yields for investors for decades by taking money from one investor to pay another, and ultimately was not sustainable and bankrupted many people. For example.

So are DeFi yields like a BDC, or like a Bernie Madoff?

Re: The biggest crypto lending company is a ponzi scheme

#158

Post by [deleted] »

Tangokat wrote: post #139

Clickbait title and no proof at all. HN hates all things crypto so much this gets upvotes even though the quality is less than Buzzfeed. Rates like these are absolutely possible to get using Defi, futures and so on. One example of doing it risk free (staying delta neutral) is by selling crypto futures contracts and buying the underlying asset to hedge. With that said, lenders like Celsius, Nexo, Crypto.com etc. shoul…

[deleted]

Re: The biggest crypto lending company is a ponzi scheme

#159

Post by api »

gentleman11 wrote: post #10

We keep expecting crypto to die but then again, we still have antivirus software that is spyware (avast), a scammy vpn industry, and a thriving anti vax movement. No matter how absurd it is, it might stick around for a long time now

This phenomenon itself could be here to stay and even grow in the future if world GDP continues to increase. There's just less and less downward pressure on things as the economy grows, less "natural selection" so to speak. Scammy or outright broken things can stumble along for a long time. Look at all the startups stumbling along for years and years with almost $0 revenue and a poor or nonexistent product.

I wouldn't have a problem with this if there wasn't so much inequality at the human level. A schoolteacher should not be struggling to pay their rent when obvious bullshit NFTs are selling for hundreds of thousands of dollars and startups with barely a product and no revenue are raising A rounds.

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