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Gemini Earn

gemini.com

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Re: Gemini Earn

#31

Post by px43 »

Acrobatic_Road wrote: post #26
bdcravens wrote: post #10

This is just crypto p2p lending, which is hardly new. Fraud is rampant in this space.

it's not, this is either overcollateralized lending like compound finance or dharma, or it's flash lending. You don't have to worry about fraud. edit: this line sheds some light: "Gemini is partnering with vetted and accredited third party institutional-grade borrowers including Genesis Capital". So they are lending your money to accredited parties, not random people on the internet.

Actual DeFi is great. It's non-custodial, on chain, and mostly easy to verify just by reading the code. Any Ethereum based asset makes this trivial to implement, and for the most part, the DeFi ecosystem on Ethereum is incredibly mature.

BTC lending on the other hand (which Gemini is offering) must be custodial, so there's pretty significant risk of loss if Gemini gets hacked, seized, or otherwise looted.

To answer someone else's question on this thread, over-collateralized lending solves the "I want to buy Ethereum but all I have is Ethereum" problem. Most people use it at a really simple mechanism for adjustable leverage, letting them increase their risk exposure without losing custody of their assets.

Re: Gemini Earn

#32

Post by Sektor »

Literally still waiting on verification from Gemini after more than 2 months. I've since opened an account with BlockFi (was verified in 24hrs) an account with Binance (same again) and bought crypo from binance and moved it to blockfi for interest gain. Gemini can suck a fat one.

Re: Gemini Earn

#33

Post by jtbayly »

If I am earning interest on Bitcoin I put in there, am I also gaining/losing the value change of Bitcoin during that time?

Re: Gemini Earn

#34

Post by dastx »

piercebot wrote: post #28

What's the market for borrowers? What are people borrowing cryptocurrency for? With fiat interest rates at record lows, why not borrow fiat instead and use it to buy crypto? Surely not all of the demand is coming from the unbanked? EDIT: My question was answered while I was typing it up :) https://news.ycombinator.com/item?id=25996264

> With fiat interest rates at record lows, why not borrow fiat instead and use it to buy crypto?

I just had a look and compared Gemini's calculator of lending, compared to Zopa's (UK p2p lender) calculator and, for a £10k loan, you'd be paying ~£500 in interest at Zopa (~14% APR), where Gemini claims you'll be getting $1.7k in interest (based on $11k lent and Filecoin's ~7% interest).

My guess is Gemini's calculator is either purposefully or accidentally broken, or I'm missing something.

Re: Gemini Earn

#35

Post by jtbayly »

jtbayly wrote: post #33

If I am earning interest on Bitcoin I put in there, am I also gaining/losing the value change of Bitcoin during that time?

Ok, you can, but I still don’t understand how.

“ Unlike other opportunities to earn interest on your cryptocurrency, you can redeem your cryptocurrency at any time, with no penalties, and receive it at its current market value — plus the interest you’ve earned!”

Re: Gemini Earn

#36

Post by jkhdigital »

px43 wrote: post #31
Acrobatic_Road wrote: post #26

Earlier quoted context omitted.

it's not, this is either overcollateralized lending like compound finance or dharma, or it's flash lending. You don't have to worry about fraud. edit: this line sheds some light: "Gemini is partnering with vetted and accredited third party institutional-grade borrowers including Genesis Capital". So they are lending your money to accredited parties, not random people on the internet.

Actual DeFi is great. It's non-custodial, on chain, and mostly easy to verify just by reading the code. Any Ethereum based asset makes this trivial to implement, and for the most part, the DeFi ecosystem on Ethereum is incredibly mature. BTC lending on the other hand (which Gemini is offering) must be custodial, so there's pretty significant risk of loss if Gemini gets hacked, seized, or otherwise looted. To answer s…

Probably better to call it “self-custodial” since you still have to maintain security of the keys yourself. But yeah, there’s no additional custodian required, unlike (say) publicly traded securities.

Re: Gemini Earn

#37

Post by jkhdigital »

piercebot wrote: post #28

What's the market for borrowers? What are people borrowing cryptocurrency for? With fiat interest rates at record lows, why not borrow fiat instead and use it to buy crypto? Surely not all of the demand is coming from the unbanked? EDIT: My question was answered while I was typing it up :) https://news.ycombinator.com/item?id=25996264

Because nobody will lend you fiat to buy crypto? Interest rates for high-quality collateral (real estate, established business income, legalized theft of your citizens’ assets via taxation, etc.) are at record lows but credit cards for marginal borrowers still charge 20%+.

Re: Gemini Earn

#38

Post by meowkit »

formalsystem wrote: post #30

Am I missing something about crypto lending? Your deposit can't be FDIC insured and if borrowers are defaulting that means your deposit disappears. You can't bailout a crypto bank by printing crypto. The appreciation of Bitcoin has been so staggering that it also makes getting interest back on your deposits seem rather outdated.

You’re not. The ToS for Gemini Earn states exactly that you risk losing your deposit.

You earn interest on top of the underlying appreciation. Doesn’t seem outdated to me.

Re: Gemini Earn

#39

Post by jcpham2 »

formalsystem wrote: post #30

Am I missing something about crypto lending? Your deposit can't be FDIC insured and if borrowers are defaulting that means your deposit disappears. You can't bailout a crypto bank by printing crypto. The appreciation of Bitcoin has been so staggering that it also makes getting interest back on your deposits seem rather outdated.

Bitcoin banks have been tried and failed, I should know the US department of Justice sent me victim notification emails about it for years.

Take it from someone who has operated in this space long enough to beware of interest rates on crypto, the money has to come from somewhere to cover the vig

Fractional reserve banking is the thing that is to be avoided and ultimately fails.

Ymmv. I am not a financial advisor blah blah

Re: Gemini Earn

#40

Post by smabie »

piercebot wrote: post #28

What's the market for borrowers? What are people borrowing cryptocurrency for? With fiat interest rates at record lows, why not borrow fiat instead and use it to buy crypto? Surely not all of the demand is coming from the unbanked? EDIT: My question was answered while I was typing it up :) https://news.ycombinator.com/item?id=25996264

Most entities borrowing are borrowing crypto as part of their trading operations. For example, I could borrow crypto to provide margin for my HFT market making strategies.

A very popular use is to do rate/basis arb. So I borrow a crypto at say 10% interest and then use that to sell a future or swap that has a rate higher than 10%. So borrow at 10%, short a future with a annualized percent basis of 20%, and capture a risk free spread of 10%.

Very sophisticated and institutional players are doing a lot of these kind of basis arb plays nowadays. It's pretty much free money. You need to be able to borrow though, as without leverage these rate arb strats don't yield compelling enough returns.

If you're a crypto trading firm and not making at least 100% annualized, you're fucking up. It's not usual for sophisticated players to be making a 1-2% return a day in crypto.

The wealth generation from crypto trading in the last two years is truly astonishing.

Also want to note is that most of these obscenely high return strategies are delta neutral: they are unaffected by the price of crypto going up or down. There are some funds out there who's returns are derived from crypto exposure, but those are the shitty ones.

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