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Carolina Cloud pays SOFR on unused prepaid credits

docs.carolinacloud.io

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Re: Carolina Cloud pays SOFR on unused prepaid credits

#51

Post by bojangleslover »

canucktrash669 wrote: post #50

They claim to be 1/3 the price of AWS, so I calculated for fun and it's 8x more expensive than my server auction machine I just got from Hetzner. Which itself is 6x cheaper than on-demand pricing at AWS, but only 3x cheaper than spot. Of course I get free egress. And my RAID1 perf can't be matched by the baseline EBS storage I've used in the comparison. In any case, they don't seem to really have an edge on AWS unles…

That's not a like-for-like comparison. You need to compare CC to the c8a range of AWS, on-demand only. That's where the 1/3 comes from. For example:

c8a.medium (1vCPU/2GiB RAM/no SSD) on-demand on AWS: 5.39 cents per hour plus egress Carolina Cloud equivalent: 2 cents per hour with zero egress

If you don't have egress then the price is closer to 40% that of AWS. If you do have egress, the price could be far, far below 1/3.

Hetzner server auction is great for many use-cases, but it's not a fair comparison with EPYC Turins.

(1) https://cloudprice.net/aws/ec2?filter=c8a

Re: Carolina Cloud pays SOFR on unused prepaid credits

#53

Post by alias_neo »

infecto wrote: post #49
alias_neo wrote: post #47

Earlier quoted context omitted.

> The original post was specifically about why they decided not to do this in the EU because it created additional regulatory overhead Yes, but I'm not convinced they mean what they're saying, I took that to mean they were trying to do this as _real_ interest. > If paying interest on prepaid customer balances were legally trivial just because they’re called “credits” or have “no cash value,” companies could structure…

I think we’re actually debating a narrower point than you think. I agree that simply calling something “interest” doesn’t magically make it a regulated financial product. My disagreement is with the idea that “can’t be redeemed for cash” is the dispositive test. Regulators generally look at the substance of the arrangement, not just the label. Also, your £1,000 credit example isn’t really analogous to the original po…

> because regulators care about products that start looking financially deposit-like

I totally agree with this point, but I don't see how the topic we're discussing would be seen that way.

From a "common sense" point of view (which I know, financial regulation is absolutely not), no matter what you call this act of giving someone extra credit (let's call it "interest") for your service based on the amount they've previously paid for your service (let's call it "deposited"), you're still just giving them monopoly money that serves a single purpose and that is to use more of your service.

If they can't turn it into cash, why should any financial authority care? It's got nothing to do with them.

That said, to take your side for a moment, what's to stop me depositing boat loads of cash up front to pay for your service using the "interest" you'll give me, rather than paying it regularly out of company earnings? Now it starts to sound like something a financial authority might take interest in (pun intended).

Re: Carolina Cloud pays SOFR on unused prepaid credits

#54

Post by lurkshark »

bko wrote: post #5
badatnames wrote: post #2

I've looked at doing this in Europe before, interest-bearing completely changes the classification of the prepayment. I didn't dig too deeply, but the general gist was that regulation-wise it really wasn't worth doing for a relatively gimmick-level feature

I've heard about similar regulatory barriers especially in finance so this does not surprise me. A long time ago I remember reading about banks that want to provide incentives for saving that amount to basically lottery tickets. The idea is that people aren't thrilled about a savings account that pays 2%, but if instead they offered a monthly 1 in 50 chance to get 100% return (same expected value, ignore compounding)…

In the US they call those Prize-Linked Savings Accounts. They’re actually legalized in a majority of states but aren’t marketed particularly heavily (especially when compared to lotteries, sportsbooks, prediction markets, …)

https://en.wikipedia.org/wiki/Prize-linked_savings_account

Re: Carolina Cloud pays SOFR on unused prepaid credits

#55

Post by infecto »

alias_neo wrote: post #53
infecto wrote: post #49

Earlier quoted context omitted.

I think we’re actually debating a narrower point than you think. I agree that simply calling something “interest” doesn’t magically make it a regulated financial product. My disagreement is with the idea that “can’t be redeemed for cash” is the dispositive test. Regulators generally look at the substance of the arrangement, not just the label. Also, your £1,000 credit example isn’t really analogous to the original po…

> because regulators care about products that start looking financially deposit-like I totally agree with this point, but I don't see how the topic we're discussing would be seen that way. From a "common sense" point of view (which I know, financial regulation is absolutely not), no matter what you call this act of giving someone extra credit (let's call it "interest") for your service based on the amount they've pre…

I think your last paragraph is the answer.

My only point from the start was that I’m not surprised the EU imposes extra compliance here. Once you’re incentivizing customers to leave prepaid funds with you in exchange for a return, it’s reasonable that regulators would take a closer look.

Whether they ultimately regulate it as deposits, e-money, or something else is for the lawyers. I was never arguing that “credits paying interest” automatically makes you a bank. Simply put it’s not surprising you would have to go through extra hurdles for this kind of gimmick.

I think you are taking this a bit too far. I don’t think it’s shocking that even credits which have a dollar value would need to pass a smell test.

Re: Carolina Cloud pays SOFR on unused prepaid credits

#56

Post by alias_neo »

infecto wrote: post #55
alias_neo wrote: post #53

Earlier quoted context omitted.

> because regulators care about products that start looking financially deposit-like I totally agree with this point, but I don't see how the topic we're discussing would be seen that way. From a "common sense" point of view (which I know, financial regulation is absolutely not), no matter what you call this act of giving someone extra credit (let's call it "interest") for your service based on the amount they've pre…

I think your last paragraph is the answer. My only point from the start was that I’m not surprised the EU imposes extra compliance here. Once you’re incentivizing customers to leave prepaid funds with you in exchange for a return, it’s reasonable that regulators would take a closer look. Whether they ultimately regulate it as deposits, e-money, or something else is for the lawyers. I was never arguing that “credits p…

> I think you are taking this a bit too far

I just find it an interesting thought experiment.

I wonder if this has anything to do with why a lot of companies convert your money into a variety of virtual currencies, "bells", "gold, "gems" etc.

I'll leave it there but nice chatting with you about it!

Re: Carolina Cloud pays SOFR on unused prepaid credits

#57

Post by mhh__ »

teiferer wrote: post #32

Mentioning what SOFR is would be incredibly useful. Gemini: The Secured Overnight Financing Rate (SOFR) is a broad measure and benchmark interest rate for U.S. dollar-denominated loans and derivatives, reflecting the cost of borrowing cash overnight backed by Treasury securities.

When LIBOR was killed, financial derivatives were forced to reference (compounded) SOFR, it's a trimmed average of all the overnight lending agreements.
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