> "You can believe that 99% of crypto is bullshit while also believing that the 1% that isn't will change the world"
Is this a quote from someone?
Because you can believe anything, believes are not a good method to find what is truth. But it is part of the pump and dump strategy, make people believe that something is valuable and them dump on them all your worthless assets.
It's from Preston Byrne (added this in my original comment).
The reason I think it's relevant is that posts like Palmer's attack only the "scam side" of crypto (the 99%) without acknowledging the "new paradigm" (1%) side
Yes there are scams, yes there are pumps and dumps, yes there are insiders who control too much liquidity. But you also have to do justice to the promise of the tech.
It was not previously possible for anyone with an internet connection to take out a loan via a decentralised protocol (MakerDAO), or exchange assets via a decentralised contract (Uniswap), or have a digital proof of authenticity (NFTs). And all of this without middle-men taking fees, opaque leverage throughout the system (see Archegos) and gating access to only certain participants (the richer half of the world who have a bank account).
Looking forward to the responses handwaiving your comment and saying these aren't real use cases, they don't solve anything, you don't need this stuff unless you're doing illegal activity, tradfi is better, only reason they exist is to better enable scams, [insert any other ignorant argument].
It really is hilarious how similar the naysaying here is to the internet/email says.
Change the world in some as-yet undiscovered way? I have much less than 1% confidence that any of the crypto ideas I've heard so far will change the world.
My wife and I paid off our student loan debts with a 0% interest loan and no need to go through a bank. Our position is well over-collateralized and interest generated from other DeFi lending positions will pay off the loan in full.
Not to mention, Ethereum as a settlement layer for stablecoins is gaining exponential adoption. There's a non-insignificant chance it disrupts the traditional banking rails (i.e. ACH, wire, SWIFT, etc.).
I take this comment to mean that you had crypto investments that worked out well for you, and then you took a DeFi loan against them to pay off your student loans?
If so, that doesn't seem that groundbreaking. You could have simply liquidated enough of your gains to pay your student loans off. Instead, you're now in a leveraged position. It's very possible that your collateral could drop below the LTV threshold, causing a liquidation, which would magnify the losses you'd have if you weren't levered. There's no free lunch.
It's certainly interesting that DeFi creates new schemes for creating leverage, with minimal intermediation, but I wouldn't call it groundbreaking. It's an incremental development in financial engineering.
EDIT: read some of your other comments that you made while I was writing mine. It sounds like you're using stablecoins as your collateral, which seems like a smart move, and you've effectively converted your student loan into a DeFi loan at a lower rate. But I'd still be concerned that while your more mundane risks aren't that high (like asset prices and interest rates), you may have exposure to more complex risks.
Why move the goal posts, they weren't speculating on “price go up”, they took a capital efficient loan from an automated world bank instead of dealing with a boutique lender that wastes everyones time
Your edit captures the situation pretty well. I used stablecoins as collateral and this was effectively a migration of the debt on my balance sheet to a lower (even negative) interest rate.
And yes, there are definitely risks; it's not for everyone!
...if you paid it off with an over-collateralized loan, then surely you must have already had enough money to pay it beforehand. Also may I ask what DeFi platform facilitates 0% loans? I thought they all had some low interest
I did have sufficient funds but drawing a loan is more capital efficient. I responded to another comment in this post explaining why.
Also, this was not my scenario but a common view: it can make sense to draw a loan so that you're not liquidating long-term holdings. Imagine I hold $100k in bitcoin and need to pay off $15k in student debt. If I sell my BTC, I'll incur capital gains tax and also have a smaller long-term holding. Alternatively, I can borrow $15k against the BTC, pay no tax, and keep my BTC position in full. There are various ways to then generate interest on the BTC and pay back the borrowed funds.
Some platforms offering 0% loans include Liquity and Alchemix.
I mean given crypto coins are going to the moon, every payment they make will have a higher USD(T) value than before. Deflationary currency is great for lenders!
In fact this “DeFi” thing should have a negative interest rate to compensate for the fact that this borrower will be paying them more and more each payment.
I'm not disputing that it's made some people rich by allowing them to place big bets, but I don't think that's world changing. So did Bernie Madoff if you were lucky enough to get out early.
And I'm not increasing my overall debt position on my personal balance sheet. Rather, I shifted the debt from student loans at ~5.5% to a DeFi protocol where the borrow rate is effectively negative.
Your use-case sounds really interesting. Would you mind elaborating a little bit more? Sounds like you’re using compound.finance or liquity in some way …
I do use both of those protocols, but for this specific use case I'm referring Alchemix. I deposited $30k DAI and borrowed $15k alUSD against the deposit. Traded the alUSD for USDC and withdrew through Coinbase.
I didn't go into detail in the initial post since it sounds a bit crazy, but the loan will actually pay itself off since Alchemix is depositing my $30k into Yearn. The yields generated from Yearn gradually pay down my debt automatically. Other interest bearing positions (apps like Compound and "yield farming" on various new protocols) will also help me pay off the loan faster.
The alternative to this is that I could've taken $15k from the initial $30k and paid off our loans outright. But, using Alchemix is more capital efficient. Student debts are now paid and I also have $30k of capital generating yield instead of only $15k if I had simply paid the loans upfront.
How did you come to trust Alchemix with that much capital? I'm not familiar with them, but just checking their site doesn't give me a lot of confidence about sending tens of thousands of $ to them.
It's all open source. You can see the contracts yourself, or read an audit that someone else created. The beauty is that you don't have to trust them, because you can see exactly what can possibly happen with your money by looking at the code.
My collateral is currently yielding 6.5%, which is gradually paying down the debt. At this rate, estimated maturity is 02/28/2029. This will vary depending on APYs for DAI in the Yearn protocol. But personally, I'll use other income streams to pay it off much sooner.
Bitcoin has been around longer than the iPhone. When it started I think we were all still in Windows XP.
If Bitcoin hasn’t yet discovered a killer app, when will it?
But yeah yeah, it took tens of thousands of years between humans seeing lightning start fires and the charcoal grill… if it took that long, I'm sure it will be tens of thousands of years before Bitcoin finds a use. Better keep buying and holding!
Well, it was pretty early days: Bitcoin was released a few months after the iPhone got an app store, and a few months before the iPhone got copy & paste functionality.
That’s kind of like saying “the Nokia brick phone has been around forever, if it hasn’t discovered a killer app, when will it?”
Bitcoin was just the first blockchain to really find adoption, it’s nowhere near where 99% of the innovation in crypto is happening today. Far more interesting projects that are providing actual value today.
Is this a quote from someone?
Because you can believe anything, believes are not a good method to find what is truth. But it is part of the pump and dump strategy, make people believe that something is valuable and them dump on them all your worthless assets.