DeFi Staked Returns: Are These for Real?
The tsunami of Decentralized Finance Growth came as many millions of Americans savings interest rates drop precipitously and opportunities for sustained, safe investments offering a healthy yield began to dry up.
Why get 0.1% when opportunities exist to earn north of 5–10%?
People regularly reach out to my Linkedin — Linkedin.com/in/DeFi — and ask me if these returns are for real. Well, there are several considerations:
- What’s the stability of the platform that’s taking custody of the tokens? If they purport to be a decentralized exchange or “DEX,” then who holds the admin keys to the smart contracts?
- What’s the stability of the stablecoin? I recognize that in some countries many crypto activities full under the purview of the regulatory authorities so devs choose to be careful, but when millions of dollars in fiat are at stake, I want to know who is touching the cash every step of the way.
- You do understand that these rates fluctuates wildly, correct? There is very often a positive bias in terms of people who wish to go short versus long a crypto pair, but there absolutely are times when people are massively bearish on bitcoin and these rates can drop precipitously.
I tell people to tread carefully and don’t invest any amount that you can’t afford to lose.