11-17-2022, 10:42 PM
How the actual fuck do crypto lenders go bankrupt?
<!-- SC_OFF --><div class="md"><p>So I'm really tired of hearing about crypto lenders going bankrupt. Celsius, 3 Arrows, Blockfi, FTX, and now Genesis is on the brink. It makes zero sense, lending is literally the easiest way to make money.</p> <p>Now, I've dabbled in DeFi. I've also gotten loans from banks. In traditional finance, whenever the loan was greater than 1 month's salary, I had to collateralize it. In DeFi, it's always collateralized. When the value of the collateral reaches a certain threshold, you get liquidated/margin called. The ensures the lender doesn't lose money.</p> <p>Now typically, the collateral value is greater than the loan value. The lender will likely profit when you get liquidated. Additionally, the lender gains a yield from the interest of the loan. And even more, they can earn a spread on your deposits- they can offer a 4% USDC deposit rate, but lend USDC out at 6% and make the easiest 2% ever.</p> <p>Literally all crypto lenders need to do to not go bankrupt is to liquidate positions or perform margin calls when they approach being upside down. It takes like, 2-3 people who know how to code to automate this function. There's github repos that have the shit already coded, just need to make a few tweaks.</p> <p>Yet somehow, these degenerates still figure out a way to completely fuck it up. The only two explanations are they are literally running a Bernie Madoff ponzi and running off with customer funds the second they are deposited, or they are giving out massive uncollateralized loans.</p> <p>So, if you're hell bent on earning a yield through lending (only for the experienced and high risk takers), PLEASE do it through a DeFi protocol that is set up to not be completely degenerate with your funds. *WARNING- The protocol can still be hacked and you lose everything. Beware*</p> <p>​</p> <p>TL;DR- Crypto lenders have millions of ways to make money and prevent losses. All the bankrupt companies literally just decided to steal money or had the dumbest business practices ever.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/002timmy"> /u/002timmy </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/yxg2gv/how_the_actual_fuck_do_crypto_lenders_go_bankrupt/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/yxg2gv/how_the_actual_fuck_do_crypto_lenders_go_bankrupt/">[comments]</a></span>
<!-- SC_OFF --><div class="md"><p>So I'm really tired of hearing about crypto lenders going bankrupt. Celsius, 3 Arrows, Blockfi, FTX, and now Genesis is on the brink. It makes zero sense, lending is literally the easiest way to make money.</p> <p>Now, I've dabbled in DeFi. I've also gotten loans from banks. In traditional finance, whenever the loan was greater than 1 month's salary, I had to collateralize it. In DeFi, it's always collateralized. When the value of the collateral reaches a certain threshold, you get liquidated/margin called. The ensures the lender doesn't lose money.</p> <p>Now typically, the collateral value is greater than the loan value. The lender will likely profit when you get liquidated. Additionally, the lender gains a yield from the interest of the loan. And even more, they can earn a spread on your deposits- they can offer a 4% USDC deposit rate, but lend USDC out at 6% and make the easiest 2% ever.</p> <p>Literally all crypto lenders need to do to not go bankrupt is to liquidate positions or perform margin calls when they approach being upside down. It takes like, 2-3 people who know how to code to automate this function. There's github repos that have the shit already coded, just need to make a few tweaks.</p> <p>Yet somehow, these degenerates still figure out a way to completely fuck it up. The only two explanations are they are literally running a Bernie Madoff ponzi and running off with customer funds the second they are deposited, or they are giving out massive uncollateralized loans.</p> <p>So, if you're hell bent on earning a yield through lending (only for the experienced and high risk takers), PLEASE do it through a DeFi protocol that is set up to not be completely degenerate with your funds. *WARNING- The protocol can still be hacked and you lose everything. Beware*</p> <p>​</p> <p>TL;DR- Crypto lenders have millions of ways to make money and prevent losses. All the bankrupt companies literally just decided to steal money or had the dumbest business practices ever.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/002timmy"> /u/002timmy </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/yxg2gv/how_the_actual_fuck_do_crypto_lenders_go_bankrupt/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/yxg2gv/how_the_actual_fuck_do_crypto_lenders_go_bankrupt/">[comments]</a></span>