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1. riffra+(OP)[view] [source] 2022-05-19 06:41:44
I imagine (and hope) those 5k where mostly crypto bros who knew what they were getting into. Who else expects 15% returns from a "safe" investment?
replies(6): >>fortra+e >>devout+x >>wickof+O >>puranj+fc >>mdip+tK >>moistl+mf2
2. fortra+e[view] [source] 2022-05-19 06:44:47
>>riffra+(OP)
YCombinator's board?

https://www.ycombinator.com/companies/stablegains

replies(1): >>ed+F3
3. devout+x[view] [source] 2022-05-19 06:47:51
>>riffra+(OP)
I didn't invest because it was only 15% gains. Sad, but true. I actually read them their material & saw it was based on Anchor Protocol. When I saw that it was based on UST, and I couldn't figure how UST was backed by anything I understood, I opted out. One of the few times in crypto where I felt "do you won research" paid off for me.
replies(2): >>vkou+v6 >>chii+B7
4. wickof+O[view] [source] 2022-05-19 06:50:19
>>riffra+(OP)
Crypto bros would forgo the middleman and get the 20% yield instead.
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5. ed+F3[view] [source] [discussion] 2022-05-19 07:17:47
>>fortra+e
What is YCombinator’s “board”? Re their directory profile: every public YC company has one, even my defunct 11 year old startup —- it’s definitely not an active endorsement.
replies(1): >>fortra+8L
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6. vkou+v6[view] [source] [discussion] 2022-05-19 07:44:08
>>devout+x
> I didn't invest because it was only 15% gains

I'm confused. Were you looking for a cryptocoin that was promising 1,500% gains?

Anyone promising a safe 15% return in a world where your savings account earns 0.15% interest is trying to rob you.

replies(3): >>renonc+l8 >>negzer+t8 >>devout+1k
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7. chii+B7[view] [source] [discussion] 2022-05-19 07:55:16
>>devout+x
What is old is new again: the UST algorithmic backing is basically https://en.wikipedia.org/wiki/Death_spiral_financing

A company that couldn't get financing any other way could get financing by issuing fixed price convertible bonds. "Fixed price convertible" means the bond can be converted into shares (of the company), but at a fixed price - aka, regardless of the value of each individual share, you are promised fixed a dollar amount of them.

This means if the share price drops, you will be "made whole" by getting issued enough shares to match the fixed price.

It's called death spiral bond, because if/when the price of such a company drops, these convertible bonds will trigger, causing the amount of shares to increase (as they issue new shares), which in turn causes the price of the existing shares to drop, ad-infinitum. Often the owners of the shares would end up with nothing as the shares' value drops to zero (or the company recovers, and they do make some money).

Swap bonds with UST, and shares with Luna, and you get the above scenario.

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8. renonc+l8[view] [source] [discussion] 2022-05-19 08:02:20
>>vkou+v6
It's unfair to compare it against a savings account. Even 1-year treasury bills would give you around 2% interest. It's just that banks are not willing to offer that premium to you.
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9. negzer+t8[view] [source] [discussion] 2022-05-19 08:03:29
>>vkou+v6
Given you could get ~20% on anchor, why would you invest in something with lower return with no a priori reason to believe the returns are safer?
replies(1): >>vkou+6e
10. puranj+fc[view] [source] 2022-05-19 08:46:58
>>riffra+(OP)
As a recovering crypto bro, none of my other friends have been impacted by this entire UST/Luna meltdown at all

Why? Because crypto bros are too degen to be okay with 15% yield lol

replies(1): >>dropne+gd
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11. dropne+gd[view] [source] [discussion] 2022-05-19 08:57:12
>>puranj+fc
right, crypto nerds are swinging for multiple x, if not 100x or 1000x
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12. vkou+6e[view] [source] [discussion] 2022-05-19 09:05:21
>>negzer+t8
If a 20% better ponzi is better than a 15% one, again, I ask, why not a 1,500% one? There's new shitcoins born every day, promising these kinds of returns.
replies(2): >>MacsHe+lI >>negzer+Ij3
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13. devout+1k[view] [source] [discussion] 2022-05-19 10:14:50
>>vkou+v6
Anchor protocol is/was paying around 20%. That was my benchmark. When I saw these guys were paying 15% and looked like a bank on the surface, was initially more interested because they looked established. Then I read up on it and changed my mind. Essentially it’s just anchor protocol with a fancy abstraction layer.
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14. MacsHe+lI[view] [source] [discussion] 2022-05-19 13:13:24
>>vkou+6e
The part you're missing is that StableGains was simply parking their investors' money on Anchor, collecting the 20% APY, shaving off a quarter of it, and passing the remaining 15% to their investors.

Skipping the middleman is necessarily better because it is inherently lower risk for an absolute guarantee of 33% more upside.*

Investing in something else with even 16% promised returns, let alone 1500%, is not necessarily better because it is almost certainly higher risk.

* When Anchor (Luna/UST) crashed both StableGains and direct users of Anchor suffered the same percentage losses. But direct investors in Anchor had balances which were necessarily 33% ahead of StableGains investors due to not having StableGains shave off their interest earnings.

replies(1): >>devout+6L
15. mdip+tK[view] [source] 2022-05-19 13:24:42
>>riffra+(OP)
You would certainly think so ... I did. But I'm sorry to say that you are strongly overestimating the general population here.

My friends know I'm the local crypto-geek[0] so Bitcoin and other cryptocurrencies and tokens are brought up to me all the time by people who's knowledge of what any of it is begins and ends with "Last year X coin was $7.00 and this year it's $100.00, and all of the other ones have had gains like nothing else I can invest in."

I can think of at least 6 members of my extended family who are presently invested in cryptocurrency trading (many just say "Bitcoin" and don't actually have any) who are -- in every way -- technologically obliviously ignorant[1]. Half of them, however, are not otherwise uneducated people (one guy is a very well paid VP at a company everyone in my state has heard of and has an MBA from a major university ... he's just not in finance or tech). They're not thinking "well, 15% APY is insane/impossible to provide over the short term/impossible to ever guarantee unless they've invented a time machine or are breaking the law." They're looking at the percentage gains on Bitcoin or Ethereum (depending on when you acquired it, of course -- Lord knows it's taken a hit lately) and thinking "15% sounds easy for a company to pull off in this space."

Everyone in my family who invested in some crypto used some company to hold their crypto. Almost all of them used services/companies that had enough of a strong scent of "scam" that I would have dismissed them without further research. Some used more mainstream crypto-sort-of-banks. Sort-of-banks because none of the companies that my family members chose for crypto trading were FDIC or otherwise insured in a manner that made sure the numbers they see on their page could be turned into dollars in a bank account somewhere else. The surprising thing is that none of them had any idea this was the case! A few family members thought they were buying Bitcoin because they were investing in "cryptocurrency" and it turned out they were buying some strange token running on the Ethereum network.

I'll grant it's a small sample size, but in every way it's consistent ... it's a "gold rush" kind of frenzy filled, unfortunately, with a lot of fraudsters riding the wave of news around the crazy gains of crypto.

The thing that scares me the most is that a few of my family members[2] have done very well trading crypto (4x/5x/10x their yearly salary). Some lost a little, the others gained a little. The ones that did well aren't treating it like a short-term gamble, even watching the prices drop ... it's like they're holding on to the stock of a company that they deeply believe in except ... there's no company.

[0] I don't invest, I did mine Ethereum a while back/spent most of it and made a small profit but did it mostly to learn how the miner worked and how to write CUDA software. I worked SecDev for a couple of years at a global telecom and I enjoy the technology behind it all.

[1] One of them -- not elderly -- called for help reconnecting to his 4G modem (their only internet service). The instruction "reboot your computer" was not understood. I fell back to "turn it off, count to ten, turn it on again." Nope, right back where he left it. I had not seen his computer setup so I could provide no more instruction. When I arrived I discovered he was "rebooting" ... the monitor.

[2] Four, precisely, two who are distantly related through a great aunt and are working together, but are among the most irresponsible people with money I've ever known, and two who are quite good with most things financial.

Edit: Realized my tone was harsh in a few places and there was one inaccuracy.

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16. devout+6L[view] [source] [discussion] 2022-05-19 13:27:50
>>MacsHe+lI
The reason StableGains initially looked compelling to me was for smaller transactions. Being able to deposit & withdraw smaller amounts of money w/o having to pay gas fees looked good. If you need to pull out $100 to cover your half of dinner w/ a friend, StableGains would make that easy. Trying to pull it out of Anchor Protocol would be more work, and you'd have to pay the gas fees.
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17. fortra+8L[view] [source] [discussion] 2022-05-19 13:27:59
>>ed+F3
The people at YCombinator who decide who to endorse, fund, and provide guidance to.
18. moistl+mf2[view] [source] 2022-05-19 20:58:45
>>riffra+(OP)
I have a (ex-) friend who falls for every MLM scam that comes along. Naturally, she put everything into crypto. She would undoubtedly think she could make 15% with no risk. I believe a huge number of the MLM gullible are the dupes involved in these scams.
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19. negzer+Ij3[view] [source] [discussion] 2022-05-20 06:57:21
>>vkou+6e
There are almost definitely a priori reasons to think a 1500% one is much riskier. 20% is in the realm of possibility considering you could get ~15% yields from crypto.com, there were also some powerful players with deep pockets funding anchor paying the difference, and that there was almost 20bn$ TVL.

Stablegains had nothing going for it, in fact it had all of the risk with none of the reward. 1500% APYs are usually attached to LPs carrying huge risks of impermanent loss rather than stablecoin staking and are usually very transient in that they evaporate within hours.

FWIW I disagree with Anchor being termed a ponzi.

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