zlacker

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.

>>devout+(OP)
> 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.

>>devout+(OP)
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.

>>vkou+Y5
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.

>>vkou+Y5
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?

>>negzer+W7
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.

>>vkou+Y5
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.

>>vkou+zd
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.

>>MacsHe+OH
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.

>>vkou+zd
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.