zlacker

No, perfectly safe three digit APR yield was the norm for months, and high double digit - for about 1.5 years. Checking the contracts was easy, as usually they were copied from other projects and thus known. Often capital was locked doing nothing at all, sometimes just providing liquidity in a lp pair. Took a while for the absurd risk premium to go down to its real value of ~0, crashing safe yields.

Ironically, this is partially what made UST so big - because to many people it looked like this:

(1) months of three digit APR - 'obviously unsafe' ('common sense' - high yield is sus, smells like ponzi)

(2) it wasn't a ponzi. Nothing bad happens. Many people make bank. Some have no idea what's safe and were just gambling, some make informed decisions

(3) eventually, the person in question feels stupid for missing free money and decides to put money in with no deep understanding

(4) safe yields crater from a combination of people like that + slow moving, but smart, funds that started to deposit hundreds of millions

(5) person in question deposits into the UST ponzi scheme by extrapolating safety record of non-ponzi farms that are now gone, due to a category error - 'it's defi and it was safe for so long, therefore UST is safe'

(6) not realizing it's a ponzi scheme they don't even try to exit when the gig is up. Massive loss.

Ironically I now see many examples of the same category error but applied in reverse - many people that lost on Luna think its collapse proved that defi is, in fact, fundamentally unsafe, when the reason they lost is because they put their money into a ponzi scheme that leveraged defi brand for marketing.

>>nootro+(OP)
Why were people willing to pay a three digit APR yield to borrow assets then just keep those assets doing nothing at all?

>>nootro+(OP)
You're using "safe" in a very odd sense.

If you're driving 200kph and crash, you weren't safe before the crash and unsafe afterwards.

>>Khoth+T4
High APR = High Total Value Locked (TVL) = Potential to steal someone's money = Attract crypto investments

>>Khoth+T4
Nobody paid that in borrowing, that APR was generated by minting new tokens that could be sold to someone else.

>>nootro+Hc
Isn't that precisely a ponzi scheme?

>>Khoth+Re
Generated tokens were different than what you had to deposit to get them. Deposited funds were (almost always) completely safe.

>>nootro+5f
If you were doing this though (using funds to mint other tokens to sell), the principle was clearly not in USD, so there was still a risk of the bottom falling out on whatever you were holding funds in.

You also can't really add "almost always" to "completely safe". It's either "completely safe", or it's not. This statement is just "it works 100% of the time 65% of the time", but with words rather than numbers.

"It's 'completely safe', until it's not" which is exactly the point that I and others in this thread started with.

>>nrmitc+yA
>If you were doing this though (using funds to mint other tokens to sell), the principle was clearly not in USD

It was often in usd.

>"It's 'completely safe', until it's not" which is exactly the point that I and others in this thread started with.

The meaning was: almost all smart contracts were safe, meaning you had to at least check the code before depositing.