Lending

Jul 27 2020

Liquidity Machine Go BRRRRRR

If you have a hard time keeping up with the latest in crypto, fintech, or any of the other things that keep the economy moving, join the club. It seems like just yesterday we were all sharing a laugh over the Crypto Winter and lamenting how we could have gotten so many ICOs so wrong.

Then, out of nowhere, comes “DeFi.” “Decentralized Finance.” Sure, it’s Bitcoin, but it’s not, because it’s different, and decentralized, and it’s another term that you’ll pretend to understand and nod in agreement when you hear about and then move on to something else.

WELL, SOMETHING ELSE IS HERE. IT’S LIQUIDITY.

It’s Not Your Grandfather’s Liquidity

Why is Chairman Powell using what appears to be a pasta maker?

If you want to read a debrief on what is meant by these “liquidity pools” that are de rigeur now, go here: Coindesk Liquidity.

If you want *my* take on these liquidity pools, read on.

Did I Mention I’m Clueless?

I decided to jump into the pool — double entendre was intentional there — by learning what I could about a site called Yearn.Finance. $YFI is like the other liquidity pools in that meet many of these criteria:

New (with many having launched in the past few months)
Mysterious (names like “Compound” or “Ampleforth“
Volatile (see screener below)
And in Beta with warnings that “in Beta” means “could get rekt”

One month on the Great Ampleforth Coaster

How it works…in theory: you lend your coins into a pool and then those who need liquidity borrow and your pool lends your coins out at interest and you also get a share in the trading fees and it’s all dependent on algorithms and a number of variables, including whether or not there’s a need for the underlying assets and whether or not there’s a palatable interest rate and…

Liquidity in Action!

The above screenshot is, thank goodness, not the price at which I purchased YFI. I went to KuCoin to buy some and then…it failed. I tried again and…failed again. Finally there was success at something like $2000 a coin. Next:

I was the proud member of a Liquidity Pool and will now be printing money like Chairman Powell. Right?

Your Guess Is As Good As Mine

This is a serious FOMO game, as far as I can tell. Stories suggest large “whales” are making upwards of 50% a month on their deposits. Several hundred percent a year — or the equivalent — can be yours if you know what you’re doing, if your timing is right, and if the prices of these random liquidity pool tokens continue to give you the thrill ride of a lifetime.

Or not.

Once again, like everything in crypto, do your own research. You could lose everything. This isn’t investment advice.

And if anyone knows what is REALLY going on, let me know.

Final Warning:

I really fear these may be like some of the passive income “high yield” schemes we’ve seen on these pages. Which is why this small experiment is, indeed, small.

We’ll keep you posted.

Mar 31 2017

Bitbond: It’s like Prosper, or LendingClub, but with Bitcoin

As we continue looking around the universe for Bitcoin and altcoin uses in the real world, we stumbled upon a site called Bitbond.

(So if you think “Hey, I’ve got a great idea…” they’ve already checked that particular box.)

Peer-to-peer lending has been around for a little while, and two titans of this space are names you’ve likely heard of: Prosper and LendingClub.

Bitbond uses the same principle to let you use your Bitcoin as…principal. (That’s if you have Bitcoin to lend.) If you want to borrow, then there’s that, too – which the site says is ideally suited for folks like eBay power sellers.

If it sounds legit, well, it IS legit. Bitbond has been around since 2013 – see the complete write-up on Crunchbase – and they recently secured Series A funding north of 1000 BTC. (See what we did there?)

Is this better than the Shark Lady’s loan site?

This question is for the small business owners out there – and you know the site I’m talking about. The one that that lady from that show recommends. The only one she would use if she were looking for money.

Well, it quite possibly might be a process improvement. The Bitbond site walks you through what to expect once you’ve been funded. You have to work with an exchange, so you’re going to want to be sure it’s one that people have used for deposits and withdrawals and done so without fail.

And you’re subject to the credit check of Bitbond; given the fact this is a global and “bank-free” site, it’s still a question mark as to how that works.

Rates start at 7.7% and you can have your money in as little as five days.

Bitcoin and altcoin traders…

This also looks like a decent spot to put your coins to work, and – this could be big if you don’t have the stomach for wild mood swings – avoid the dips of your Bitcoin. (I mean, really, we’re talking about something that’s still rather volatile, right?)

The site tells us you can earn “13% interest.” That might sound too good to be true – or it might also sound paltry when compared to the day-trading gains you COULD make from trading the 100% gain du jour altcoin.

That’s up to you.

Other companies will follow…

Let’s think macro for a second. You’ve got the desire to move away from the traditional banking system, and you’ve got banks hustling to employ their own blockchain and cryptocurrency strategies. Plus you’ve got people thinking “OMG, the GOVERNMENT!!!!” or people worried about taxes or people worried about the trillions of dollars in derivatives that could implode any second now.

It makes sense, then, that borrrowing and lending will move this direction – outside the traditional brick-and-mortar, and traditional Central Bank mentality.

And if you look at this site – which is cool as heck – you’ll see that Bitcoin is just a small sliver of the overall pie.

Bottom line: more of this, please. Innovation in all stripes, thanks to blockchain technology.