17 Aug 2021
What do you think about moving $10k from my Singlife account (1% interest rate) to 3 different crypto lending platforms to earn a sweet 8-12% APY from stable coins like USDC and USDT? Any advice?
I was thinking of Celsius, Hodlnaut and maybe blockfi. Thank you!
I would not rank holding SGD in Singlife and USC/USDT in lending platforms to be equal on the risk spectrum.
If you're holding SGD in Singlife as your emergency fund, I'd suggest you reconsider.
Stablecoins by themselves already hold risk. Depgging is a real thing and the value of a stablecoin can be permanently eroded if it's not backed by fiat and a bank run of sorts ensues. USDT has always been entangled in controversy regarding how much USD it holds and well, it turns out it's not much hahahaha. USDC on the other hand, while safer since they are based in the US and are audited, have since removed the claim that they are backed by US Dollars (implying using bonds or money market funds to generate return on their USD holdings). While that tends to be quite safe, things can always go wrong, so keep that in mind.
Beyond stablecoin risk, you still have platform risk. You're subject to both counterparty risk and the risk of the platform being hacked. I think this is quite self-explanatory. Crypto platforms are always the target of hackers so do be safe. Also I noticed you mentioned BlockFi. Do note that BlockFi had a slight issue earlier this year where they paid out their rewards in BTC instead of USD LOL (i.e. 700BTC instead of 700USD). They obviously got it back since everyone is KYC-ed but just something to know if you want to use it.
All in all, the risk profiles are very different. Singlife should be viewed as a savings platform while stablecoin lending should be viewed as an investment. Stay safe and dyodd.
As many has pointed out. It’s moving from a risk-free to high-risk product.
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