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Earn 5% on XRP on Uphold!

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A note on these interest rates:  According to their FAQ:

Quote

"What happens if the value of my asset changes during the duration of the CredEarn program?

Irrespective of the market conditions, you will still receive USD or stablecoin equivalent interest payments based on the price of crypto at the start date. You benefit from the full price appreciation of your digital assets."

To me this could be more revealing.  A more pertinent way to put it might be that the interest rate they'll pay you on a digital asset varies inverse to the assets value.  Eg, if you lock up BTC with them at 10% per annum for 6 months, and BTC goes up 10x during that time, the annual interest rate you will effectively receive will drop from 10% down to 1%.

Conversely, if you think any of the assets they offer interest on could plummet drastically to the point of being worth less than the interest they'd pay, you could hedge your assets in a somewhat risk-free manner.  Ie, if you thought Bitcoin had a 50/50 chance dropping to less than 1% of its current value, placing your BTC with Uphold would get you a reliable five times more than that at the end of the 6 months.  On the upside, if it didn't plummet, you'd still get all your BTC back (...if no hack), plus the interest as a bonus.

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5 minutes ago, Professor Hantzen said:

A note on these interest rates:  According to their FAQ:

To me this could be more revealing.  A more pertinent way to put it might be that the interest rate they'll pay you on a digital asset varies inverse to the assets value.  Eg, if you lock up BTC with them at 10% per annum for 6 months, and BTC goes up 10x during that time, the annual interest rate you will effectively receive will drop from 10% down to 1%.

Conversely, if you think any of the assets they offer interest on could plummet drastically to the point of being worth less than the interest they'd pay, you could hedge your assets in a somewhat risk-free manner.  Ie, if you thought Bitcoin had a 50/50 chance dropping to less than 1% of its current value, placing your BTC with Uphold would get you a reliable five times more than that at the end of the 6 months.  On the upside, if it didn't plummet, you'd still get all your BTC back (...if no hack), plus the interest as a bonus.

From their FAQ: 

Cred is able to leverage its returns by lending digital assets to a variety of customer segments, including crypto miners, digital asset companies, crypto investment funds and retail investors.

My two cents on this:

Crypto-miners? Perhaps in Proof-of-Stake but how would this apply for any others?

Maybe my imagination is limited but I cannot but think that the major use-case for this would be as a low-cost hedge for short-sellers against a short-squeeze. This could be exchanges, market-makers or even retail-investors and traders who are net-short on the listed DAs. Essentially it provides an extra liine of liquidity to short-sellers. The consequent effect of this snowballing larger could be additional sell-pressure on the crypto-markets since it reduces risk asymmetrically for those taking short-positions by providing an extremely cheap hedging mechanism. I mean, what is 5%, or even 10%, per annum in the crypto-realm? 

Perhaps we could argue that this is simply mirroring what is already going on in traditional markets (such as stocks and shares) but given the presently nascent nature of crypto-markets, introducing this at such an early stage could have more negative than positive impact on pricing, at least in short-term to mid-term.

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Uphold/Cred must be taking a commission on the XRP they lend out. Would there be any way in which I can lend my digital assets without the help of a third party? 

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1 hour ago, Richretard said:

Uphold/Cred must be taking a commission on the XRP they lend out. Would there be any way in which I can lend my digital assets without the help of a third party? 

They'll be earning interest on that lending - and that's fundamentally how traditional banks make money. It's quite obvious that Uphold are willing to support this because of their high capital requirements. The set-up is now the equivalent of a bank asking the permission of an account holder to lend the money they're holding for you, rather than simply doing anyway. Fair enough. 

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they can/will update the yield every 30 days, so i reckon it's based on their projections of price appreciation as well as expected profit from storing (or reselling?) users funds/data etc plus uphold and/or cred trying to sell us services and of course uphold taking deposit/withdrawal fees etc

so it's not that great IMO, for ex. i doubt they'll give such high yields in a late bull market... but whatever, it's a few extra bucks i suppose if you're willing to give away your info to yet another financial company and risk your funds with them

there's always a catch, nothing's for free -- took me a few months to figure out revolut's biz model, then i realized the obvious: they make interest on your fiat while you don't, and their operational costs/risks get covered by the premium users and so on

Edited by zerpdigger

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Posted (edited)
On 1/17/2019 at 11:08 PM, jMusic said:

You may also want to check out celsius network. I have been earning 5.1% apr interest on some xrp for a while now. The interest is paid like-for-like, ie, I receive the interest as xrp. LTC just got increased to 6.15% apr. They use BitGo for cold storage. Of course, there has been no third-party audit yet so this could all be bs.

DYOR.

I'm taking a chance on Alex Mashinsky and Celsius. I've spent quite a lot of time investigating the additional risks involved, and I came to the conclusion that although such crypto deposits are not insured, that Celsius is far more conservative in rehypothecating your coin than any bank you could name is with your fiat. If you believe Alex, and I do, then they hold 1:1 cash on deposit against the loss of your funds by a non-performing loan...and he reports that throughout the horrible drawdown of 2018, that they didn't have a single borrower who failed to service his loan.

Now that fewer shorts appear to be borrowing cryptos, the interest has fallen on XRP to 3.25%, but on a 100K XRP deposit that still amounts to 60 XRP per week, paid in XRP.

No, it isn't huge...but consider that you are leveraging your portfolio...when XRP does inevitably make large gains, the effects will be multiplied. At the mythical $589 level, my current interest payments come to $3600 a week. (Just an example, I'm not a believer in bears and riddles, lol.)

Moreover, crypto banking in general is good for XRP in my opinion. How many retired people buy low paying bonds and bank CD's? (Answer: millions) Once crypto banking is understood to be safe, there is a huge potential pool of individual savers who would benefit greatly from making the decent interest on XRP (and other cryptos). To make the interest they would have to acquire and hodl the coins like we do, thereby reducing the supply.

Furthermore, I do see what Alex is doing as generally very beneficial to the larger crypto community in a number of ways which we could discuss. And somewhat philanthropic on his part. As he says, he isn't doing it for the money, and I believe that too. Crypto banking, if not THE killer app, is certainly A killer app. 

Full disclosure, I also own Nexo, another crypto bank coin....but I like Alex and Celsius better, I do expect when they put their coin (CEL) on the exchanges (the early stakeholders have voted to keep it locked up so far) I will buy some. 

As I said, I've looked at the way Celsius works and looked at the security they have, and I'm fairly impressed. I'm not giving advice, but just sharing my own opinion.

I most assuredly do NOT like the JPM's and the BOA's of the world, and I'm looking forward to them dying off like dinosaurs.I hope I live to see it.

Addendum: One additional thing. I prefer Celsius to Uphold and CredEarn because there is absolutely no lock-up of your coin.

Edited by dr_ed
correct spelling

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