That means users are exposed to borrower credit risk. Loans made through Gemini's Earn program, for instance, are unsecured. Gemini is happy with them, because the loans are 'overcollateralized' but if Bitcoin falls too much they wont be overcollateralized any more, and you - the person who put your GUSD into Earn - is going to be the one who lost the money. Our vetted institutional lending partners such as Genesis Global Capital find these borrowers and lend your funds in exchange for an interest payment."While crypto lending offers higher yields than bank deposits, it comes with a higher level of risk. GUSD Earn is run by Genesis, and theyre doing exactly what Celsius is doing here. "They are willing to pay competitive market rates to borrow GUSD. As an ERC-20 compliant token, the Gemini dollar can be transferred on the Ethereum network. "There is high demand for GUSD among institutional borrowers who use it to fund their operations and investment strategies," Gemini COO Noah Perlman told The Block. But Im curious about this for people with a lot of money.So if someone had 100,000 USD or say. The return just wasn’t worth the risk and the tax documentation for it was a giant pain in the ass. In fact, imagine that you recently sold BTC or ETH for GUSD on the Gemini exchange. Anyone who holds the token can (and should be allowed to) connect to the Gemini exchange and redeem it. There is no way to know whether that particular GUSD was involved in Earn or not. I’d recommend dividing that 12k into chunks put into different platforms and stablecoins. Id consider lending again if Bitcoin recovers to over 30k. GUSD is an ERC-20 token, meaning its fungible. Gemini and GUSD are arguably the safest platform and stablecoin for savings, but it’s not risk-free so you should still diversify your holdings. I would like to test this with 1,000 usd. I pulled everything from Gemini Earn when Celsius went under, even my tiny amount of nearly worthless Doge. Seems a lot since banks dont even pay you more than one percent interest. 7.4% APY is enticing but it feels like we only have part of the story, going to test it out for a few months and see how it goes. So I see you could earn a bit more than 8 percent interest if you have GUSD on gemini and i have quite a few questions on this. "Institutional borrowers" could mean a bunch of things. Would love to better understand that population so I can understand the credit risk. Gemini Earn Some months ago, I made a thread about how the redemption from GUSD earn was so quick when I tried it. Some people on this Reddit seem to conflate the two but they are not the same. If you’re talking about the risk of GUSD in earn, that’s a totally different animal. While the risk isn’t 0, it’s much lower than UST. According to Gemini, looks like most of the credit risk comes from the counterparty borrowers. There were burn mechanisms with Luna in order to keep it’s peg at 1 USD.
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