Topic: How do you feel about algorithmic stablecoin staking? - page 2. (Read 239 times)

After the pump of Waves to over 50$ a few weeks ago i sold my waves (i did only have a few sadly) and now i have some USDN sitting in my waves wallet that are doing nothing. My first plan was to trade those USDN into USDC or USDT and then put those into the algorithmic trading pools of the waves wallet, but i could not do that because Waves was crashing very hard after that pump and even took USDN with it to a price of around 0,70 USD which was pretty crazy as USDN should be a stable coin after all. This pretty much has made me lose some trust into the whole waves platform and i am not so sure anymore if i should really invest my stablecoins there.

The fears are confirmed. Algorithmic stablecoins look too fragile and can lose their link to the dollar very quickly. Anchor lowered the percentage on staking, instead of 20% it is already less than 18%.

Looking at the charts at https://terra.smartstake.io/anc, you can see that a lot of USTs are being withdrawn from the protocol now, more than 2 billion tokens have been withdrawn in the last few days, and this has led to a short-term detachment from the dollar. What happens when withdrawals exceed 5 or 10 billion? Staking rates will continue to decline massively.

That's what I was afraid of in staking these algorithmic stabelcoins, and that's the reduction of the interest rate. The initial 20% offered by Anchor was too tempting, but alas, it did not last long. Today the interest rate is lower, 18%, by the end of the month their interest will be even lower, around 15-16%. I assume it won't stop there and the rate will continue to drop to ~10%.



It has become clear that to maintain such a high rate for a long time will not work, as it is already becoming similar to a HYIP. As soon as there is less money and there is an outflow of funds, it is primarily reflected in the staking. It is common for all pools offering initially high interest rates.

Most likely, the same will apply to stablecoin USN and USDD staking.

But stablecoin staking has a bad side as well. It's certainly a good thing that they're not subject to volatility. But on the other hand, if you have invested in staking, and you earn new coins that you plan to sell in the long run (because such coins can, in addition to profits from staking, also bring more profit from holding), then even a much lower annual return, compared to stabelcoins, can be a much more profitable investment. But for risk diversification, staking stablecoins is also justified.

Not gonna stay long.

Most of the interest will go down in around 1-5%, Is already a base interest for any stable-coin from my perspective. Higher interest from my perspective only because the pair staking just open and still nobody use it or stunt program.

Some, project want to add more interest to attract more people.

system analysis,

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Good question, I don't think that they can sustain that huge returns per annum. It was obvious that they got that numbers to attract investors. So they have to somewhat bring it down to a minimum and not exaggerate otherwise if might affect the market negatively as you have said. Maybe the high payout will not bring any good and on the contrary they could have been running on reserves already.

If there's the sign that there's no money flowing in anymore for these stable coins, I think the first thing that we'll see is the decrease of the rate that they're giving.
Honestly, if I've got a lot of money and I want to stake, I'll simply put it into stable coins and stake it. I'd like it much than the other staking coins because it gives stable amount for its percentage and the coins itself.

Thirty percent returns per annual is not bad at all, I prefer staking stable coins because there is no need to be worried about volatility, either bull or bear market it's not of your business, I have only staked USDT before on the Binance exchange but the return isn't up to 30%, projects that offers this range of rewards for staking annually are safe, there is nothing to worry about here.

Stablecoins like UST, USN, USDD have a very tricky link to the dollar and the collateral pool, in the form of a native token of a particular blockchain, be it LUNA, NEAR, TRON, etc. Such projects offer or are about to offer 20-30% per annum in staking these stablecoins. Not a bad interest rate, is it? But will these projects be able to provide such a high interest rate all the time, and won't that provoke a cascading collapse of both the stablecoins, with the loss of the peg and a cascading collapse of the native tokens that act as reserve collateral?

After all, such high payouts to stakers must be accompanied by constant replenishment of these projects reserve funds. But what will happen if the money stops flowing in the right amount?