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Author Topic: How Really Does Crypto Savings Work  (Read 1181 times)

Offline Crypto Fella

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How Really Does Crypto Savings Work
« on: July 09, 2024, 11:00:04 PM »
I have always thought of how the crypto sector works and while I try to compare it with the bank sectors, one aspect that often comes to mind is crypto savings. While I admit that the reason for crypto is gotten from the banking sector, but in this case the focus is decentralisation, we can't deny it.
Everything is clear and I agree that the bank has a store of value to reward savings, but how does the crypto sector get its own APR when realy it has higher returns compared to the savings in the bank? While banks do around 1% to 3% you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?

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How Really Does Crypto Savings Work
« on: July 09, 2024, 11:00:04 PM »

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Offline Zed0X

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Re: How Really Does Crypto Savings Work
« Reply #1 on: July 09, 2024, 11:51:01 PM »
~ but how does the crypto sector get its own APR when realy it has higher returns compared to the savings in the bank? While banks do around 1% to 3% you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?
It's similar method with what the bank does but the main differences are no paper work, no verification (KYC), and can transact without approval of a staff. Do not fall for the high APRs because that's just a marketing method to attract users. Sooner or later, the rates will drop to around 5% which is more realistic.

Offline Muhammad Bashir

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Re: How Really Does Crypto Savings Work
« Reply #2 on: July 10, 2024, 09:26:43 PM »
I have always thought of how the crypto sector works and while I try to compare it with the bank sectors, one aspect that often comes to mind is crypto savings. While I admit that the reason for crypto is gotten from the banking sector, but in this case the focus is decentralisation, we can't deny it.
Everything is clear and I agree that the bank has a store of value to reward savings, but how does the crypto sector get its own APR when realy it has higher returns compared to the savings in the bank? While banks do around 1% to 3% you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?

Such high APR in crypto are not fixed (just to be clear). How do they get those high yield can be traced to the high lending rate against majorly BTC, ETH and USDT especially during the bull run where some of these assets can be traded or staked for more returns (since they are collaterals with fixed tenure). But they are real and you can try them; I think there's one currently on bitget with the same rate of 20% but can't say if it's fixed or not (better not expect that much tho).

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Re: How Really Does Crypto Savings Work
« Reply #3 on: July 11, 2024, 11:45:48 AM »
You will not get any return. If you deposit 1 Bitcoin into your wallet, it will always be 1 Bitcoin, but its value varies according to supply and demand, just as if you bought 100 grams of gold, 100 grams will always be with you, but its value varies.
Cryptocurrencies that operate on the principle of proof of stake enable you to obtain a return in exchange for ensuring the decentralization of the network that return may not increase the value of your assets if the value of the token declines.
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Offline Hamza2424

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Re: How Really Does Crypto Savings Work
« Reply #4 on: July 11, 2024, 08:20:06 PM »
Note: My comment is only for the Subject.

For the rest I haven't read it, as it's general and worth answering my view on it is, that crypto savings don't exist, in crypto, you sell, hold, or buy there is nothing like savings, if you are trying to call holding as saving bro you are in a big mistake and correct yourself, savings are for the emergency, and crypto cant helps you in the emergency due to its volatile nature. You should always save in the fiat currency or stable assets.

Holding falls under the investment category and you should acknowledge that every investment is based on risk to reward, and if a person is in high-risk assets and trying to say his investment as a savior in an emergency he should learn more about it because it won't help you in making good returns as well as on-time saviors.

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Re: How Really Does Crypto Savings Work
« Reply #5 on: July 12, 2024, 10:42:34 AM »
you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?
As a reminder, avoid savings that provide unreasonable interest, be it banks or crypto savings. Within reasonable limits, these two types of savings should offer an APR that is not too different, such as 5% PA in units. The inherent extrinsic value of crypto can multiply your profits or even make you lose even if the units increase.
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Re: How Really Does Crypto Savings Work
« Reply #6 on: July 14, 2024, 05:51:27 AM »
I have always thought of how the crypto sector works and while I try to compare it with the bank sectors, one aspect that often comes to mind is crypto savings. While I admit that the reason for crypto is gotten from the banking sector, but in this case the focus is decentralisation, we can't deny it.
Everything is clear and I agree that the bank has a store of value to reward savings, but how does the crypto sector get its own APR when realy it has higher returns compared to the savings in the bank? While banks do around 1% to 3% you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?

Such high APR in crypto are not fixed (just to be clear). How do they get those high yield can be traced to the high lending rate against majorly BTC, ETH and USDT especially during the bull run where some of these assets can be traded or staked for more returns (since they are collaterals with fixed tenure). But they are real and you can try them; I think there's one currently on bitget with the same rate of 20% but can't say if it's fixed or not (better not expect that much tho).

That's valid, I've always seen tripple digits Apr on top coins on bybit and always wondered how it's sustainable. The one on Bitget is it with stable coins or alts?.. 20% seem okay imo.

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Re: How Really Does Crypto Savings Work
« Reply #6 on: July 14, 2024, 05:51:27 AM »


Offline joniboini

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Re: How Really Does Crypto Savings Work
« Reply #7 on: July 15, 2024, 07:31:54 AM »
That's valid, I've always seen tripple digits Apr on top coins on bybit and always wondered how it's sustainable. The one on Bitget is it with stable coins or alts?.. 20% seem okay imo.
20% return per year is doable with crypto, but it is risky. It also depends on how they calculate the rate, and whether people actually get that. I participated in some farming activities in the past and most of them failed to deliver the promised return for various reasons, from lower exchange rates, lack of interest from the market, etc. That's especially true if the rate comes from lending activities. There's a huge chance of default especially if there's no need to provide collateral. CMIIW.

Offline MrSpasybo

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Re: How Really Does Crypto Savings Work
« Reply #8 on: July 16, 2024, 04:57:15 PM »
I have always thought of how the crypto sector works and while I try to compare it with the bank sectors, one aspect that often comes to mind is crypto savings. While I admit that the reason for crypto is gotten from the banking sector, but in this case the focus is decentralisation, we can't deny it.
Everything is clear and I agree that the bank has a store of value to reward savings, but how does the crypto sector get its own APR when realy it has higher returns compared to the savings in the bank? While banks do around 1% to 3% you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?
Crypto saving has 20% APY? I have never received this APY. If so, it only comes from staking or LP on DEXs.

Profit from LP comes from the trading status on DEX: the more swaps, the more fees the DEX generates, and the more profits liquidity providers will receive.

Profit from staking depends on the tokenomics of the blockchain: some blockchains set a fairly high inflation rate to encourage the participation of validators/stakers to protect the network.

Profit from Lending will depend on the efficiency of the protocol: I have never experienced it so I have no share.

The development of DeFi is extremely strong but not yet large enough to threaten CeFi of traditional banks. Meanwhile, traditional banks tend to participate and provide crypto-related services to capture market share of the crypto market.
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Offline Husires

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Re: How Really Does Crypto Savings Work
« Reply #9 on: July 17, 2024, 12:00:19 PM »

The development of DeFi is extremely strong but not yet large enough to threaten CeFi of traditional banks. Meanwhile, traditional banks tend to participate and provide crypto-related services to capture market share of the crypto market.
It lacks a basic thing, which is guarantees. In bank loans, your deposits are safe up to $250,000, and the bank guarantees you a percentage of the profits, but this percentage is low for most safe investments, while in DeFi there is no guarantee for capital, LP, or for profits and the value of the token in staking. The rate is 40% APY, but the price of the token decreases by 60%.
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Re: How Really Does Crypto Savings Work
« Reply #10 on: July 20, 2024, 12:22:51 PM »
~
Everything is clear and I agree that the bank has a store of value to reward savings, but how does the crypto sector get its own APR when realy it has higher returns compared to the savings in the bank? While banks do around 1% to 3% you see crypto savings give out 20%, is this to further discourage bank savings or it is because of the operating system if yes, then how?
Higher risk and volatility of the coins.

I believe that's 2 of the factors why the APR when it comes to these crypto savings are way higher than those of banks. I'm not an expert on it, but I believe that since the whole crypto industry is considered a risky investment, these DeFi wanted to rewards these creditors a higher APR. Add also the fact that volatility is prevalent in all cryptocurrencies, I believe that this also affects the overall APR in these crypto savings.

For the banks, there's no such thing as volatility and if there is, it can't be felt.

 

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