Long time lurker and FatWallet reader. Are we allowed to discuss crypto here?
I’ve been somewhat successful with playing the 0% BT arbitrage game from credit cards and using this float money to invest in USDC rewards at Celsius where it is earning 8.5%.
Even though most of my recent 0% BT offers have a 3% fee, I still come out about 5.5% ahead after the USDC transfer fees.
While I always a bit nervous on this strategy, I’ve been using it for the past 1.5 years or so to help grow my “cash” funds.
I’m much newer to USDC “rewards” earning. I had USDC funds in StableGains earning 15% in December, but then decided I that StableGains was too new and unvetted, so I recently moved those funds to Voyager to earn 9%. I just received my first month “rewards” there, so I’m feeling more confident about moving all my long term savings there.
I had actually forgotten about the 0% CC arbitrage as an option until you just mentioned it. I remember back in the day when high yield online savings accounts paid 5% and there were plenty of 0% offers with no fee. If I get around to it, I’ll have to look up what 0% cards are out there right now and run the numbers. Thanks for the reminder of that option.
Yes, as long as there’s no shilling / referrals, and we already have a thread for all things crypto:
But there’s no harm in having a separate thread to discuss stablecoins and the “rewards”.
Can someone explain to me why the rewards are so high? Whose pocket are they coming from? Usually the interest rate is commensurate with risk, and only the very brave (and/or dumb) would use CC BT money for something that pays so much.
The rewards come from loan interest and staking. I can’t explain it, but there are a million links out there to people who can. It’s legit. It’s not a pyramid scheme. I think it’s unsustainable at the current APRs, but that’s all the more reason to do it now. Your principal isn’t going to disappear to pay someone else’s reward. They’ll just lower the APR of the rewards eventually.
USDC is tied to the dollar, so it doesn’t change in value so there’s no risk of losing your principal to market fluctuations like with bitcoin or any of the other fluctuating crypto currencies. There’s over $51 billion currently invested in USDC. It can’t just disappear unless it’s literally stolen, so you’re money isn’t going anywhere if you have it somewhere legit.
Celsius is legit, Voyager is legit. StableGains seems legit, but they are much smaller, newer, and less transparent, so I felt the additional risk of them walking off with my USDC wasn’t worth the extra 6%. I can see a group of scammers starting a long-con like StableGains and just disappearing with everyone’s cash randomly someday. Voyager and Celcuis are way too overdeveloped to be a scam. It’s like saying depositing your money with Robinhood is risky because they could walk off with it. I suppose all those well known people could and live the rest of their lives looking over their shoulders and never being able to enjoy all the money they stole. Or they could just be rich legitimately from all the legal profits and stock increases they’re making from actually running a real and popular crypto trading app.
Allegedly tied to the dollar. They (Circle?) say they have every dollar in reserve, but wasn’t there a bank audit recently showing they don’t have anywhere near as much?
I’ve read some of the explanations. The problem is that I believe you can still lose your principal. The people who take out loans in USDC are putting down Bitcoin and Ether as collateral. A sudden drop in the price of either or both should trigger a margin call, which would cause a further drop in the price of the crypto “assets” loan collateral. I believe that it’s possible to lose some of your principal if your “note” can’t be repaid in full.
how do you eel about Blockfi. I’m putting my rewards for now in DAI which is “stable” paying 9% rewards as a test, before putting in real money.
Reminds me of Everbank from FWF back in the day. It was Kroner accts paying 10%. Lost a little with currency risk but came out ahead after interest. Here principal is tethered to USD so why would there be principal risk with a good custodian…
Too bad no FDIC? Unless there are traditional institutions that do this too? Great CSR, esp over email so far
I think it’s important to squeeze as much out of this now there are some things on the horizon that I think will change - gov’t regulation is on minds of many in Congress and I believe the Fed is toying with creating their own digital currency. It will take years for these things to be implemented I’m sure.
Taxation is also sort of a pain for all crypto things, some places do a better job of helping you report gains, others leave it up to you. I’m still on the fence as to whether the small interest arbitrage is worth potentially hours of spreadsheets and tax work on the backend.
I’m not investing gonzo amounts with my accounts, and as others have said I feel secure with the concept of USDC itself. However, it’s the fact that some accounts have been hacked and drained that gives me pause occasionally. To earn “rewards”, the coins are stored at the “institution” rather in your own offline wallet which is much more safe.
Other concerns I see all of the time on Reddit and elsewhere - I lost my password/my phone got replaced and I can’t access my own account. Or the customer service is non-existent or takes 2 months to get back to you, etc. The other big concern is sending funds to the “wrong” account or using the wrong wallet type (protocol?) and it takes month to track down and recover the coins if it ever happens.
And one alternative view from someone who’s been around. I don’t see anything wrong in his logic, but for my own security preferences, I prefer to chase the returns via cc CD purchases. Those returns are about the same, but have practically no risk, as opposed to what may be significant risk in my understanding of what’s been described here.
Just got my 9% reward from my USDC at Voyager for March. So far, no indication that reward is going away.
In February, I took out a $5,000 personal loan at 4.49% for 2 years with Sofi for their $600 bonus. I was going to pay it off early to pocket a net bonus of ~$580. But instead I have moved that $5,000 into Voyager USDC. Assuming it stays at 9% (which I don’t assume it will, but for now that’s the only number I can use), over 2 years the loan will cost $237 in interest, but make $474 at Voyager. Since I already took the hit to my credit for the $600, might as well keep it going for the additional $237.
Now I have to decide if that is worth doing for a 0% credit card. It would take a few months to get a balance up to $5k, but I could presumably keep it going past $5k and maybe get to $15k in 6 months. And it would be 100% profit instead of 50% like the Sofi loan. But it would also only be 1 year instead of 2 (more like 11 months because I’d pay it off early instead of worry that I’d hit the day where they start charging 27%). Another factor is, when do I think Voyager will start lowering their reward rates.
I think I’ll check existing cards I currently have to see if any of them are offering a 0% promo rate first, then move on to see if anything is paying an opening bonus and offering 0%.
No. If there is a run on the bank, I’m screwed. But Voyager (where I hold my USDC and the corporation paying me 9% on it) is publically listed on the Toronto Stock Exchange and traded also on US OTC markets. They’ve been publically traded in some form since 2019 (a long time for a crypto platform).
According to their most recent interim financials, which I just looked at to answer your question, they are holding about 11% of USDC in reserves, but their overall reserves are 54%. Before COVID, 10% was the minimum reserves for an FDIC insured bank. Now it’s 0%. I picked a random bank with about $6 billion in assets (City National Bank of West Virginia) to compare to Voyager (also ~$6 bil) and that bank had 13% in cash reserves and 38% in cash and security reserves, so not that far off Voyager.
The biggest issue I see is that Voyager’s reserves are trending downward. If I see their USDC reserves drop below 10% and their overall reserves drop below 35%, I don’t know I’ve I’ll be willing to stomach the risk for a 9% return.
Applied as was accepted for the Chase Ink Business Unlimited card yesterday. It’s got a $750 bonus for $7,500 spend in the first 3 months and a 0% APR for 12 months. Normally I would never hit that spend threshold, but we’ve got a $2,000 roof repair coming up, so with a little finagling, I think we’ll be able to swing the bonus, and I’ll be putting the balance into Voyager each month while I pay the minimum for a year. They only granted me a $6,000 limit, but I have another Chase Ink Business Cash card that I barely use with a $7,000 limit, so hopefully I can move limits from one card to the other. Is that a thing Chase does for business cards?
