On Yields & APR
One of the attractive concepts in crypto and real life is yield and ROI. To put it simply, how does this work in crypto? You deposit your money into a pool and earn some percentage back, based on how much you've deposited.
It's simple, but what makes it even better?
It is one of those ways to make decent returns for doing absolutely nothing except for your money that is at stake (pun intended).
The average person is only productive for about 12 hours per day and spends the rest of their time sleeping or resting, and they cannot maximize that "rest time" in any money-making opportunities unless they are actively earning while sleeping, which is why the concept of ROI and yield is so appealing.
However most yields that are real, sustainable and long-term don't really offer so much whether it's in crypto or real life.
DEFI
In 2021, DEFI was one of those crypto narratives that promised high yields with liquidity pools and so on, and everyone rushed to it, but DEFI is no longer a narrative that can survive one crypto cycle, as it is mostly dead today.
ROI on Housing
When compared to the cost of owning a home, real estate does not provide a particularly attractive ROI. Most houses in the rental market (regardless of country or location) should take 20 to 50 years to pay off their initial costs.
We must also consider the cost of maintenance and repairs over that time period, as well as the possibility that the property's owner will be deceased by the time the house finally pays for its initial cost.
However, we must understand that a property provides financial security and appreciates to some extent, even if not enough to cover the cost of inflation on the property's price.
However, owning a rental property and earning income is not comparable to farming yields on a CEX or using a stable coin to earn APR on a CEX. liquidity DEFI pools have proven to be unstable and dangerous, particularly in untrustworthy environments.
However, let us face it: some yield opportunities are both appealing and nearly impossible to pass up.
Binance Alpha
Take a look at what Binance is offering for Holding Hive: a massive 40% returns. It is like a dream: your money works for you. Binance understands that this will appeal to ROI farmers, and many people will be unable to resist it.
Some people may now believe that Binance obtains liquidity from Hive in order to pay a significantly higher ROI. Of course, if it comes from here, it raises serious concerns, but this is strictly business on Binance's part, and it is done solely for profit.
In reality farming yields on a CEX with such a high ROI is profitable. With 10k Hive you could earn up to 5k Hive per year, and probably about 417 Hive per month (thereabout).
However this percentage will fluctuate.. A lot of users are already taking advantage of this. I mean, they can actually increase their Hive holdings and eventually multiply them during alt season. It appears to be a very smart plan, but there is one minor issue: Binance is a CEX, and you do not own your CRYPTO if you do not have the keys.
I held 1k USD on Binance in 2020 and I wasn't even comfortable with it, even though it wasn't there because I was farming any yield, and I made sure to remove it quickly. In short, a CEX is unpredictable, not to mention the potential for instability.
I know Binance is the most trustworthy CEX out there, but a CEX is a CEX, and if you have a minor issue with KYC, a banned country, or VPN, it can take a long time to recover your account. However, this could be because I do not know Binance well enough, but if it is not HBD, I doubt I will trust any other opportunity to earn ROI on stables.
Finally
This is not to say that there are not genuine yield opportunities out there; it is probably just me being old-fashioned and crude. However, the golden rule for me remains: use only what you can afford to lose.
At the moment I don't have much I can afford to lose. However, keep in mind that there are numerous retroactive opportunities available that can earn you a return on your investment.
Most of the time, people will make decisions based on the percentage of yield and the pool's safety. What we have here is safe, but there are those who want to quickly earn massive dividends for their money, as the goal is to make more money in a shorter amount of time.
Interested in some more of my posts
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The first time I saw that ln banana site, I was like, what are they really up? Would this really be sustainable considering the humongous APR they offer? Or is it a strategy to attract people and get something else?
Someone said it's a strategy to get people to lock their money for a period of time. Someone else said maybe they're leveraging on Hive to pump very soon to make back the money they've given out..
This is so true including the cost of maintenance once in a while but it remains a good investment even...because once u realize your initial cost , u will start earning decent ROI as long as possible . Also, the years of realizing the initial cost might be lesser depending on the location of your asset
Again Joe, I didn't really understand this holding 10k hive on binance with interest ...biko, be expecting nkem on watsapp
If I buy a house $300M at ikeja, it might still take like 15 to 20 years of rental to make back the money, it's true that it's worse in some places where rental income is not as attractive.
I've read a few posts that confirmed it, although I didn't bother because I don't trust Binance, perhaps if I wasn't broke, I might have done some research and decide to try it out, but since I'm broke, I won't risk what I have.
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I smell something dirty on that binance apr, i suspect they want a lot of hives locked, wait a pump and dump hive with their own liquidity
A person said once "do it so you can earn even when sleeping or you will have to work your whole life"... That works on hive, hbd for example makes you earn while sleep
I don't even know Binance's intentions here. We've all been speculating at what they intend to do. However I know that whether they're doing, they're aiming to profit massively. On the upside, someone said it might be that they're expecting Hive to blow up very soon.
Hm it won't make much sense offer that much apr if they expect a blow up on price tough
It's all speculations though... Good thing is, they're not depending on us to give them that yield. It might make Sense if they're expecting price to go up, so they can recoup all the APR they've given out by taking profit.
ROI on housing is unpredictable for sure. Maintenance costs are a nightmare. But in California some people bought houses in the 1960's, and then when they sold they were worth three million dollars because property values jumped so much in that time period. Those days are long gone though!
If you don't control those keys it's not really yours, on that you are right. Binance may be stable, but one never really knows. But if you make $5K a year that's pretty tempting, and I see why someone would want to invest. Still, a scary investment for me personally...
Yeah, I think buying houses now are no longer as profitable. Imagine buying a house in the 60s and selling them for 3 million dollars, that's massive money. Nowadays I think the cost to build or buy is just so expensive, and you might not even make as much, in the short term.
I don't know what Binance intends to get out of this "free money" they're magically giving people. Someone says that they're trusting Hive to boom and this is what they're leveraging on to make back their money. Somehow it feels more like a bad thing than a good thing.
40% APR seems like its way too much. I remember how people thought BlockFi was safe and those platforms blew up. I wouldn't touch it.
Well I don't trust Binance's intentions but it seems like a lot of people are already cashing out from that ROI already.
Greetings @josediccus ,
Thank you for this well written thoughtful post and the subject matter....the APR yields on Hive at Binanace....and as you said...."a CEX is a CEX".....too true.
Appreciate the ending banner on your post.....Lovely!
Cheers, Bleujay
Yes, a CEX will always remain one: when the key is not ours, then you don't have control over your assets, and anything is so possible. For me, I can't afford to take a loss at this point.
Yeah, it's my way of spreading the gospel. I once had a different banner, but since it didn't really resonate with me anymore, and since I've chosen the way of the Lord Jesus Christ, I guess I want to at least spread the word in ways I can.
sincerely speaking which is better EXPECTING ROI on Real Estate or crypto?.....
Crypto ROI is way better. You don't lose money against the Dollar, although a home gives you security because it's real life asset.
but Crypto can be unpredictable atimes while Housing can gives you that longterm assurance, also likely to surge with cost of living .... if you ask me I'll bet on Housing...I feel its a more secure way to secure the future
You don't farm ROI with regular crypto, unless you're just investing to take advantage of the market, that's not ROI farming.
People rather farm with stablecoins, as they're not volatile. Take a look at HBD, gives you 15% you can use this ROI to buy back cheap coins during the bear market.
Ooh.....I get it now... thanks buddy
The appeal of passive ROI is real—especially when people are looking for ways to make their money work while they sleep. But like you said, the balance between risk and reward is everything.
Funny enough, a friend of mine who holds a significant stake here was actually considering powering down and moving part of it over to Binance for that 40% ROI offer. She asked me for advice, but I honestly couldn’t say much because I don’t know enough about the backend mechanics of what Binance is doing with those funds. She did say she’s done her research and seems confident, so I couldn’t really stop her just tell her to move 20% to check. Her 20% should be 28k so that should be enough to test without too much regrets.
Binance might be the most “stable” CEX out there, but it’s still a CEX at the end of the day. And when it comes to key ownership, you made the most critical point: not your keys, not your crypto. I think a lot of people get caught up in the numbers and forget how much of this game still depends on platforms that can change the rules overnight.
Thanks for the insight, Jose 😊
The higher APR paid by Binance is a great option and I have read a few posts about this topic. I get your point that it's a cex but binance is one the reliable name however nothing is 100% safe when it comes to money. Well written thought.