RE: CeFi | Passive Lending Rates Compared
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Interesting, for someone like me who spends most time in decentralized platforms, these rates are awfully low, it makes me think,eventually when the world is more aware of these decentralized alternatives, will the insane APR’s we get there also reduce to these rates offered on Centralized platforms? Because I know that more people on a pool, the lesser the APR’s
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Due to yield farming, the rates of APR are artificially higher. In theory though the more people join and then sell the yield coins, rates will come down. Due to the bull market type area, the yields will be high until it cools down as coins get pumped and due to this coin being "new money" paper value it increases.
One could say much lending is speculative in the DeFi which is both good and bad you know.
Centralized ones lend to more centralized trusted such as miners,short traders, and etc. Rates are thus lower.
I like the fact that the returns from the CeFi lending platforms are based on the actual revenue they manage to make. A lot of the DeFi stuff feels like it is fueled purely by hype and it has been not that easy to get into unless you work with really high amounts due to Ethereum Gas fees. It will be interesting to see where it all goes once the bull market cools down again. It's inevitable for rates to come down as more people start using both CeFi and DeFi. It have been golden times this past year getting good returns while prices of coins themselves also have gone up a lot.
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Another way I think about is that because of how cryptos can be gamified, it makes the system flexible enough to accomodate such high yields for a long time if done right, it’s all based on algorithms, yields are calculated in APR’s but the APR is measured in terms of the number of tokens issued, not value of token. So if the tokenomics of the token is for some reason superb, then the ApR might just be sustainable, perhaps I’m wrong
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