Does the Degenbox Strategy introduce Serious Risk into the Crypto Ecosystem? How does creating $10 dollars from $1 aka 10x leverage not simply spiral out of control when market goes down or a stable depegs? What lending platforms lend on stake tokens?
If I understand the strategy correctly, you are starting with a stablecoin (UST) that's staked earning interest (~20% on UST), then you use that as collateral for a loan in more stablecoin (MIM), up to 90% LTV. Then you loop this several times until you have up to around $10 for every $1 earning interest.You also end up with loans which have negative interest for all your collateral, but as long as the interest you earn on the collateral is greater, you are making profit.The crazy thing to me seems to be that you only risk losing your initial investment for what I've heard are up to 100% APY and the risk of the stablecoins depegging enough if your not too greedy and stay at lower leverage stables would have to be off like 20 cents which I haven't really seen.What am I missing here? I can't quite see how this strategy could snowball downhill, but it's got to have a serious drawback right?Also, this strategy seems to rely on being able to borrow for a cheaper rate at which are earning for your initially staked assets. Pretty much every lending platform I've seen has borrow rates higher than the lending rates, so this seems pretty hard to do on one platform.It seems like you need to take a stake token such as USTa or yvDAI and stake it off platform to stake somewhere else. I've only found two lending services which take these and they seem to always be out of stables to lend for the stake tokens.What platforms support lending based on stake tokens besides abracadabra?If this strategy isn't dangerous how come it isn't just continually open without limit?
Ingrandisci immagine - Repost: Does the Degenbox Strategy introduce Serious Risk into the Crypto Ecosystem? How does creating $10 dollars from $1 aka 10x leverage not simply spiral out of control when market goes down or a stable depegs? What lending platforms lend on stake tokens? (from Reddit.com)
If I understand the strategy correctly, you are starting with a stablecoin (UST) that's staked earning interest (~20% on UST), then you use that as collateral for a loan in more stablecoin (MIM), up to 90% LTV. Then you loop this several times until you have up to around $10 for every $1 earning interest.You also end up with loans which have negative interest for all your collateral, but as long as the interest you earn on the collateral is greater, you are making profit.The crazy thing to me seems to be that you only risk losing your initial investment for what I've heard are up to 100% APY and the risk of the stablecoins depegging enough if your not too greedy and stay at lower leverage stables would have to be off like 20 cents which I haven't really seen.What am I missing here? I can't quite see how this strategy could snowball downhill, but it's got to have a serious drawback right?Also, this strategy seems to rely on being able to borrow for a cheaper rate at which are earning for your initially staked assets. Pretty much every lending platform I've seen has borrow rates higher than the lending rates, so this seems pretty hard to do on one platform.It seems like you need to take a stake token such as USTa or yvDAI and stake it off platform to stake somewhere else. I've only found two lending services which take these and they seem to always be out of stables to lend for the stake tokens.What platforms support lending based on stake tokens besides abracadabra?If this strategy isn't dangerous how come it isn't just continually open without limit?
Ingrandisci immagine - Repost: Does the Degenbox Strategy introduce Serious Risk into the Crypto Ecosystem? How does creating $10 dollars from $1 aka 10x leverage not simply spiral out of control when market goes down or a stable depegs? What lending platforms lend on stake tokens? (from Reddit.com)
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