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BrTarolg
United Kingdom3574 Posts
If you include these metrics, then inflation might look more something like 20-25%, which is roughly the same as the money printed by the government Some things (electronic goods, food) are resistant to inflation, because technology has improved the efficiency and caused costs to come down. | ||
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LegalLord
United States13779 Posts
On July 14 2021 05:53 Emnjay808 wrote: My understanding of inflation is that flat income earners will experience less purchasing power over time. Scary shit to consider since minimum wage barely moves (varies state to state) and most businesses forego cost-of-living raises—especially due to the recent economic climate (COVID) . I don’t like to speak doom or fear often but this is scary as fuck. Maybe I’m overreacting. Edit: Not really trade/investing related as it digresses the train of topic a bit. apologies >_< With a little bit of inflation, creditors and people with cash (or any other form of fixed income really) lose out, debtors and people with assets benefit. Not a bad thing in general; if it's under control that tends to keep the market moving smoother than any amount of deflation. When you get runaway inflation, on the other hand, a lot more bad things tend to happen. People priced out of being able to live, businesses seeing costs rising rapidly, loss of faith in the currency, all forms of market distortions, and so on. We're definitely at the point where it's time too start worrying about inflation of the runaway variety. When the "excludes all the goods that are actually rising in price" inflation indicators show values like 4-5%, that is reason to worry. And the things that are excluded are where inflation has been rampant but hidden for at least a decade (but realistically much longer) - stock prices, real estate, food & energy, and other "asset" classes. Makes for some really good opportunities to gamble and make it big on the stock market, but we've accumulated some pretty serious market distortions that actively cause problems and are impossible to unwind without serious pain. I certainly wouldn't take the concern of runaway inflation lightly at this point. It's definitely related enough to trading/investing since inflation is a pretty important factor at play there. I was worried enough about it to put some significant money into gold myself. No guarantee that that'll be a good play (as with any other), but it seems prudent to hedge against inflation getting out of control. | ||
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iPlaY.NettleS
Australia4433 Posts
I note the Biden admin announced a 3.5 trillion budget yesterday (in addition to a 600B infrastructure plan so 4.1 Trillion in total).They raised rates to 17.5% in 1980 to counter high inflation and rocketing gold prices but now, they couldn't raise them a measly 2% without wiping out the economy.Debt is too high. Some things (electronic goods, food) are resistant to inflation, because technology has improved the efficiency and caused costs to come down. Some of these things are going up in price due to shortages caused by COVID.Cars are far more expensive here than they were two years ago, some people are selling 2 year old cars for more than they bought them for.Whether this is temporary as they claim, who knows, depends if you think COVID is going away anytime soon i guess. | ||
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BlackJack
United States10574 Posts
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Uldridge
Belgium5195 Posts
https://academy.binance.com/en/articles/proof-of-stake-explained https://academy.binance.com/en/articles/what-is-staking The information comes from Binance, which is a centralized (crypto) exhange (CEX). Shibaswap on the other hand is part of the Decentralized Finance space or a decentralized exchange (DEX), which I don't know nearly enough about. But what I do know about it is that they (and other protocols) let you hold a pair of crypto coins (or crypto-fiat) so that the algorithm can find a way for someone who wants to trade one coin for the other in the least expensive way. The way I understand it is that you 'stake' your coin(s) in the platform, providing liquidity, so that they can be swapped for other coins and in turn you get a reward for providing that liquidity. Certain platforms have promised ridiculous rewards and many have been/are scams. You've got Pancakeswap, Sushiswap, Linear procotol, Uniswap, etc.. so there's quite the amounts of projects doing their thing. Many people believe in the concept of a DEX, but it feels like too much a Wild West situation at the moment where it's not exactly clear what's a scam or not and so you need to invest hours upon hours investigating the tech, understanding the maths, trying it out for yourself and so on. The concept of a DEX is an interesting one for sure, but it needs some more time to mature. | ||
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Blitzkrieg0
United States13132 Posts
This is meant as an ELI5 explanation on why it isn't a scam. Staking is not an FDIC insured savings account and much higher risk. | ||
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{CC}StealthBlue
United States41117 Posts
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BrTarolg
United Kingdom3574 Posts
On July 19 2021 08:10 BlackJack wrote: Can anyone explain to me what crypto "staking" is? A friend of mine was telling me about how he makes money on this site called shibaswap. I told him to explain to me how it works and the more he tried to explain it the more clear it became to me that he had no idea what the fuck he was talking about. Something about "providing liquidity" and pairing coins, etc. Basically a lot of the stuff i do for a living involves this kind of thing There's two parts - first is what it is, second is where the edge is 1. you're basically providing liquidity to an AMM, (automated market maker). You provide in a pair, in a 50/50 ratio (i.e USD/ETH so say 2000 usd of usd, and 2000 usd of eth) As the market moves up and down, people trade against the AMM and you capture some fees, but in return the ratio of the crypto you deposited changes, and if there's a big movement you suffer "impermanent loss" (terribly named, divergence loss is my preferred) https://academy.binance.com/en/articles/impermanent-loss-explained The shortcut to calculating is a 1.5x move = 2% loss, 2x move = 5.7% loss, 3x move = 13% loss 2. In reality what is going on is that often there are these DEX (decentralised exchange) which live on chain and in order to bootstrap liquidity they offer rewards to people who provide liquidity, since the fee capture is usually very minimal (with a few exceptions in the most commonly traded liquid pairs like ETH/USD). These rewards are usually paid in a token that governs the dex (example: uniswap has uni token, curve has crv token, pancakeswap has cake token etc). These are usually useless governance tokens, sometimes they have a bit of fee capture (and don't get me wrong, these protocols can generate billions of revenue so it's not exactly fake either) What i can advice for you here is if you don't know what you're doing, don't play. The liquidity provision game is FULL of extremely sharp traders and arbitragers (and people like me) who basically mercenary with liquidity and hunt yield/returns, and generally we just dump the reward token on the market. The yields are pretty extreme (anywhere from 20% to 1000's of % and even more... i know lol) and the general rule is "if you don't know where the yield is coming from, it means you're probably the yield" A lot of the game is a huge psyops in order to trap noob traders into providing liquidity in the wrong places and they just get hosed Esp when it comes to shibaswap, which at this point may be a full on outright scam, if you are not a professional or know EXACTLY what you're doing, you're almost garuanteed to lose money. That being said, i do this kind of stuff for a living and it's very profitable. I do teach people in private coaching about it if you're really desperate to learn, but in general it's just not for the average investor | ||
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BlackJack
United States10574 Posts
On July 20 2021 02:13 BrTarolg wrote: Basically a lot of the stuff i do for a living involves this kind of thing There's two parts - first is what it is, second is where the edge is 1. you're basically providing liquidity to an AMM, (automated market maker). You provide in a pair, in a 50/50 ratio (i.e USD/ETH so say 2000 usd of usd, and 2000 usd of eth) As the market moves up and down, people trade against the AMM and you capture some fees, but in return the ratio of the crypto you deposited changes, and if there's a big movement you suffer "impermanent loss" (terribly named, divergence loss is my preferred) https://academy.binance.com/en/articles/impermanent-loss-explained The shortcut to calculating is a 1.5x move = 2% loss, 2x move = 5.7% loss, 3x move = 13% loss 2. In reality what is going on is that often there are these DEX (decentralised exchange) which live on chain and in order to bootstrap liquidity they offer rewards to people who provide liquidity, since the fee capture is usually very minimal (with a few exceptions in the most commonly traded liquid pairs like ETH/USD). These rewards are usually paid in a token that governs the dex (example: uniswap has uni token, curve has crv token, pancakeswap has cake token etc). These are usually useless governance tokens, sometimes they have a bit of fee capture (and don't get me wrong, these protocols can generate billions of revenue so it's not exactly fake either) What i can advice for you here is if you don't know what you're doing, don't play. The liquidity provision game is FULL of extremely sharp traders and arbitragers (and people like me) who basically mercenary with liquidity and hunt yield/returns, and generally we just dump the reward token on the market. The yields are pretty extreme (anywhere from 20% to 1000's of % and even more... i know lol) and the general rule is "if you don't know where the yield is coming from, it means you're probably the yield" A lot of the game is a huge psyops in order to trap noob traders into providing liquidity in the wrong places and they just get hosed Esp when it comes to shibaswap, which at this point may be a full on outright scam, if you are not a professional or know EXACTLY what you're doing, you're almost garuanteed to lose money. That being said, i do this kind of stuff for a living and it's very profitable. I do teach people in private coaching about it if you're really desperate to learn, but in general it's just not for the average investor This makes some sense. I guess my biggest confusion is how you get to these yields of 1000's of %? Is this just from fee captures from providing the liquidity? Someone compared it to putting your money into a bank and the bank paying you interest. Well right now you'd be lucky to find a bank to give you 1% interest and we're talking about 200%+. Do these yields include how much crypto is rising vs USD as well? In other words, the yield is a combination of the money you make from holding the coin + staking it as opposed to just staking it? | ||
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BrTarolg
United Kingdom3574 Posts
and yes, you are always exposed to the underlying pair in a 5050 ratio, unless you hedge that off using futures or a borrowing/leverage protocol of some kind often the yield comes from the governance token being printed out of thin air and a lot of the yield comes from losing traders who play the game but barely know the rules Honestly, it varies case by case and just depends on understanding + using all the available protocols natively | ||
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BlackJack
United States10574 Posts
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BrTarolg
United Kingdom3574 Posts
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Acrofales
Spain18399 Posts
On July 20 2021 11:26 BlackJack wrote: One guy compared it to earning interest at a B&M bank and you compare it to options trading. Seems to me that those things are not very similar. That's what doesn't make sense to me. It sounds like this is being pitched as something that is low-risk and high-reward which typically doesn't make sense unless you're investing with Bernie Madoff, if you catch my drift. Err, they are two different people. One who is clearly intimately involved in this. He's saying it's very high risk, but he makes a shitload of money. Blitzkrieg says it's like giving your money to a bank, which from the offering liquidity point of view is apparently true, but the situation is different enough that the risks and rewards are incomparable. If you gave your money to the bank and the bank said "right, I will go and play high stakes roulette with this." It'd maybe be a better comparison, given what BrTarolg is saying. | ||
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BlackJack
United States10574 Posts
On July 20 2021 12:01 BrTarolg wrote: There is also single sided staking, which also does exist (usually on lending/borrowing protocols) which is much more akin to earning interest in a bank, though again unless it's a direct yield on your lending, the yield is often some governance token of some kind which is where the apr comes from So this "governance token" you get back is not either of the cryptos you are staking, correct? What is the governance token? Is it like another crypto? Can you trade it or exchange it for USD$? This is the thing that's created out of thin air? So let's say you have a bitcoin and some ethereum to pare 50-50. You stake it which provides liquidity for other people in the exchange and as a reward you get some governance token which has some value. Am I getting that right? If so what's the risk? What's the downside? According to that shibaswap site I referenced earlier of all the parings you can make the lowest has a yearly ROI of 6% and the highest is 200%+. You can't actually lose your coins from staking them, right? Is the risk from holding crypto that might go down in value? It seems like like in the long run you'd almost always be better off staking your crypto instead of just holding it so shouldn't everybody be doing that at such a scale that it would flood the market and you wouldn't have to offer so much governance tokens to create the liquidity you need? | ||
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RvB
Netherlands6304 Posts
On July 14 2021 06:27 BrTarolg wrote: Inflation depends on which asset you're measuring - Some inflation metrics use baskets of goods, they usually don't include prices of things that are going up the most (education, healthcare, housing is not priced into these metrics usually) etc. If you include these metrics, then inflation might look more something like 20-25%, which is roughly the same as the money printed by the government Some things (electronic goods, food) are resistant to inflation, because technology has improved the efficiency and caused costs to come down. Both CPI and PCEPI include healthcare, education and expenditure on housing. Food is also hardly resistant to inflation. Food prices are very volatile which is why it gets removed from inflation numbers to get core inflation. I'm not sure where you get your information from. | ||
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Blitzkrieg0
United States13132 Posts
On July 20 2021 15:23 Acrofales wrote: Err, they are two different people. One who is clearly intimately involved in this. He's saying it's very high risk, but he makes a shitload of money. Blitzkrieg says it's like giving your money to a bank, which from the offering liquidity point of view is apparently true, but the situation is different enough that the risks and rewards are incomparable. If you gave your money to the bank and the bank said "right, I will go and play high stakes roulette with this." It'd maybe be a better comparison, given what BrTarolg is saying. The disconnect is that there are an infinite number of ways to stake because anyone can write some code and mint a new token. I will add a disclaimer that staking isn't an FDIC insured account like a savings account and higher risk to my previous post because that wasn't my intention. | ||
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BrTarolg
United Kingdom3574 Posts
On July 20 2021 17:49 BlackJack wrote: So this "governance token" you get back is not either of the cryptos you are staking, correct? What is the governance token? Is it like another crypto? Can you trade it or exchange it for USD$? This is the thing that's created out of thin air? So let's say you have a bitcoin and some ethereum to pare 50-50. You stake it which provides liquidity for other people in the exchange and as a reward you get some governance token which has some value. Am I getting that right? If so what's the risk? What's the downside? According to that shibaswap site I referenced earlier of all the parings you can make the lowest has a yearly ROI of 6% and the highest is 200%+. You can't actually lose your coins from staking them, right? Is the risk from holding crypto that might go down in value? It seems like like in the long run you'd almost always be better off staking your crypto instead of just holding it so shouldn't everybody be doing that at such a scale that it would flood the market and you wouldn't have to offer so much governance tokens to create the liquidity you need? 1. yes 2. lots of risks. Firstly you got "impermanent loss" risk. You are also exposed to the underlying you are staking unless you hedge that off somehow But the real risks are protocol risks (exploits, flashloan attacks, protocol failure), rug risks (shady team, rogue developers, "insider exploits", audit teams finding exploits and then doing the exploit themselves and running off with the money etc), network externality risks (some chains can get clogged up during high vol times where you might be wanting to pull your money out), You also have the risk of just using defi in general, the entire space is pretty much designed to psyops and find a way to scam you - i get tons of scam messages and DM's every single day. People placing links everywhere which can compromise your metamask through all sorts of day 0 exploits. I have top tier security for everything and have never personally been rugged for a large %age of my portfolio (but have still been scammed/rugged for at least 10k this year lmao). You have to approve tokens to smart contracts all the time as standard procedure, but all it takes is a slight exploit in the background that allows a proxy contract to swap the logic somewhere and that approval can lead into wiping your entire account clean in an instant, and a hardware wallet will not save you here because you approved it! And these risks are not rare either - quite literally happen every week, for tens of millions of dollars vanished into the ether https://www.rekt.news/ Just trust me, if you don't know exactly what you're doing, you're going to end up getting rugged lol But yes in theory, it's infinitely better to stake your money as the returns are out of this world. edit: oh don't get me started with tax risk either lool. I am properly structured and secured but there are such things as "tax attacks" on defi where a specific protocol/coin is designed to maximise your tax bill and bankrupt you because the IRS interprets tax in a certain (outdated way) that causes you to become a paper billionaire and realise that tax but in fact you didn't make anything | ||
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JimmiC
Canada22817 Posts
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BrTarolg
United Kingdom3574 Posts
The IRS is not doing it specifically no, but there have been real life instances of people being bankrupted using loopholes such as the above | ||
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JimmiC
Canada22817 Posts
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