After I read about this Terra ecosystem, it looks very suspicious: first, you buy UST tokens, investing real money. You are promised a yield up to 20% (suspicious point 1). Then, you deposit your UST so that other people can lend it. But the terms look weird to me (suspicious point 2): first, the loans are "overcollateralized", so, for example, you need to put down equivalent of $100 to get a loan of $70. Second, the interest rate on the loan is ridiculously high - in the range of 30%. Who would take such a loan?
They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don't think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens.
The support page at Stablegains site says [1]:
> They [Digital finance protocols] are more efficient than traditional finance
I can't see how 30% interest rate overcollateralized loans are "more efficient" than traditional bank loans with rates below 10% per year.
By the way, here is an idea about new type of coin, that I would call "investcoin". Do you see any potential problems with it?
This would be a coin that is backed by stocks. When you buy my investcoin, you can choose any kind of stock from a preapproved list and I will buy them for your money. If you decide to cash out, I will sell stocks of my choice to repay you. The stocks are managed in a public account, so anyone can ensure that the amount of stocks matches the amount of coins. You are guaranteed a share of stocks proportional to amount of coins that you own.
Of course, hard work of thinking out a hypothetical cryptocurrency must be rewarded, so I will take a reasonable fee from every transaction involving buying or selling stocks.
To make things more interesting, we could manage those stocks by voting of coin holders.
Why this is much better than stablecoins:
- first, in contrast to existing stablecoins, anyone can easily check that I hold the amount of stocks matching the amount of coins
- second, unlike existing stablecoins, the value of my investcoin is going to grow as on average stock markets grow over time
- third, the money that you have invested is improving world economy instead of just burning electricity
- fourth, you can use this investcoin as a mean of payment
- fifth, there will be no promises of ridiculous yield. The stocks are meant to back the value of coin, not to be a source of a significant profit.
Looks like a perfect business plan, or am I missing something?
They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don't think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens.
The support page at Stablegains site says [1]:
> They [Digital finance protocols] are more efficient than traditional finance
I can't see how 30% interest rate overcollateralized loans are "more efficient" than traditional bank loans with rates below 10% per year.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...