CryptoPotato
CryptoPotato
  • Crypto News
  • Margin Trading
  • Guides
    • Bitcoin & Crypto Guides 101
    • Bitcoin For Beginners
    • Editorials
  • DeFi & NFT
  • Buy
  • Language
  • Crypto News
  • Bitcoin For Beginners
  • Cryptocurrency Guides 101
  • Editorials
  • Bitcoin & Crypto Margin Trading
  • DeFi & NFT News
  • Bitcoin Price Analysis
  • CryptoPotato Crypto Fund
  • Ethereum (ETH) Price Analysis
  • Ripple (XRP) Price Analysis
  • Market Updates
  • Interviews
  • Buy Bitcoin with Card
  • bitcoin
    BTC$29,527.00
  • ethereum
    ETH$1,959.88
    • Market Updates
    • BTC Analysis
    • ETH Analysis
    • XRP Analysis
    • Interviews
    • Crypto Fund
    Home » Crypto News » Higher DeFi Interest Rates Come With Unstated Risks Attached, Vitalik Buterin Says

    Higher DeFi Interest Rates Come With Unstated Risks Attached, Vitalik Buterin Says

    Author: George Georgiev

    Last Updated Jun 21, 2020 @ 11:10

    Vitalik Buterin, the co-founder of Ethereum, has recently stated that interest rates on decentralized finance protocols that are significantly higher compared to those in traditional finance come with unstated risks attached.

    Vitalik Buterin on High DeFi Interest Rates

    The co-founder of Ethereum and one of the most prominent members of the cryptocurrency community, Vitalik Buterin, recently took it to Twitter to comment on high yields and interest rates associated with Decentralized Finance (DeFi) protocols.

    According to him, “decentralized finance should not be about optimizing yield. Rather, we should be solidifying and improving a few important core building blocks: synthetic tokens for fiat and a few other major assets (aka stablecoins), oracles (for prediction markets, etc.), DEXes, privacy…”

    Buterin also touched on the fact that “flashy DeFi things that give you fancy high interest rates” are being overly emphasized.

    “Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached.”

    Indeed, last year at Tel Aviv’s Ethereal conference, Buterin warned about the risks of DeFi, stating that protocols have a non-zero chance of failure.

    ADVERTISEMENT

    Comparing Rates

    Indeed, comparing interest rates on DeFi-based lending protocols, they seem higher compared to interest rates provided by traditional finance institutions.

    According to DeFi Rate, lending interest rates on specific protocols such as Nuo for USDC have a 30-day average percentage of 10.25. One of the more popular protocols, Aave, averages 4.28% for USDC lending, while Compound, which is currently the biggest DeFi protocol, offers 4.12% on its USDT deposits.

    defi_rates
    30-day Avg. DeFi Lending Rates. Source: Defi Rate

    On the other hand, legacy financial institutions offer considerably lower interest rates. According to research by Money Rates, Marcus, a borrowing instrument by Goldman Sachs, offers 2.15% average annual percentage yield (APY) on its 5-year deposits as of Q1 2020.

    apy_legacy
    Best 5-Year CD Rates: Q1 2020, Source: Money Rates

    Moreover, the study also reveals that the average 5-year CD rate has dropped by 0.555% and is currently around 1.181%.

    SPECIAL OFFER (Sponsored)
    Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

    PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.

    You Might Also Like:

    • Union
      Union Raises $3.9 Million From Alameda Research and Others to Tackle DeFi Risks
    • 4 Things That Could Cause the DeFi Bubble to Pop
    • synthetix_cover
      Unraveling DeFi: An Interview With Synthetix About How Synths Work
    Tags: DeFi Ethereum United States Vitalik Buterin
    Enjoy reading? Share with your friends
    Facebook Twitter LinkedIn Telegram

    About The Author

    George Georgiev
    More posts by this author

    Georgi Georgiev is CryptoPotato's editor-in-chief and a seasoned writer with over two years of experience writing about blockchain and cryptocurrencies. Georgi's passion for Bitcoin and cryptocurrencies bloomed in late 2016 and he hasn't looked back since. Crypto’s technological and economic implications are what interest him most, and he has one eye turned to the market whenever he’s not sleeping. Contact George: LinkedIn

  • bitcoin
    BTC$29,527.00
  • ethereum
    ETH$1,959.88
  • Join Our Community

    FacebookTwitter YouTubeTelegram


    Editorials
    Bitstamp CEO JB Graftieaux: We Are Still Early (Interview)

    Bitstamp CEO JB Graftieaux: We Are Still Early (Interview)

    Okay Bears NFT Collection: The Complete Guide

    Okay Bears NFT Collection: The Complete Guide

    Our Ambition is to Become the Amazon of Crypto: Interview with Coinbase’s Guillaume Chatain

    Our Ambition is to Become the Amazon of Crypto: Interview with Coinbase’s Guillaume Chatain

    Bittrex CBO: Why Bittrex Lost its Lead, Token Sales’ Critical Mistakes, and How to Get Listed (Interview)

    Bittrex CBO: Why Bittrex Lost its Lead, Token Sales’ Critical Mistakes, and How to Get Listed (Interview)

    What is Balancer Protocol? Everything You Need to Know

    What is Balancer Protocol? Everything You Need to Know

    Coinbase Wallet For Beginners: The Complete Guide

    Coinbase Wallet For Beginners: The Complete Guide

    Tether Has No Plans to Go Public: CTO Paolo Ardoino (Exclusive Interview)

    Tether Has No Plans to Go Public: CTO Paolo Ardoino (Exclusive Interview)

    Join Our Newsletter
    Become a CryptoPotato VIP
    One Weekly Email Can Change Your Crypto Life.
    Sign-up FREE to receive our extended weekly market update and coin analysis report
    We NEVER send spam. You can unsubscribe at any time.
    Invalid email address
    Thanks for subscribing!
    About
    Advertise on CryptoPotato
    About Us | Contact Us | Careers

    Terms of service | Privacy Policy | GDPR
    More Sections
    IEO List | Evaluations
    Airdrops
    Scholarship
    Cannabis Stocks News | Market Analysis
    Disclaimer
    Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. Full disclaimer
    © Copyright CryptoPotato 2016 - 2021
    Scroll to top
    One Weekly Email Can Change Your Crypto Life.

    Sign-up FREE to receive our extended weekly market update and coin analysis report

    We never send SPAM. You can unsubscribe at any moment
    Invalid email address
    Thanks for subscribing!