I’m also a little chicken in addition to being a pig so I’m trying to create a good yield strategy without too many risks.
The current safe option yields are
| Asset | example | Rate |
| Checking account | cash | 0% |
| Good saving account | Marcus | 0.5 % |
| US gov bonds (mid term 5-10Y) | VGIT | 0.88% (30 days SEC yield) |
| US gov bond (long term 10-30Y) | VGLT | 2.22% (30 days SEC yield) |
| US bond gov+corporate | BND | 1.36% (30 days SEC yield) |
| International bond | BNDX | 0.46% (30 days SEC yield) |
| EU gov bond | around 0 if not negative |
These values need to be compared to inflation to see my potential real return…
Last inflation figures are 4.2% YoY
In other words I am losing in all case….nothing surprising since the system is designed for pigs to get slaughtered 😉
This is something Ray Dalio mentioned several times in the last year: “cash is trash“
So where to put my cash to get some yield ?
It all start with 2 new trend that become mainstream in 2020:
- Crypto lending: it is possible to lend crypto to wall street for them to make money… but since crypto currencies value is so volatile I would not consider it a safe bet.
- StableCoin: Crypto currencies stable against one asset (can be gold, fiat, Oil…..) In my case I will focus on Stable coin peg against the dollar.
What happens if I combine these 2 trends and lend some stableCoin ?
I need to figure out which stable coin to lend and how much return I can get to see if it is an idea worth trying…
Lending platform
There are a lot of platforms where you can lend crypto. I identify 2 of them (to diversify) which seems trustworthy enough for me: BlockFi and GeminiEarn.
- BlockFi was one of the first platforms and is regularly recommended online.
- Gemini Earn is part of the Gemini platform. I used Gemini for crypto trading and trust it enough to give a try to their new Earn functionality.
StableCoin
I review all the stablecoins offered by the 2 platforms to decide which ones to use. I plan to use several for diversification reasons:
- DAI: Algorithm stable coin. I like the idea of having the PEG maintain by an algorithm so I will give it a try
- USDC: Coinbase stable coin. Coinbase is now a publicly traded company so i trust them to maintain the PEG
- GUSD: Gemini stable coin. Since i trust Gemini I trust them on the PEG too
- BUSD: Binance stable coin. I do not like too much Binance for personal reason so i discard it
- USDT: Tether was the first stablecoin but has a complicated history so I prefer to avoid it.
- PAX: I did not really research it since I already have 3.
So I have now 2 exchanges and 3 coins which should allow me to have some kind of protections. Here is what I plan to implement (I put APY as information but they may change)
| BlockFi | Gemini | |
| DAI | 25000 (7.4% APY) | |
| USDC | 20000 (8.6% APY) | |
| GUSD | 20000 (8.6% APY) |
These returns look good enough to fight inflation.
What could go wrong ?
The exchange can be hacked or the owner could run away. That’s why i used 2 and i focus on the ones that are recognized in the crypto community
The stable coin could lose its peg against the dollar. That’s why I used 3 different Stable coins and also focus on the one recognized in the crypto community.
Lot of stuff could go wrong but hopefully it will go right! That is also why I would advise people to do their own research and not copy my strategy. I will regularly update on this income flow on a monthly basis.
