Gemini Earn: too good or too risky?
The offer is simple, place your faith in Gemini: one of the most secure and reliable exchanges in the crypto space. In return, you get an impressive yield on your crypto assets.
In addition to the high potential rewards, there is never a shortage of folks rushing to vouch for the exchange:
“Gemini has never been hacked, stolen from, or otherwise compromised in any way during its more than 5 years of operation” -https://blog.shrimpy.io/blog/gemini-exchange-review-regulated-cryptocurrency-trading#:~:text=The%20World's%20Safest%20Cryptocurrency%20Exchange,than%205%20years%20of%20operation.
Filecoin offers the most return at 7.4% APY and basically, every other coin on their exchange hovers within a few %. Filecoin itself is also a reliable name, stemming back to 2017, it positioned itself as a decentralized alternative to the cloud storage offered by Amazon web service.
So 7.4% annual yield is enough to turn some heads, but shit takes a hard left when you look into their Terms of Service. The first line reads as follows:
YOUR AVAILABLE DIGITAL ASSETS WILL LEAVE GEMINI’S CUSTODY, AND YOU ACCEPT THE RISK OF LOSS ASSOCIATED WITH LOAN TRANSACTIONS, UP TO AND INCLUDING TOTAL LOSS OF YOUR AVAILABLE DIGITAL ASSETS.
Well fuck man, that blows my high. The further down the page you go, the worse it gets.
Gemini is not a depository institution, and the Program does not offer a depository account. Participating in the Program may put your Digital Assets at risk.
Loans made through the Program are unsecured. You have exposure to Borrower credit risk, and Borrowers are not required to post collateral to you or to Gemini.
Transactions in Digital Assets may carry added risk compared to lending of other types of assets because transactions in cryptocurrency are in many cases irreversible. Funds may not be recoverable in the event of errors or fraudulent activity.
Gemini is not a principal to any Loan, and Gemini has no obligation or ability to return the Loaned Digital Assets from your Borrower in the event of a Borrower default.
The Borrower is not required to custody or maintain the Loaned Digital Assets with Gemini or any other Gemini-controlled account. Gemini will not be responsible for any Digital Assets once they leave Gemini’s custody.
Loans are not insured by Gemini or any governmental program or institution. Gemini does not assume any market or investment risk of loss associated with your participation in the Program. Your Available Digital Assets may decline in value during the term of a Loan or the applicable callback period.
Loan Fees are variable and subject to change. Loan Fees may decline over time and Gemini cannot guarantee that you will earn any particular rate of return on your Available Digital Assets by making Loans.
That’s a lot of “risk, loss, not liable for any, not required’s” in one bulky ass set of paragraphs.
So all together, we have a lot of upsides and an overwhelming amount of potential downside.
So here’s what I personally have mapped out: I’m willing to take this risk, on the condition that they cannot have my precious bitcoin. Bitcoin is digital gold and I’m keeping that shit locked and buried far underneath the earth so no one can find it except me, with my trusty big ass shovel. Also, BTC only yields 3.05%, which is low considering the risk.
However, LTC & FIL are two of the highest yields, so they offer the most upside in the short term; and if they were lost to me, it would be a massive bummer, but it would not be as devastating to my overall portfolio.
I see a future where even having 1% of a BTC is going to be nearly impossible, so losing any amount of that is absolutely unacceptable.
