What's the difference between rewards and interest?What's the difference between rewards and interest?
Via the GENIUS Act, stablecoins in the US aren't supposed to pay interest to token holders (#1412658).
So here comes our fresh new friend Flashnet (#1411107, #1327410) saying you can earn 6% annually on your USDB paid in bitcoin. Well, how is that possible?
They have even launched a nice new subdomain on the Flashnet website: usdb.flashnet.xyz
warning: this is one of those sites where elements don't (fully) appear until you scroll -- it can be really frustrating to try to get to the end of it. Perhaps it is best if visited on mobile...
Flashnet doesn't issue USDB, so they can pay rewards on USDBFlashnet doesn't issue USDB, so they can pay rewards on USDB
If you persevere and scroll through the whole site, you will arrive at the FAQ. This is where Flashnet does an excellent job clearing things up about how one can earn interest on a stablecoin:
They reiterate this on their transparency page:
Which raises the question: how does Flashnet acquire the bitcoin they give to USDB holders as rewards?
And the next question is why would Flashnet be so generous?
But where does the USDB have to be in order to get these rewards?But where does the USDB have to be in order to get these rewards?
At first I thought perhaps the only way to use USDB is if you are using Flashnet, but there's this in their other FAQ:
In the case of something like USDC, I imagine Coinbase pays me rewards if I give my USDC to Coinbase (like giving money to a bank). But Flashnet is says they are not custodial ("trust-minimized" seems to be their preferred wording). So what I want to know is if I am holding USDB in spark addresses, how does Flashnet know they are mine? Clearly, I'm missing something.
Then I thought perhaps you earn the rewards when you do a trade on Flashnet. But they also say it is not a promotion:
So it sounds like I am depositing USDB to earn yield, but they state that I am not depositing any USDB.
One obvious answer might be that this is a program for liquidity providers. It seems like Flashnet allows users to create custom pools to provide liquidity for different trade pairs and different rates. But there are separate fees such LPs earn, so that doesn't seem to be it.
In the video, Ethan Marcus from Flashnet says he'll give a bonus to some random commenters who leave their Spark address in the comments. I want to know how one knows the difference between any old Spark address I generate and a Spark address that is holding USDB eligible for Flashnet's bitcoin rewards.
Watching the video again, I think I answered my own question: it seems like they will pay you rewards on any USDB balance over 10 USDB on a spark address. Since USDB seems only to be issued on Spark, this means they pay rewards on any USDB balance over 10 USDB.
What is USDB? Just another stablecoin company?
Why do we have all this...
Exactly what I'm wondering
People really want dollars?
Strange, because they can have sats. But they seem to want the dollars.
If you watch Ethan's announcement video, he says somewhere toward the end:
"Today, you can take any asset on any chain and bring it directly to USDB on bitcoin"
So maybe this all just a fancy bridge? Maybe that's all stablecoins are anyway: a way to bridge all the ridiculous protocols for value humans have created: dollars, euros, btc, and the alphabet soup of crypto.
Do we have data to back that up though? Are the stablecoins going into the hands of people who need to spend dollars who can't otherwise get access to them?
Part of me is wondering if there isn't something more devious going on, like some weird self-dealing arrangement, or some strange loophole that most people are not aware of
You're right, more data would be nice on this. I need to think a little on how to get at this problem.
USDB is a stablecoin issued on Spark.
It is issued by a company named Brale.
I've been doing a little reading about Brale. Stablecoin as a Service sounds like a fun post topic.
I'd love to see a post discussing the economics of stablecoins, but not just how the stablecoin issuers make money (that's obvious), but where the demand for stablecoins is coming from. I'm very curious as to how they're being used out in the wild and by who.
Here's another thing:
Brale says they are a "stablecoin as a service" company and that they can issue stablecoins on a whole bunch of different chains.
Who, in the case of USDB, is Brale's customer? To whom are they providing the stablecoin as a service? I don't think Brale intends by the phrase "stablecoin as a service" that the users of the stablecoin are paying them for the service...that's what normal stablecoin companies do (think USDT or USDC).
Stablecoin as a service implies that they are issuing the stablecoin on behalf of someone. The obvious candidate in this case is either Spark or Flashnet. If that's the case, what does it mean that the business on whose behalf the stablecoin is being issued is offering rewards (read: interest) for holding the stablecoin?
It's probably not worth the risk, but I can see how some may be tempted to try. I just think about Blockfi when I hear yield paid out in sats.
So confusing I doubt I will be using this product
Alternatively, I could just hold my own bitcoin, which usually appreciates well above 6% per year.
It does seem like it must, in some sense, be yield on deposits. I can't think of any other way that it makes any sense.
Dont mention spark to Darth!
Also have you seen BuckToken, a btc product offering 8% yield , associated with Dan from mstr true north fame....it's bithereumification of the highest order, right up Justin and Darths street....not 🤦
You mean @DarthCoin the self declared BTC Maxi who claims that he 'lives on The Bitcoin Standard' paying for everything with Bitcoin but in the real world does not even use BTC LN on SNs and absolutely refuses to attach his LN wallets?
The guy is a total Hypocrit.
I would not ask @Darthcoins opinion on anything as he is proven to be very muddled in his thinking.
I've read a few of your posts on Spark. I'm not yet seeing a good reason to use it instead of self-custodial lightning. But then again, I guess I'm preaching to the choir?
Maybe I'll be proven wrong
I suppose the good reason is if you don't feel capable of running a lightning node. For instance, if you are using a custodial lightning wallet to interact with SN, it might make sense to switch to a spark-based wallet like Breez (at least some of Breez's products based on Spark, I believe) -- Spark, being a very large, well funded company, may be less likely to run off with your sats (also, they have a lot more to lose if they try any shenanigans).
Even @DarthCoin with his undoubted technical expertise claims using his custodial wallet on SNs is more trouble than its worth so maybe @DarthCoin will consider using Spark and finally be able to support the SN LN circular economy.
Then again you have to wonder if hes really just all talk and no walk.
shady, wacky. (I have nothing material to add!)
Thanks for looking at it!
https://twiiit.com/flashnet/status/2013688712866001224