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Seeking Alpha 2022-07-19 22:14:14

USD Coin Stablecoin Interest Update: CeFi Implosion

Recent implosions of Terra Luna and Three Arrows Capital have set off a massive contagion effect in the crypto industry.Many CeFi lenders are in distress due to market downturns, risky investments, and unsecured loans.Here's a status and health summary for Centralized Finance exchanges offering interest for crypto deposits.In my article USCoin: How To Earn 6-12% Interest Safely With Stablecoins, I recommended considering high interest stablecoins to avoid the melting ice cube problem -- optimizing portfolios to fight inflation, even for cash reserves. My thesis was to hold high interest stablecoins on reputable exchanges to offset dollar value destruction.And for me, the best stablecoin for crypto yield is still USD Coin (USDC-USD). USDC is fully backed by cash and short-dated U.S. government obligations, and always redeemable 1:1 in US dollars.But since that article the entire crypto industry has experienced turmoil around specific coins and institutions leading to cascading liquidations, huge waves of selling, and the destruction of almost a trillion dollars from the global cryptocurrency market cap. The companies offering crypto interest were deeply affected and several have entered bankruptcy due to reckless and risky investments.This update will trace the events that brought us to this point and revisit the financial health of the platforms reviewed in my first article.The Precipitating Event: The Terra DisasterIn May of ...

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