Friends, a 'miraculous operation' has recently gone viral in the circle: mortgage USDC, borrow USDT, and then exchange USDT back to USDC to continue mortgaging... It is said that this cycle can boost stablecoin interest rates to 4 times!
Does it sound like discovering a 'perpetual motion machine'? Are you tempted? Are your hands itching?
Don't rush, I spent three days digging through all relevant protocols and on-chain data, and the conclusion is: this operation theoretically exists, but you are very likely not the one who 'gets to eat the meat', but rather the 'meat' in someone else's eyes.
Why? Because there are three deadly wounds that you might overlook hidden within:
Slippage loss: every USDT/USDC exchange incurs a loss, the more cycles, the higher the cost eats into profits;
Liquidation risk: collateral ratios in volatile markets are like walking a tightrope; one pin could trigger a chain liquidation;
Protocol risk: are the lending and exchange protocols you rely on strictly audited? Are there backdoors?
This precisely reveals a deeper reality: in the pursuit of 'extreme returns', most people often forget that the essence of returns is compensation for risk. Behind higher numbers often lie more complex hidden dangers and more fragile balances.
Therefore, I gradually turned my attention to a seemingly 'unsexy' but truly sustainable approach: not pursuing complex arbitrage structures but returning to the most basic demands of asset allocation—transparency, stability, and reliability. This is also why, after experiencing various 'fancy operations', I chose to anchor part of my position in stable infrastructure like @usddio, which has a simple and transparent mechanism.
USDD does not engage in complex arbitrage games; it is dedicated to solving a more fundamental problem: how to provide a stable asset that is fully verifiable on-chain, with transparent reserves and a solid value peg.
Overcollateralized, transparent and traceable: every issuance of USDD has sufficient asset collateral, and all collateral addresses are publicly available on-chain, allowing anyone to verify in real-time, eliminating the risks of 'black box' operations and insufficient reserves.
Solidly pegged, transcending cycles: through algorithmic and multi-audit guarantees of a 1:1 dollar peg, its price does not decouple due to market arbitrage behaviors or emotional fluctuations, becoming a reliable 'ballast' in asset portfolios.
Ecological practicality, sustainable: on high-performance public chains like Tron, USDD is not only a medium of exchange but also allows easy participation in staking and other low-risk yield scenarios, ensuring that funds can steadily grow in value while safeguarding security.
Chasing a 4x interest rate arbitrage is dancing on the edge of risk; whereas allocating assets like USDD is building a flood dam for your wealth. True 'wealth creation' is not about seizing every possible arbitrage opportunity, but avoiding any traps that could bring you to zero.
Follow @usddio to learn how to build your simplest yet most robust defenses in an unstable market.
#USDD以稳见信 —— While others are obsessed with calculating complex returns, the wise have already returned to the commitment to simplicity and trustworthiness.
The market is never short of tempting 'wealth codes', but history repeatedly proves that returns built on complex leverage and opaque operations are often as fragile as sandcastles. On the road to maturity in the crypto world, perhaps the greatest wisdom lies in recognizing: which are fleeting illusions, and which are the foundations worth trusting.
