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I've been lending on https://trade.dydx.exchange and https://compound.finance/ for the past few months. They are smart contracts that lend out your deposits to other people who want to borrow them (usually people who are going long crypto). I don't like the added risk of leverage trading, so I'm happy to lend my stablecoins out for them to trade. The process is all governed by open source smart contracts on the ethereum blockchain. I would encourage you all to check out the decentralized finance (DeFi) movement.

I've been lending on https://trade.dydx.exchange and https://compound.finance/ for the past few months. They are smart contracts that lend out your deposits to other people who want to borrow them (usually people who are going long crypto). I don't like the added risk of leverage trading, so I'm happy to lend my stablecoins out for them to trade. The process is all governed by open source smart contracts on the ethereum blockchain. I would encourage you all to check out the decentralized finance (DeFi) movement.

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[–] [deleted] • 2 pts

How is this any different than normal banking?

[–] • 1 pt

The overall goal is to make a more efficient form of banking that requires seconds to send money instead of days. These lending contracts I've linked follow the same principals as fractional reserve banks. The only difference is that you are exposed to a few additional risks:

  1. The smart contract could get hacked and you lose everything

  2. You are not lending US dollars. You would be lending either DAI or USDC. DAI is a stablecoin soft pegged to the dollar which is backed at least 1.5:1 ETH:DAI. Currently it is backed 3.36:1 (https://mkr.tools/). USDC is a stablecoin that is backed 1:1 US dollars:USDC. These stablecoins pose an additional risk of failing/getting hacked, so there is more risk that you take on when you use them over the traditional banking system.

  3. Instead of using a normal bank account, you will use an public/private key pair on ethereum to make transactions to the network. This poses another risk you are taking on in case of a hack/you losing your private key.

So, to wrap it up, this is very different than normal banking. This form of lending is much riskier than a traditional savings account at your bank, but in return for that risk you are paid more of a reward. I would suggest you read more about these risks to further understand what you're getting yourself into before buying some stablecoins and depositing them into dydx/compound smart contracts, as I've only listed the 3 most obvious differences.