This article is based on a question from a follower. In short, the question is: Why not simply choose the USDT Earn Flexible at 7% instead of a 4% #RWUSD ? But to understand what RWUSD is, I leave you this link here
Buy U.S. Treasury Bonds: RWUSD
1. Where do both APYs come from?
USDT in #SimpleEarnProducts Earn (7%): That interest is not free, nor does it come from Binance's generosity. It comes from traders who borrow USDT to leverage (loans). If there is a lot of market euphoria, the interest goes up; if the market slows down, the interest drops to 1% or 2%. It's a volatile return and depends on other traders' risk.
RWUSD (approximately 4.2%): The money comes from U.S. Treasury Bonds (Real World Assets). It is a much safer interest rate. It does not depend on whether people are trading or not, or on the official rates of the U.S. Federal Reserve.
2. Stability vs. Platform Risk
USDT: It is a currency issued by a private company (Tether). Although it is the most used, there is always debate about its reserves. There are two elements to consider as well: Inflation and disparity. We explain this to you in the following link
CHANGING USDT TO USDC WILL NOT SAVE YOU
RWUSD: It is a regulated asset. Each coin is backed by U.S. government debt. In other words, this treasury bond token you acquire is perfectly legal and traceable. It's like having dollars saved in the bank.
3. The "Opportunity Cost" factor
USDT: This "Flexible" Earn lives up to its name, it doesn't hold your money, although the APY is not stable either, because as we have indicated, it absolutely depends on how enthusiastic the market is (Risk On) today it can be 7%, tomorrow up to 20% and plummet dramatically to 2%. However, all this is compensated because it does not hold your money, nor does it charge a fee for withdrawing it.
RWUSD: It maintains a more stable and solid APY. That depends on the official rates of the Federal Reserve, you don't have to fear an abrupt drop of the APY to 4.2%. However, it is not necessary to sell these debt tokens to make profits, they continue to generate money for you. Additionally, for Binance, it is a guarantee for the user to request loans against these debt bonds, without the need to sell them.
All this seems to be a great opportunity to invest in U.S. debt bonds, doesn't it? However, there is small print, here is more information
Do you prefer to stick with the typical Earn Flexible or RWUSD? I'm listening 👇
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