As we know, Yield farming is a great way to earn passive income on an invested crypto. In yield farming, we see that many stablecoin pair have much higher APY rates compared to the traditional rates.
Some examples are here from the defilama
https://ibb.co/W5LYKx4https://ibb.co/tzHC0y9https://ibb.co/ZKt9YvYMy question is that if anyone takes a loan at around 10 - 12% interest rates and invest in stablecoin pair to earn a decent 16 - 18% APY interest on various platform. Now there is a margin of 4 - 5% to earn. Is it possible in reality? Because many factors are working here.
- First of all, there is always a risk of hacking the platform, seeking higher APY, many users invested in small pools, where there is a always risk.
- The rates fluctuate regularly (every 3/15 seconds).
- Have a change to rug pull.
Despite all factors, is it will be profitable to follow this way, 'take a loan from one place and invest in another for getting higher APY %
Although the APY % is very low, investing a large amount could bring a large APY.
Can any one earn like this? If yes, what things need to remind before investing?