2026-01-18 14:20:46

Many people lack a first line of defense when screening investment projects. In fact, just by measuring with the risk-free rate as a benchmark, you can instantly eliminate most garbage projects.

Let's first talk about what the risk-free rate is—it's the return you get when you bear virtually no risk, no fuss needed, and the market automatically provides you with that small yield. This thing is the passing line for all investment decisions; if it's below this line, taking on risk is just nonsense.

Currently, the typical risk-free rate looks like this: the 10-year U.S. Treasury yields around 4%-5%, and the actual returns on high-quality stablecoins are roughly 4%-6%. This is the baseline that the market openly states.

Let me ask you a question: if a project’s long-term return is around 5%, why would you gamble on its volatility, exit risk, liquidation risk, or regulatory risk? This calculation simply doesn’t add up.

Looking back at 2021 to 2022, DeFi projects flooded the market promising APYs of 50%, 100%, even 300%. People were thrilled. But what’s the reality? These promises came from token inflation—massive token issuance—while real cash flow was nearly zero. When token prices fell, those high yields vanished instantly. After accounting for inflation, investors might have actually lost -20%, -50%, or even -90%. These projects didn’t even come close to the risk-free rate.

Later, these players changed their story, claiming "stable 8%-12% returns." Celsius and BlockFi were just such scams. And what happened in the end? They all went bankrupt.

Here’s the painful truth: when the market’s risk-free rate is only 3%, what reason do you have to promise me a stable 10%? The math simply doesn’t add up.

So the simplest and most straightforward screening method is: any project must beat the risk-free rate first. If it can’t pass this hurdle, then no matter how good the story sounds later, it’s all nonsense. Those projects promising returns even lower than government bonds but with terrifying risks—what exactly are they selling?

DEFI-4,33%

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BearMarketSurvivor

· 10h ago

I learned my lesson about this logic back in 2017. At that time, I was watching 10x coins every day, and in the end, after accounting for inflation, I lost everything, even my underwear. Now, the first thing I do when evaluating a project is to calculate the risk-free rate. If you can't even beat this baseline, there's really no need to get involved.

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WhaleWatcher

· 10h ago

Here comes another new trick to cut leeks. This time, they’re directly using the risk-free rate as a benchmark, whatever. Are the lessons from Celsius and BlockFi not enough? I really want to see a third time. If 5% can't beat inflation, what's the point of playing? Isn't it better to just lie back and earn interest from government bonds? That's right, but the problem is that greedy people simply won't listen. I bet there will still be someone falling for it in a month. If you can't even earn 4% from the risk-free rate, how do you expect these projects to reliably give you 10%? Pure scams. This logic hits the mark. Those who make super-promised returns should really be removed from the investment pool.

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CryptoMom

· 10h ago

Really, I was the one who got cut during the Celsius wave. Reading this article now really hits home. --- From the perspective of risk-free interest rates, it's truly brilliant, much better than those retail investors who know nothing. --- Damn, that 300% APY dream in 2021, just thinking about it makes me want to slap myself. --- You're not wrong, but honestly, most people don't do the math that way at all. When emotions take over, they get cut again. --- The math and logic don't add up—this sentence kills me. It's clearer than when I repeatedly explained it to friends. --- Wait, can you really get 4%-6% on stablecoins, or is this just another new trick to fool people? --- That's why I only buy US bonds and stablecoins now. I'm so tired of those false promise projects.

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SatoshiSherpa

· 10h ago

It's the same story again. The Celsius and BlockFi incidents haven't even settled yet, and now a bunch of projects are still spinning stories. You really need to take up the risk-free rate as a benchmark; otherwise, you're just asking for criticism. I also got burned during the DeFi boom two years ago, with promises of 300% APY, but in the end, it was all inflation figures—huge losses. Now, stablecoins offering 4-6% are much more reliable than those slick-talking high-yield schemes. Any promises that defy mathematics, run for your life.

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consensus_failure

· 10h ago

To be honest, I've heard Celsius's pitch more than once, and every time I think greed is deadly. The risk-free rate should definitely be used more often as a benchmark.

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LiquidatedTwice

· 10h ago

Damn, the Celsius and BlockFi episodes were truly a nightmare. I was fooled by their spiel back then, and now I think how damn stupid I was. The risk-free rate as a yardstick is really brilliant; I should have used it to filter projects earlier. Watching those still touting high-yield projects, it's exactly the same套路 as in 2021. Wait, what are those still promising ultra-high returns using as backing now? This logic is so easy to poke holes in—why are people still throwing money into it? U.S. Treasury bonds at 4% are steady—why bother messing around?

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