Curriculum·S207 Investing Frameworks (Unleveraged)·about 32 min
Yield without leverage
By the end of this lesson you can
- →Trace any advertised yield to the party paying it and the risk they are paying you to take
- →Distinguish yield that is a fee, a subsidy, a spread on somebody else's risk, or dilution
- →Identify hidden leverage in a product that describes itself as unleveraged
- →Compute whether a yield compensates the risk, and act on the answer
Sophomore · enrolled learners
This lesson opens with Stablegains, 2022.
- What happened
- Stablegains, a startup launched in August 2021, offered US users a 15 percent yield on deposits. Crypto Briefing reported that it marketed itself as a "simple and safe" way to benefit from "advances in financial technology", with documentation assuring users the value of their deposits would stay stable "regardless if the crypto markets are soaring or crashing." The yield came from placing most or all customer funds in Anchor, the Terra protocol whose deposit rate, in Stablegains' own August 2021 description, usually oscillated between 18 and 20 percent; Stablegains paid customers 15 percent and kept the difference. F102-04 establishes that Anchor's rate was a subsidy from a depleting reserve rather than an earned return. When UST collapsed in May 2022, Protos reported about $42M of customer deposits almost entirely lost, and a co-founder put the holdings at about 47.6 million UST from 4,878 depositors. A class-action firm sent a preservation letter that month, and in February 2023 two depositors sued in federal court in California, alleging the funds had gone into Anchor without depositors' knowledge or consent. They dismissed the suit voluntarily, without prejudice, in July 2023, so no court ruled on it.
- The decision point
- The product's yield was a spread. Customers were paid 15 percent to take a risk the operator was taking at about 18 to 20 percent, and the difference was the operator's revenue for standing in the middle. How plainly that was disclosed is disputed: the company's own blog described the Anchor rate and the spread, while Protos reported that users were not told their money was almost all in one risky third-party product, and the later suit alleged they did not know. Either way, the underlying subsidy had a computable end date that F102-04 puts at roughly 84 days from published figures.
- Recorded loss
- $42,000,000
What you will be able to answer
- →What is the first question about any yield?
- →Name the four sources of yield.
- →How do you spot hidden leverage?
- →What was the Stablegains spread?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://protos.com/ycombinator-crypto-defi-startup-stablegains-lost-42m-in-anchor-protocol/
- https://cryptobriefing.com/yield-app-stablegains-faces-lawsuit-after-losing-44m-on-ust/
- https://cryptoslate.com/stablegains-in-hot-water-after-losing-more-than-40m-due-to-terras-collapse/
- https://www.courtlistener.com/docket/66825823/alec-ohanian-v-stablegains-inc/
- https://cointelegraph.com/news/terra-injects-450m-ust-into-anchor-reserve-days-before-protocol-depletion
- https://www.arnoldporter.com/en/perspectives/advisories/2023/01/read-before-you-click-accept
Confidence medium·Volatility high·Reviewed 2026-08-06·Owner unassigned
Contested
No court has ruled on Stablegains. A class-action firm (Erickson Kramer Osborne) sent a preservation letter in May 2022 but no class action is on the record; the suit that was filed, Ohanian v. Stablegains, Inc., No. 2:23-cv-01245 (C.D. Cal., filed 18 February 2023), was brought by two individuals and voluntarily dismissed without prejudice on 13 July 2023. The marketing quotes are Crypto Briefing's (19 May 2022); the $42M is Protos; the 4,878 depositors and 47.6 million UST are a co-founder's figures as Crypto Briefing reported them, and Crypto Briefing computed the loss at more than $44M. Attribute rather than assert.
What users were told is genuinely disputed, not just unadjudicated. The complaint itself quotes a Stablegains blog post of August 2021 saying Anchor's rate oscillated between 18 and 20 percent and that Stablegains paid 15 and kept the difference, and CryptoSlate quotes the company saying all deposits were placed in Anchor using UST; Protos reported users were not told their money was almost all in one product. Teach the disclosure question as contested and do not say the arrangement was hidden.
J305 owns the full treatment of yield-bearing strategies and their mechanics. This lesson covers only how to interrogate a yield within an unleveraged framework, and must not be expanded into strategy content.