OP here! #1 was my motivation, though at the moment I'm definitely feeling like #4 played a role.
My rationale was that crypto just sitting in cold storage could only gain value if the underlying asset appreciated which is effectively currency speculation. By storing it in a crypto "bank" my money could be working to generate actual value via. liquidity and loans akin to a real bank.
If the money was earning a modest amount of interest it didn't feel like as wild of a risk. Even if the exchange rate to USD is unstable I can still see the amount of crypto going up each month.
> “generate actual value via liquidity and loans akin to a real bank”
What’s missing from this picture is actual productive economic activity. Banks make loans to real-world businesses who use it to produce goods and services, and assuming those are desirable in the market, part of the margin on those products ends up paying the interest to the bank.
Crypto lenders make loans to crypto traders who ultimately produce cash by extracting it from other traders and from new investors that bring in real cash into the system at the bottom of the pyramid. There’s nothing producing anything in the hermetic crypto bubble. When the retail interest ended, the system started running out of dollars.
Yes, you summarize the entire cycle very well. There's nothing creating wealth other than the next group of people buying some crypto thing, then that is 'invested' by buying other things that are paying interest, but eventually the cycle of new money coming in goes away.
My rationale was that crypto just sitting in cold storage could only gain value if the underlying asset appreciated which is effectively currency speculation. By storing it in a crypto "bank" my money could be working to generate actual value via. liquidity and loans akin to a real bank.
If the money was earning a modest amount of interest it didn't feel like as wild of a risk. Even if the exchange rate to USD is unstable I can still see the amount of crypto going up each month.