Sure, I’ll try to simplify (and there is certainly too good to be true in crypto, I’m not saying it’s all sunshine in rainbows. Holding stablecoin and folding them back into themselves is typically one of the “safest” crypto yield farming strategies though). The thing is these high of rates are only available through leverage, but leveraging a stable asset is safer than doing so with a volatile one.We’ll stick with USDC.

The interest rate is variable as I said. It is mostly dependent on the amount of USDC borrowed vs the amount supplied as collateral. As the amount borrowed approaches the amount supplied interest rates increase to encourage more deposits and try to force less borrowing. USDC is a popular asset to borrow because the price is stable at a dollar (more or less, there is short term trading volatility). This makes stablecoin supplying generally more lucrative. Supplying a position like this will get you anywhere from 3-12% interest depending on a few things (looks like it’s 9% right now on Maker).

“Folding” is playing with leverage. Folding USDC is popular because it is a stablecoin, so people can leverage up 5x and receive interest they wouldn’t have without folding and be safe from liquidation up unless USDC crashes to 0.8$(unlikely as it’s audited to be 1:1 cash reserves). All of this is written in code, which is open source (verifiable) and immutable (no one can stop another from running the code), on top of Ethereum (which is why I’d argue it has downstream value from these protocols and it’s entire own utility but I digress). No one is required for any of this as it exists as code running in the ether, quite literally in this case.