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The details of the protocol are just obfuscation. The 10,000 ft view is that people converted USD to tokens so they could earn 20% interest. As the dust settles
by seoaeu 4y ago
The details of the protocol are just obfuscation. The 10,000 ft view is that people converted USD to tokens so they could earn 20% interest. As the dust settles, we can see the outcome looks exactly like a Ponzi:
(1) The folks running the scheme walked away with a couple billion dollars
(2) Those who cashed out early got back their original investment plus interest
(3) Everyone else lost all/most of their investment
Notably, all the extra money received by groups (1) and (2) came from (3).
- dlubarov 4y agoCompanies which IPO (or cryptocurrencies which ICO) and later fail have those same outcomes. Surely they're not all Ponzis?
- vkou 4y agoAny company whose business plan for repaying early investors consists of bilking later investors, while producing nothing isn't going to get to IPO. But you are right, this sort of thing is incredibly common in the ICO world.
- jimmydorry 4y agoIf the value of Uber went to zero overnight, would that be a Ponzi? People put money into it, and that money was used to subsidize user rides. If it went to zero, then all those investors would have nothing to show for their investment...
- vkou 4y agoUber has a multi-billion dollar business selling taxi rides. They may not be running that business well, but it's a business. They have a roadmap for turning those rides profitable, that they may or may not be able to execute on. If you invest in their business, you have the ability to steer it, by using your shares to vote. The fact that they produce something is the difference between it and a ponzi. The tera business model was 'sell tokens to people who want to get in on the 20% yield, and pay the yield with the profits of these sales.' And also skim 3 billion for the founder. It's completely circular.