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And the Crypto Andys were all like "you just don't understand DeFi!" to which the retort is "No, you just don't understand finance". If you believe the stateme

And the Crypto Andys were all like "you just don't understand DeFi!" to which the retort is "No, you just don't understand finance". If you believe the statement "if someone is promising you consistent above-market returns it's either a scam or there is unknown or undisclosed risk" it might be true that you don't understand DeFi to some degree. DeFi isn't a single market, it's millions of micro markets that are accessible through what amounts to a single API. So when you have millions of markets with different returns that can be traded in every imaginable way (and some you probably haven't imagined), throw in an insane amount of dumb money, people willing to borrow at high interest rates (relative to the real world), and a laundry list of factors that introduce inefficiencies into the market, it's quite easy to find pockets of above-average returns if you're smart. I have no idea if Stablegains was actually smart, but it's more than possible to achieve above-market gains in DeFi without exposing yourself to outsized risks.

JumpCrisscross 4y ago
> it's more than possible to achieve above-market gains in DeFi without overexposing yourself to insane risks "Insane" is subjective. The point is nothing safe yields ten or 20%. Someone saying "you will not lose your funds" [1] when paying above-market yields is lying. [1] https://stablegains.zendesk.com/hc/en-us/articles/4402680425745 https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
- downandout 4y ago
  I run arb and loan liquidation bots, and have for over a year now. These are atomic transactions almost always using flash swaps/loans that exist only exist for the life of the transaction. I am only exposed to potential losses on transaction fees, but have never had a losing day while running production code. My yield on my investment (mostly infrastructure costs) is closer to 5,000%...per month. I will not lose my funds, whether the market is good or bad. There are funds out there that conduct these activities, I know because I recently consulted for one. They are promising risk free returns and getting them. There are things that exist in DeFi (such as flash loans) that have no real world equivalent, which is why blanket statements made about traditional markets don't necessarily apply. If used properly, these things do in fact offer "too good to be true" types of returns.
  - JumpCrisscross 4y ago
    > I will not lose my funds, whether the market is good or bad Is your counterparty risk always zero (between you and the chain)? Custody? What if a chain is halted or amended? These systems run on novel rails. You couldn’t honestly tell an investor “you will not lose your funds,” and you’d refrain from using the word “deposit.” Because you’re trying to honestly communicate an opportunity, not to defraud.
    - downandout 4y ago
      Is your counterparty risk zero? Custody risk? In the case of flash loans/swaps, the answer is yes. It's 0. Further, I never have any capital at risk, all of my bots use flash loans/swaps. These transactions are atomic, which means that either all parts of it succeed or they all fail (it's a "revert" in blockchain parlance). So I can borrow $200 million without any prior permission and do an arb/liquidation or anything else I want with it for the life of my transaction, with the only requirement being that I must return it by the end. If my arb/liquidation/whatever succeeds and I return the loan, I keep the profits. If not, it's as if the whole thing never happened. The only risk is the transaction fee, which on the chains I do this on are miniscule. I realize that it sounds unbelievable, but it exists. My code does thousands of these daily. I am not the only one doing this. See https://eigenphi.io/ https://eigenphi.io/ . With the exception of sandwich transactions, every one of the bots you see on there is making profits without any capital at risk.
      - JumpCrisscross 4y ago
        > it’s 0 The risk of the trade on chain defaulting is virtually non-existent, agreed. Custody risk is never zero. Dollar in / dollar out returns involve lots of counterparties.
      - bryanzk 4y ago
        Hi there. My name is Bryan, and I'm a member of the EigenPhi team. Thanks for recommending us; twice!! :D Would you please spare a few minutes to have a quick chat? I'd love to receive your feedback and provide more valuable data! Here is my email: bryan at eigenphi.com. Looking forward to your reply!!
CryptoPunk 4y ago
moomin 4y ago
You’ve kind of just demonstrated the OP’s point. What do you think modern finance looks like?
simonh 4y ago
> it's quite easy to find pockets of above-average returns if you're smart… Right, but even then how deep are those pockets (what amount of investment can they absorb without being tapped out), how big a time window will they exist for, how will you know if those limits are being reached, and are you really sure you can quantify all the risks? By definition if it’s a pocket of opportunity, it’s very constrained opportunity. As soon as those constraints are breached it will suddenly stop being low risk and might collapse completely. A lot of people have lost a lot of money on sure fire pockets of opportunity that were great when they lasted.
- downandout 4y ago
  Of course there are limits to every opportunity. I make money everyday from opportunities that exist on microsecond timescales. I run arb and loan liquidation bots, so I haven't had a single losing day, ever. The last two weeks were quite profitable for me, actually the best two week period I have ever had. There are other strategies that are easier to pull off, such as market making, that have moderate risks and outsized returns. The point is that these opportunities exist, and they always will exist, you just have to be smart enough to be able to get into them. If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point.
  - notahacker 4y ago
    > If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point. If you needed money for infrastructure for more arb bot, would you look for random novices and offer them 15% (and raise $3m in VC to market to random novices)? Or would you take out an unsecured personal loan from a bank at a lower rate, or a much lower cost loan from a counterparty involved crypto, especially one who understands the nature your trades?
  - simonh 4y ago
    I’m sure it’s a great business, but what would happen if 10 competitors all spun up arb bots tomorrow morning? There’s a very low chance of that happening, but not zero.
majormajor 4y ago
A market where, with work, you can "find pockets of above-average returns if you're smart" is MILES away from one where companies are "promising you consistent above-market returns"
cookiengineer 4y ago
> DeFi isn't a single market, it's millions of micro markets that are accessible through what amounts to a single API. Millions of micro markets that produce what, exactly? Last time I checked there has to be at least something on the other side of the calculation what a coin is worth. You think crypto coins magically make people work harder, better, faster, stronger? That's not how the constraints of the physical world work.
- downandout 4y ago
  Millions of micro markets that produce what, exactly? You seem to be asking me to defend the merits of crypto, which is beyond the scope of this conversation. But generally speaking, most of the coins people actually buy are tied to protocols that are attempting to do things that interesting to at least some part of the population. But, the ability to prove the provenance and ownership of any asset, whether physical or digital, has value. The ability to move value across borders instantly, cheaply, and reliably, has value. In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value. The possibilities are endless.
  - cookiengineer 4y ago
    > In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value. This assumes that 100% of the ecosystem is already some form of blockchain. And guess what: It isn't and it never will be due to the democratic nature of the proposed system architecture. The flaws of every coin I've seen is that there are too many assumptions about markets, and dependencies of the markets in the sense of goods and/or services that are just "assumed" to migrate to their blockchain at some point. That's not how incentive proposals should work, as they will (logically) lead to exit scams because a couple of people cannot write and reinvent an ecosystem from scratch. Look at how long IPFS took to mature. Look at how long DAT was refactored in a backwards-incompatible manner. Look at how long it took to write the hypercore protocol stack. Systems like this and - especially markets like this - need time to evolve, which means that the proposed DeFi assumptions about rapid growth bullshit are anti-market proposals, and literally the same way hyped and unverified bonds in the legacy financial systems lead to market crashes.
raverbashing 4y ago
[[This is what DeFI people actually believe]] Whoever thinks "millions of markets trading in every way" is a guarantee of making money is in for an awful surprise
sumeno 4y ago
I'm looking forward to your followup post where you lost all your money and can't figure out where you went wrong. It always happens with people who think they are smarter than the "dumb money" they're taking advantage of. "Sure it's a scam, but I'm smart enough to not be the one getting scammed!"

JumpCrisscross 4y ago

> it's more than possible to achieve above-market gains in DeFi without overexposing yourself to insane risks "Insane" is subjective. The point is nothing safe yields ten or 20%. Someone saying "you will not lose your funds" [1] when paying above-market yields is lying. [1] https://stablegains.zendesk.com/hc/en-us/articles/4402680425745 https://stablegains.zendesk.com/hc/en-us/articles/4402680425...

downandout 4y ago
I run arb and loan liquidation bots, and have for over a year now. These are atomic transactions almost always using flash swaps/loans that exist only exist for the life of the transaction. I am only exposed to potential losses on transaction fees, but have never had a losing day while running production code. My yield on my investment (mostly infrastructure costs) is closer to 5,000%...per month. I will not lose my funds, whether the market is good or bad. There are funds out there that conduct these activities, I know because I recently consulted for one. They are promising risk free returns and getting them. There are things that exist in DeFi (such as flash loans) that have no real world equivalent, which is why blanket statements made about traditional markets don't necessarily apply. If used properly, these things do in fact offer "too good to be true" types of returns.
- JumpCrisscross 4y ago
  > I will not lose my funds, whether the market is good or bad Is your counterparty risk always zero (between you and the chain)? Custody? What if a chain is halted or amended? These systems run on novel rails. You couldn’t honestly tell an investor “you will not lose your funds,” and you’d refrain from using the word “deposit.” Because you’re trying to honestly communicate an opportunity, not to defraud.
  - downandout 4y ago
    Is your counterparty risk zero? Custody risk? In the case of flash loans/swaps, the answer is yes. It's 0. Further, I never have any capital at risk, all of my bots use flash loans/swaps. These transactions are atomic, which means that either all parts of it succeed or they all fail (it's a "revert" in blockchain parlance). So I can borrow $200 million without any prior permission and do an arb/liquidation or anything else I want with it for the life of my transaction, with the only requirement being that I must return it by the end. If my arb/liquidation/whatever succeeds and I return the loan, I keep the profits. If not, it's as if the whole thing never happened. The only risk is the transaction fee, which on the chains I do this on are miniscule. I realize that it sounds unbelievable, but it exists. My code does thousands of these daily. I am not the only one doing this. See https://eigenphi.io/ https://eigenphi.io/ . With the exception of sandwich transactions, every one of the bots you see on there is making profits without any capital at risk.
    - JumpCrisscross 4y ago
      > it’s 0 The risk of the trade on chain defaulting is virtually non-existent, agreed. Custody risk is never zero. Dollar in / dollar out returns involve lots of counterparties.
    - bryanzk 4y ago
      Hi there. My name is Bryan, and I'm a member of the EigenPhi team. Thanks for recommending us; twice!! :D Would you please spare a few minutes to have a quick chat? I'd love to receive your feedback and provide more valuable data! Here is my email: bryan at eigenphi.com. Looking forward to your reply!!

CryptoPunk 4y ago

moomin 4y ago

You’ve kind of just demonstrated the OP’s point. What do you think modern finance looks like?

simonh 4y ago

> it's quite easy to find pockets of above-average returns if you're smart… Right, but even then how deep are those pockets (what amount of investment can they absorb without being tapped out), how big a time window will they exist for, how will you know if those limits are being reached, and are you really sure you can quantify all the risks? By definition if it’s a pocket of opportunity, it’s very constrained opportunity. As soon as those constraints are breached it will suddenly stop being low risk and might collapse completely. A lot of people have lost a lot of money on sure fire pockets of opportunity that were great when they lasted.

downandout 4y ago
Of course there are limits to every opportunity. I make money everyday from opportunities that exist on microsecond timescales. I run arb and loan liquidation bots, so I haven't had a single losing day, ever. The last two weeks were quite profitable for me, actually the best two week period I have ever had. There are other strategies that are easier to pull off, such as market making, that have moderate risks and outsized returns. The point is that these opportunities exist, and they always will exist, you just have to be smart enough to be able to get into them. If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point.
- notahacker 4y ago
  > If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point. If you needed money for infrastructure for more arb bot, would you look for random novices and offer them 15% (and raise $3m in VC to market to random novices)? Or would you take out an unsecured personal loan from a bank at a lower rate, or a much lower cost loan from a counterparty involved crypto, especially one who understands the nature your trades?
- simonh 4y ago
  I’m sure it’s a great business, but what would happen if 10 competitors all spun up arb bots tomorrow morning? There’s a very low chance of that happening, but not zero.

majormajor 4y ago

A market where, with work, you can "find pockets of above-average returns if you're smart" is MILES away from one where companies are "promising you consistent above-market returns"

cookiengineer 4y ago

> DeFi isn't a single market, it's millions of micro markets that are accessible through what amounts to a single API. Millions of micro markets that produce what, exactly? Last time I checked there has to be at least something on the other side of the calculation what a coin is worth. You think crypto coins magically make people work harder, better, faster, stronger? That's not how the constraints of the physical world work.

downandout 4y ago
Millions of micro markets that produce what, exactly? You seem to be asking me to defend the merits of crypto, which is beyond the scope of this conversation. But generally speaking, most of the coins people actually buy are tied to protocols that are attempting to do things that interesting to at least some part of the population. But, the ability to prove the provenance and ownership of any asset, whether physical or digital, has value. The ability to move value across borders instantly, cheaply, and reliably, has value. In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value. The possibilities are endless.
- cookiengineer 4y ago
  > In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value. This assumes that 100% of the ecosystem is already some form of blockchain. And guess what: It isn't and it never will be due to the democratic nature of the proposed system architecture. The flaws of every coin I've seen is that there are too many assumptions about markets, and dependencies of the markets in the sense of goods and/or services that are just "assumed" to migrate to their blockchain at some point. That's not how incentive proposals should work, as they will (logically) lead to exit scams because a couple of people cannot write and reinvent an ecosystem from scratch. Look at how long IPFS took to mature. Look at how long DAT was refactored in a backwards-incompatible manner. Look at how long it took to write the hypercore protocol stack. Systems like this and - especially markets like this - need time to evolve, which means that the proposed DeFi assumptions about rapid growth bullshit are anti-market proposals, and literally the same way hyped and unverified bonds in the legacy financial systems lead to market crashes.

raverbashing 4y ago

[[This is what DeFI people actually believe]] Whoever thinks "millions of markets trading in every way" is a guarantee of making money is in for an awful surprise

sumeno 4y ago

I'm looking forward to your followup post where you lost all your money and can't figure out where you went wrong. It always happens with people who think they are smarter than the "dumb money" they're taking advantage of. "Sure it's a scam, but I'm smart enough to not be the one getting scammed!"