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Seen a lot of retroactive victory laps but not a lot of articles on people that successfully shorted this algorithmic stablecoins tire fire. Wondering when the

Seen a lot of retroactive victory laps but not a lot of articles on people that successfully shorted this algorithmic stablecoins tire fire. Wondering when the crypto “Big Short” book will inevitably arrive.

xiphias2 4y ago
At this point professional trader groups are doing it. Sam Bankman Fried got super rich super fast (faster than if he just made an exchange without using the trading data that he’s getting from it), I wouldn’t be suprised if he would be behind a big short like this. Insider trading securities is illegal in US, but probably not in Bahamas, where FTX is located.
- 323 4y ago
  Sam got super rich in valuation because he owns a large part of FTX. Like CZ from Binance. Sure, he also made a lot trading, but that's not how he became a billionaire. Also, US has a long arm, this is why foreign exchanges forbid US citizens. Insider trading has a very narrow scope, typically equities. To my surprise I learned that there is no such thing as insider trading in forex (from a legal point). But there are other laws that might apply to the client trading data you mentioned.
- Hendrikto 4y ago
  > I wouldn’t be suprised if he would be behind a big short like this. This event has enormous ripple effects across the whole ecosystem, and they will continue for quite some time. I do not think it would be in his interest to make 2 top 10 coins collapse spectacularly. He would have shot himself in the foot.
  - xiphias2 4y ago
    Just look at the title. The peg had to break anyways, as it was a bad idea, so I support its breakdown as soon as possible before people really start to trust it. I'm a Bitcoin only person for a reason: the devs prioritize system security over adding new features.
- deleted 4y ago
  [deleted]
fortran77 4y ago
> Wondering when the crypto “Big Short” book will inevitably arrive. You can't really "Big Short" a manipulated market where there are no rules whatsoever and you don't have transparency.
whatshisface 4y ago
Where would you go to short crypto? If the answer is "the Blockchain" then your numeraire has as much volatility as your asset. Was anyone signing real delayed delivery contracts for Tether with prices denominated in USD?
- dgfitz 4y ago
  I would be quite interested in the answer to this question. How does one short a coin?
  - puchatek 4y ago
    You can short several coins using USDC and Solana's Mango Markets platform. Also supports the other way, i. e. buying on margin. Great way to lose a lot of money fast if you don't know what you're doing.
  - pru567 4y ago
    FTX allows you to short some coins, don't know specifically if they allowed you to short LUNA/TERRA.
    - gunshai 4y ago
      Unless cha ges you can't be from the US
  - AmericanChopper 4y ago
    Do it at any place that lets you borrow the coin. I’m not especially familiar with the offerings in the market, but I know Binance will let you borrow one coin and stake a different coin as collateral. Borrow the coin you want to short, then sell it, and you now have a short position on that coin.
  - bb88 4y ago
    https://www.daytrading.com/cryptocurrency/shorting https://www.daytrading.com/cryptocurrency/shorting
  - 4y ago
sudosysgen 4y ago
The issue is that the market is too irrational to be able to go short. You can't know when it's actually going to go down.
- bb88 4y ago
  I'm not sure about that. An intentional massive short of Luna and UST at the same time could have had disastrous effects (since UST needed Luna for collateralization). https://coinmarketcap.com/currencies/terra-luna/ https://coinmarketcap.com/currencies/terra-luna/ https://coinmarketcap.com/currencies/terrausd/ https://coinmarketcap.com/currencies/terrausd/ So if you can flood UST and LUNA with enough volume to drop the price, you could send LUNA into a massive selloff. UST would then start to flood LUNA with shares which would accelerate the sell off.
  - Hendrikto 4y ago
    This seems to be exactly what happened.
bb88 4y ago
https://twitter.com/mbhdoteth/status/1524372968075407370 https://twitter.com/mbhdoteth/status/1524372968075407370 https://twitter.com/ShibInform/status/1525063572333551616 https://twitter.com/ShibInform/status/1525063572333551616
jjcc 4y ago
Any body predicted and described the nature of the event as what we know with hindsight is already amazing. Here's another example: https://www.youtube.com/watch?v=y_otSD3LYCA https://www.youtube.com/watch?v=y_otSD3LYCA
joemazerino 4y ago
Anyone liquidating their position ahead of the peg crash was shorting. Sell units were many.
roenxi 4y ago
Although in fairness that only communicates that the fees for shorting luna etc are high compared to the certainty on precisely when they will collapse. The issue is timing not destination. These stable coins are not long-term stable, the incentives around them are horrible. Every stablecoin custodian has huge incentives to spend the fiat until their coin is only partially backed, and then sooner or later there will be a run. They're all going to collapse. Much like traditional banks in fact - there is no uncertainty that eventually they will go bankrupt. It is easy to predict what the mechanism will be. But maybe they'll last long enough to be useful.
- legutierr 4y ago
  Do you really think that Circle and Coinbase are spending USDC reserves on their own behalf? Do you really have so little faith in the US financial regulators that you think they would allow publicly traded companies to steal their customers' money in such an obvious fashion? And what do you mean by "much like traditional banks in fact - there is no uncertainty that eventually they will go bankrupt"? Are you saying that all banks eventually go bankrupt? When should we expect Barclays to go bankrupt, now after having existed for 300 years? When should we expect Bank of New York to go bankrupt, now after having survived for 250 years?
  - jahewson 4y ago
    Surely the implication is not that they are spending them but behaving like banks and lending out the underlying capital.
    - legutierr 4y ago
      But that’s not how banks work. They don’t lend out the capital of depositors. Rather, when they lend money, they record a receivable from the borrower, and at the same time credit the borrower’s account at the bank. Bank lending creates money.
      - lupire 4y ago
ayngg 4y ago
I think a lot of people knew it was coming soon, and that triggered the death spiral. Everyone knows 20%apy staking rewards can't last forever, and people on Reddit of all places (if Reddit knows then it is far from a secret) saw that reserves would run dry by June with the current trajectory, and they were adjusting rates way too slow to prevent any kind of shock. So people started to jump ship, which caused the initial depegging since people were selling both UST and LUNA to get out of the ecosystem entirely.
puranjay 4y ago
I know a friend who made $14M shorting LUNA from $50 to all the way down to nothing
haasted 4y ago
One Twitter user has been very vocal about his (seemingly) successful shorts of the ecosystem: https://twitter.com/GiganticRebirth/status/1525110032895025154 https://twitter.com/GiganticRebirth/status/15251100328950251... https://www.coindesk.com/markets/2022/02/17/how-the-big-short-dao-bet-against-the-crypto-market-and-won/ https://www.coindesk.com/markets/2022/02/17/how-the-big-shor...

xiphias2 4y ago

At this point professional trader groups are doing it. Sam Bankman Fried got super rich super fast (faster than if he just made an exchange without using the trading data that he’s getting from it), I wouldn’t be suprised if he would be behind a big short like this. Insider trading securities is illegal in US, but probably not in Bahamas, where FTX is located.

323 4y ago
Sam got super rich in valuation because he owns a large part of FTX. Like CZ from Binance. Sure, he also made a lot trading, but that's not how he became a billionaire. Also, US has a long arm, this is why foreign exchanges forbid US citizens. Insider trading has a very narrow scope, typically equities. To my surprise I learned that there is no such thing as insider trading in forex (from a legal point). But there are other laws that might apply to the client trading data you mentioned.
Hendrikto 4y ago
> I wouldn’t be suprised if he would be behind a big short like this. This event has enormous ripple effects across the whole ecosystem, and they will continue for quite some time. I do not think it would be in his interest to make 2 top 10 coins collapse spectacularly. He would have shot himself in the foot.
- xiphias2 4y ago
  Just look at the title. The peg had to break anyways, as it was a bad idea, so I support its breakdown as soon as possible before people really start to trust it. I'm a Bitcoin only person for a reason: the devs prioritize system security over adding new features.
deleted 4y ago
[deleted]

fortran77 4y ago

> Wondering when the crypto “Big Short” book will inevitably arrive. You can't really "Big Short" a manipulated market where there are no rules whatsoever and you don't have transparency.

whatshisface 4y ago

Where would you go to short crypto? If the answer is "the Blockchain" then your numeraire has as much volatility as your asset. Was anyone signing real delayed delivery contracts for Tether with prices denominated in USD?

dgfitz 4y ago
I would be quite interested in the answer to this question. How does one short a coin?
- puchatek 4y ago
  You can short several coins using USDC and Solana's Mango Markets platform. Also supports the other way, i. e. buying on margin. Great way to lose a lot of money fast if you don't know what you're doing.
- pru567 4y ago
  FTX allows you to short some coins, don't know specifically if they allowed you to short LUNA/TERRA.
  - gunshai 4y ago
    Unless cha ges you can't be from the US
- AmericanChopper 4y ago
  Do it at any place that lets you borrow the coin. I’m not especially familiar with the offerings in the market, but I know Binance will let you borrow one coin and stake a different coin as collateral. Borrow the coin you want to short, then sell it, and you now have a short position on that coin.
- bb88 4y ago
  https://www.daytrading.com/cryptocurrency/shorting https://www.daytrading.com/cryptocurrency/shorting
- 4y ago

sudosysgen 4y ago

The issue is that the market is too irrational to be able to go short. You can't know when it's actually going to go down.

bb88 4y ago
I'm not sure about that. An intentional massive short of Luna and UST at the same time could have had disastrous effects (since UST needed Luna for collateralization). https://coinmarketcap.com/currencies/terra-luna/ https://coinmarketcap.com/currencies/terra-luna/ https://coinmarketcap.com/currencies/terrausd/ https://coinmarketcap.com/currencies/terrausd/ So if you can flood UST and LUNA with enough volume to drop the price, you could send LUNA into a massive selloff. UST would then start to flood LUNA with shares which would accelerate the sell off.
- Hendrikto 4y ago
  This seems to be exactly what happened.

bb88 4y ago

https://twitter.com/mbhdoteth/status/1524372968075407370 https://twitter.com/mbhdoteth/status/1524372968075407370 https://twitter.com/ShibInform/status/1525063572333551616 https://twitter.com/ShibInform/status/1525063572333551616

jjcc 4y ago

Any body predicted and described the nature of the event as what we know with hindsight is already amazing. Here's another example: https://www.youtube.com/watch?v=y_otSD3LYCA https://www.youtube.com/watch?v=y_otSD3LYCA

joemazerino 4y ago

Anyone liquidating their position ahead of the peg crash was shorting. Sell units were many.

roenxi 4y ago

Although in fairness that only communicates that the fees for shorting luna etc are high compared to the certainty on precisely when they will collapse. The issue is timing not destination. These stable coins are not long-term stable, the incentives around them are horrible. Every stablecoin custodian has huge incentives to spend the fiat until their coin is only partially backed, and then sooner or later there will be a run. They're all going to collapse. Much like traditional banks in fact - there is no uncertainty that eventually they will go bankrupt. It is easy to predict what the mechanism will be. But maybe they'll last long enough to be useful.

legutierr 4y ago
Do you really think that Circle and Coinbase are spending USDC reserves on their own behalf? Do you really have so little faith in the US financial regulators that you think they would allow publicly traded companies to steal their customers' money in such an obvious fashion? And what do you mean by "much like traditional banks in fact - there is no uncertainty that eventually they will go bankrupt"? Are you saying that all banks eventually go bankrupt? When should we expect Barclays to go bankrupt, now after having existed for 300 years? When should we expect Bank of New York to go bankrupt, now after having survived for 250 years?
- jahewson 4y ago
  Surely the implication is not that they are spending them but behaving like banks and lending out the underlying capital.
  - legutierr 4y ago
    But that’s not how banks work. They don’t lend out the capital of depositors. Rather, when they lend money, they record a receivable from the borrower, and at the same time credit the borrower’s account at the bank. Bank lending creates money.
    - lupire 4y ago

ayngg 4y ago

I think a lot of people knew it was coming soon, and that triggered the death spiral. Everyone knows 20%apy staking rewards can't last forever, and people on Reddit of all places (if Reddit knows then it is far from a secret) saw that reserves would run dry by June with the current trajectory, and they were adjusting rates way too slow to prevent any kind of shock. So people started to jump ship, which caused the initial depegging since people were selling both UST and LUNA to get out of the ecosystem entirely.

puranjay 4y ago

I know a friend who made $14M shorting LUNA from $50 to all the way down to nothing

haasted 4y ago

One Twitter user has been very vocal about his (seemingly) successful shorts of the ecosystem: https://twitter.com/GiganticRebirth/status/1525110032895025154 https://twitter.com/GiganticRebirth/status/15251100328950251... https://www.coindesk.com/markets/2022/02/17/how-the-big-short-dao-bet-against-the-crypto-market-and-won/ https://www.coindesk.com/markets/2022/02/17/how-the-big-shor...