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It’s been pretty interesting watching YC backed Coinbase get absolutely crushed by FTX, which has a higher % of crypto trading volume despite having less than 1
by hftthrowaway22 4y ago
It’s been pretty interesting watching YC backed Coinbase get absolutely crushed by FTX, which has a higher % of crypto trading volume despite having less than 10% of the headcount.
Crypto is a zero sum game, and the old Paul Graham essays and other tired VC dogmas really only work in positive sum games. FTX was founded by traders which is valuable when the ultimate purpose of the crypto industry is to separate uninformed people from their money.
- grey-area 4y agoFTX is also going to feel a lot of pain when the crypto market crash completes. None of these companies are IMO sustainable without mass interest in cryptocurrencies, which is rapidly fading as people realise they're not going to get rich quick.
- kolbe 4y agoThis is the case for most market makers in whatever markets they're in. A crash usually produces a huge trading windfall, and then the subsequent "recession" leaves people with little money to invest/gamble with. FTX's traders are veterans of the industry, and they understand the need to be lean when order flow is light, and the need to make as much as possible when it's hot. Coinbase just watched the best two years of trading pass in front of their eyes, and failed to monetize it even to 10% of its potential. If they're lucky, they will get another opportunity to do things right in 5 years. But the trading graveyard is filled with people/companies like Coinbase who did really well for a year because they lucked into a good position, but who should have done 10x better. But then the real players see the opportunity, and run the Coinbases of the world off.
- codebolt 4y agoFTX is in deep with Tether. I expect they'll pull some tricks out of their collective hats to avoid a complete collapse.
- quickthrower2 4y agoPulling tricks needs a new sucker pipeline. But sucker pipelines will dry up as old suckers get burned and money is generally drying up due to interest rates.
- codebolt 4y agoDon't need new suckers if you're running the largest money counterfeiting operation in human history.
- elif 4y agoIf Coinbase allowed you to pay in fake dollars I'm sure they would get more volume too.
- puranjay 4y agoAlameda is the single scariest entity in crypto. They're absolutely brutal. I exit every trade once it becomes apparent that Alameda is in. If I was a VC firm, however, I would back anything SBF was doing. He's a genius when it comes to making money.
- shippintoboston 4y agoSorry, what does SBF stand for?
- arthurcolle 4y agoSam Bankman-Fried, guy who started FTX and Alameda Research
- puranjay 4y agoSam Bankman-Fried - the founder of Alameda
- vamsipk 4y agoNot sure I understand your comment. If they are so good why would you exit the trade?
- greatpostman 4y agoYeah. FTX people clearly know a lot more about market making and how exchanges work. Makes coinbase look like amateurs. Coinbase hired their CPO with a 650 million dollar pay package. They should have spent that money on 2 - 5 million a year hft programmers and traders
- alephnan 4y agoI think for a while they were hiring Node.js developers to develop these trading systems
- FabHK 4y agoFTX's CEO SBF also doesn't believe in crypto, as far as I can say, but just sees it as a means to make some money for philanthropy (effective altruism). That might make him less prone to succumb to the hype and over-invest.
- llamaimperative 4y agoWhat do you make of Sam Bankman-Fried describing his business as a literal Ponzi scheme on Odd Lots podcast? The commentary isn’t necessary to see the insanity but here’s fastest way to get to the relevant content: https://youtu.be/C6nAxiym9oc https://youtu.be/C6nAxiym9oc Edit: To clarify, though not sure how much a mitigation this is, yes SBF is describing much of the underlying activity he takes commission on as a Ponzi scheme. Sure, he’s not operating the Ponzi itself, just keeping it operational and profiting from its continued operation. Mea culpa.
- janmo 4y agoFTX's success is a bit questionable. They are the biggest buyer of USDT/Tether and shady things are probably going on there.
- gruez 4y agoDoes that say much? They're the biggest buyer because USDT is the biggest stablecoin.
- rglullis 4y agoIsn't that reversing the logic? If FTX bought more USDC than USDT, the scales would've changed. Also, the fact that FTX has never called out Tether or at least pushed for a proper audit is indicative that they are more likely to be in the scam than merely buying from them because they believe to be solid.
- graeme 4y agoYour logic is backwards. They don’t buy more Tether than other stables. (Well they do but that wasn’t the point) The point is they are Tether’s largest customer. They buy more Tether than anyone else.
- gruez 4y agoI still don't see what the problem is. Their customers want USDT. They buy USDT so their customers can access it. Looking around on their site, it looks like they support USD alongside USDT, so it's not like they're strongarming their customers into using USDT. Calling that shady is like calling a stock broker shady because they're the largest buyers of [insert shady/overhyped company here].
- colinmhayes 4y agoThey are tethers largest customer because they're the largest exchange and tether is the largest stablecoin. Stablecoins in general were created because offshore exchanges had trouble dealing with traditional banks since the whole point of being offshore is not following US regulations.
- symlinkk 4y agoI have never heard of FTX until reading your comment just now. Is it really crushing Coinbase?
- avinassh 4y agoSame here until I saw the Larry David's commercial - https://www.youtube.com/watch?v=BH5-rSxilxo https://www.youtube.com/watch?v=BH5-rSxilxo
- rvz 4y agoThose who have too much head count and hire aggressively, also fire aggressively. I'm guessing FTX kept their head count low, so not impacted as hard as Coinbase is.
- vdddv 4y agocrushing might be a bit too far, but they are certainly ahead of Coinbase in volume with lower opex https://coinmarketcap.com/rankings/exchanges/ https://coinmarketcap.com/rankings/exchanges/
- avinassh 4y agoI had no idea that Binance is so far ahead. Why do most people use it? Some trust factor?
- gnrlst 4y agoIt has the most pairs available, historically aggressive referral scheme, BNB and BSC also helped a lot. not sure about the trust factor
- pcthrowaway 4y agoIt also has very low trading fees (~0.1% per trade)
- trompetenaccoun 4y ago
- golergka 4y ago> Crypto is a zero sum game How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value proposition raises quadratically.
- FabHK 4y agoGains from trading are zero sum - whatever anyone takes out (when selling), someone must put in (by buying). More specifically, it is a negative sum game, since exchanges and miners want their cut. So, the assertion that crypto as a whole is zero sum hinges on the assumption that for the vast majority of people, the utility of crypto comes from capital gains (buying and selling for a higher price), rather than, say, the utility of buying drugs or paying off ransomware.
- junofan 4y agoNo. If I buy Monero on an exchange, I pay only the marginal buyer’s price. The ability to transact privately may, however, be worth much more to me than that price.
- minsc_and_boo 4y agoMonero and its ability to transact privately is only valuable if you're participating in criminal activity, which is not the vast majority of people. You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs. (I would also argue that Monero is the only crypto that is more currency than any other crypto today bc of this, but it's not a selling point IMO)
- lawn 4y agoIt absolutely is not only for criminals. A simple example: you go to a store and buy something with BTC. All good so far. But the store owner can see on the public blockchain that the wallet you paid with contains a lot of Bitcoin, and that you were in fact a crypto multi-millionaire. And he and his buddies will now target you in a nightly visit where they'll torture you and your family until you give them your coins. Or another example: you're the business owner but the customer pays with tainted bitcoins, coming from child trafficking. Now your Coinbase account will be frozen if you send the coins there, or you'll be unable to use them in other ways because they're tainted. The ability to transact privately is for your personal safety and to be able to transact with other people without being branded a terrorist or pedophile and have to deal with those false accusations.
- bko 4y agoI agree and am in general a big fan of FTX and the guys that work there. The CEO, Sam Bankman-Fried one of these HFT guys from Jane Street and his net worth shot up from 0 to $24 billion in just a few years. He kept things super lean and focused. But in the last few months it looks like he's hired a PR team and is all over the place: podcasts, obviously planted news stories, etc. He even hired a head of fashion and luxury partnerships and even has an ad out in Vogue. I get that he may be looking forward to spending his wealth, but I feel if he doesn't keep focused his company will decay and he'll get sucked up into celebrity BS. https://markets.businessinsider.com/news/currencies/ftx-blockchain-crypto-bitcoin-ethereum-tom-brady-nft-metaverse-fashion-2022-2 https://markets.businessinsider.com/news/currencies/ftx-bloc...
- xiphias2 4y agoWhy is being a celebrity BS? After a few tens of millions (or maybe $100M) dollars money doesn't matter at all, it's all about status, and money is just a tool to achieve it.
- bko 4y agoSure, for some people. But I was hoping the Sam Bankman-Fried had higher aspirations like building a product and team he could be proud of. I don't think celebrity status is good for you. It's very unnatural to be surrounded by yes men and people that just want to use for your money or status.
- JumpCrisscross 4y ago> was hoping the Sam Bankman-Fried had higher aspirations like building a product and team he could be proud of This is Armstrong. It’s why he’s failing. Bankman-Fried recognises crypto for what it is. It’s not somewhere to do things to be proud of. It’s a place to make money while it lasts.
- adamsmith143 4y ago>I get that he may be looking forward to spending his wealth On Philanthropy maybe. He's pretty dedicated to the EA movement and has explicitly said he intends to give everything away.