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All of these yield farms seem to reassure customers that everything is great, then the next week declare themselves insolvent. It seems that as soon as they pau

All of these yield farms seem to reassure customers that everything is great, then the next week declare themselves insolvent. It seems that as soon as they pause withdrawals they know the company is done for and they have to set themselves up for bankruptcy. If it were depositor-first mindset, the damage could be spread out by limiting withdrawals but still giving some percentage of total deposit as liquidity. It seems pretty offensive that most of these companies just flip the switch to absorbing customer funds for general operations runway, lawyers and payouts for secured creditors/owners.

raverbashing 4y ago
The funnies thing is people giving those platforms "the benefit of the doubt" days or even hours before they go up in flames "Yes, I'm sure your RandomCoin with unrealistic yields is just having a momentarly hiccup, no need to worry" /s
rightbyte 4y ago
I guess they want to give insiders the chance to pull out to 100%. But ye ... there should be a controlled collapse of these things. Immediate liquidification with depositors having priority.
- cm2187 4y ago
  Which in banking is known as bail-in (regulations introduced after 2008). In the financial service industry you can't really do a chapter 11, i.e. operate while being protected from your creditors, as your business is precisely to take money from creditors (unlike a car manufacturer). That left you as only solution of either doing a bail out (3rd party, typically state, injecting capital) or going bust Lehman's way. Bail-in was introduced where the regulator has the power to declare a bank non viable, and to impose an extra-judicial restructuring over a weekend so the bank can operate normally on Monday morning. The losses in the restructuring follow a modified creditor hierarchy, which essentially follows the creditor hierarchy with some tweaks (tries to avoid restructuring deposits, complex liabilities or anything secured, and favors restructuring subordinated instruments and wholesale funding liabilities). Crypto is reinventing all the financial scandals and fuckups of the last century and re-discovering the benefit of the financial regulations it was designed to avoid.
- pjc50 4y ago
  > controlled collapse Controlled by whom? The whole point of cryptocurrency is to get beyond such limitations as "FDIC insurance" and "accredited investor" and "anti money laundering", and allow people to give their money directly to Singaporean scammers without legal recourse.
  - wmf 4y ago
    It wouldn't be hard to come up with a fair liquidation algorithm.
    - sbierwagen 4y ago
      Why would the bank want the liquidation to be fair? The primary selling point is that they're unregulated. The goal is to steal money.
yieldcrv 4y ago
yield farm has a definition in DeFi that includes a software where "disabling withdrawals and undergoing restructuring" is not capable of happening. (withdrawal control could be in the codebase, its purpose would be entirely different) I wouldn't call this a yield farm, except in a hyperbolic and pejorative concatenation of words "since it has a lot of yield products" at least in the DeFi version, any impropriety would be known instantly and its effect would be known instantly, users with insurance would be able to make a claim pretty quickly and get paid out, users without insurance would know their loss and be along for the ride or move on
- pcthrowaway 4y ago
  I think a lot of the people discussing all the crypto news (even here where people normally tend to have high technical literacy) have never bothered to try yield farming or using defi, to understand the distinction. Which is a shame, because whatever your feelings on crypto are, I'd rather see well-formed criticisms from crypto-literate people than critical or supportive comments from people who actually don't know anything they're talking about. $5-20 is enough to get an understanding of what defi is (fees on Polygon and Fantom are fractions of pennies), but it does perhaps require an investment of 5-20 hours as well.
  - nradov 4y ago
    I don't need to invest 20 hours into learning about astrology to know that it's obviously bullshit.
  - yieldcrv 4y ago
    I think the best things news organizations can do is highlight more mundane things Like how someone was immediately reimbursed by an insurance protocol following an exploit Instead of a news article only about the exploit and losses
- cuteboy19 4y ago
  i think a lot of people who are too heavily invested in crypto tend to take all the crypto marketing way too seriously. hardly any defi plaftorm or cryptocurrency is actually decentralised in a real sense apart from maybe the top 3. as an example, terra luna was a "decentralized" platform (ignore the anchor ponzi for a moment). Even its critics generally focused on anchor and did not question the decentralization part. And yet such a decentralized platform very quickly disabled withdrawals (UST peg) as soon as it became clear that their ponzi had collapsed. now we can go in depth as to whether the mechanism they used was legitimate or whether the validators were factually independent of mr kwon but it really does not matter that is why people dont and shouldnt take any such claims very seriously. its primary purpose is marketing only.
pjc50 4y ago
> absorbing customer funds for general operations runway, lawyers and payouts for secured creditors/owners. If they're actually insolvent, they're obliged to do this. They have no more customers, and should discontinue all operations; they only have creditors of one form or another. A "yield farm" seems to be just an unregulated shadow bank: "borrow short lend long", but lending into really risky assets like other cryptocurrency firms. It's not exactly Basel III.
- sgt101 4y ago
  I don't know a thing about Vauld, so no accusations here, but surely people realize that anything offering +18% on what you can get from a bank will often be a ponzi scheme?
  - rvnx 4y ago
    They rather say it's a "high yield investment program"
  - lmm 4y ago
    Many of the individual entities are honest as far as it goes (but often the one paying you 18% is just taking your funds and "investing" them in the one paying 19%, hence the current contagion). The crypto ecosystem as a whole is the ponzi scheme, and it's only going to collapse when people lose faith in all of it, bitcoin proper included.
    - yieldcrv 4y ago
      The price will go lower and blocks will still be produced and function just as well
      - lmm 4y ago
        The system will keep working on the way down (at least until the mining world gets small enough that someone can do a 51% attack), but once the expectation of future growth disappears, the price will crater and never come back and the whole thing will be fairly harmless. I guess the network will still work for people buying drugs, but do people even still do that?
Agamus 4y ago
For a long time, I was just annoyed. But it has become clear that these digital currencies are one of the most revolting and pathetic things our species has ever created. Great job!
- hotpotamus 4y ago
  One of my all time favorite (in a creative thought provoking way) comments from this forum suggested that cryptocurrency may be an answer to the Fermi Paradaox - specifically the Dark Forest theory of it. Instead of going to the trouble of actually physcially trying to destroy us, an alien civilization could simply craft an economic weapon and broadcast it to us as an anonymous whitepaper and we simply destroy ourselves. Far-fetched but darkly comic.
  - rchaud 4y ago
    Far-fetched? Russian disinformation ops have succeeded in turning the US upside down with little more than a bot farm and a Facebook ads account.
    - skinnymuch 4y ago
      The Russians couldn’t get Trump close to sniffing a vote count win. I think the shitty system deserves a ton more blame and the focus. The Russians didn’t rig Bernie Sanders out of the nomination of one of the two major parties twice either.
  - sgustard 4y ago
    More believable as a machine superintelligence rather than aliens, since we "know" the former will be here in 10 or 20 or 100 years, and immediately formulate ways to get humans out of the picture.
- npc12345 4y ago
  > Deposits USD into ponzi scam > USD is bad!!11 Does not compute.
lupire 4y ago
If it were a depositer first mindset, the business couldn't exist, because the whole operation is a ponzi. If they held depositor funds safely, they couldn't pay interest. And they did pay interest for a while, that was the liquidity. That's what the deal is, same as any unsecured loan: high risk of losing your deposit, in exchange for steady interest payments for indeterminate amount of time. It's like a casino game that pays 1.1 on a win and 0 on a loss, and you play once a month or whatever your staking period is.

raverbashing 4y ago

The funnies thing is people giving those platforms "the benefit of the doubt" days or even hours before they go up in flames "Yes, I'm sure your RandomCoin with unrealistic yields is just having a momentarly hiccup, no need to worry" /s

rightbyte 4y ago

I guess they want to give insiders the chance to pull out to 100%. But ye ... there should be a controlled collapse of these things. Immediate liquidification with depositors having priority.

cm2187 4y ago
Which in banking is known as bail-in (regulations introduced after 2008). In the financial service industry you can't really do a chapter 11, i.e. operate while being protected from your creditors, as your business is precisely to take money from creditors (unlike a car manufacturer). That left you as only solution of either doing a bail out (3rd party, typically state, injecting capital) or going bust Lehman's way. Bail-in was introduced where the regulator has the power to declare a bank non viable, and to impose an extra-judicial restructuring over a weekend so the bank can operate normally on Monday morning. The losses in the restructuring follow a modified creditor hierarchy, which essentially follows the creditor hierarchy with some tweaks (tries to avoid restructuring deposits, complex liabilities or anything secured, and favors restructuring subordinated instruments and wholesale funding liabilities). Crypto is reinventing all the financial scandals and fuckups of the last century and re-discovering the benefit of the financial regulations it was designed to avoid.
pjc50 4y ago
> controlled collapse Controlled by whom? The whole point of cryptocurrency is to get beyond such limitations as "FDIC insurance" and "accredited investor" and "anti money laundering", and allow people to give their money directly to Singaporean scammers without legal recourse.
- wmf 4y ago
  It wouldn't be hard to come up with a fair liquidation algorithm.
  - sbierwagen 4y ago
    Why would the bank want the liquidation to be fair? The primary selling point is that they're unregulated. The goal is to steal money.

yieldcrv 4y ago

yield farm has a definition in DeFi that includes a software where "disabling withdrawals and undergoing restructuring" is not capable of happening. (withdrawal control could be in the codebase, its purpose would be entirely different) I wouldn't call this a yield farm, except in a hyperbolic and pejorative concatenation of words "since it has a lot of yield products" at least in the DeFi version, any impropriety would be known instantly and its effect would be known instantly, users with insurance would be able to make a claim pretty quickly and get paid out, users without insurance would know their loss and be along for the ride or move on

pcthrowaway 4y ago
I think a lot of the people discussing all the crypto news (even here where people normally tend to have high technical literacy) have never bothered to try yield farming or using defi, to understand the distinction. Which is a shame, because whatever your feelings on crypto are, I'd rather see well-formed criticisms from crypto-literate people than critical or supportive comments from people who actually don't know anything they're talking about. $5-20 is enough to get an understanding of what defi is (fees on Polygon and Fantom are fractions of pennies), but it does perhaps require an investment of 5-20 hours as well.
- nradov 4y ago
  I don't need to invest 20 hours into learning about astrology to know that it's obviously bullshit.
- yieldcrv 4y ago
  I think the best things news organizations can do is highlight more mundane things Like how someone was immediately reimbursed by an insurance protocol following an exploit Instead of a news article only about the exploit and losses
cuteboy19 4y ago
i think a lot of people who are too heavily invested in crypto tend to take all the crypto marketing way too seriously. hardly any defi plaftorm or cryptocurrency is actually decentralised in a real sense apart from maybe the top 3. as an example, terra luna was a "decentralized" platform (ignore the anchor ponzi for a moment). Even its critics generally focused on anchor and did not question the decentralization part. And yet such a decentralized platform very quickly disabled withdrawals (UST peg) as soon as it became clear that their ponzi had collapsed. now we can go in depth as to whether the mechanism they used was legitimate or whether the validators were factually independent of mr kwon but it really does not matter that is why people dont and shouldnt take any such claims very seriously. its primary purpose is marketing only.

pjc50 4y ago

> absorbing customer funds for general operations runway, lawyers and payouts for secured creditors/owners. If they're actually insolvent, they're obliged to do this. They have no more customers, and should discontinue all operations; they only have creditors of one form or another. A "yield farm" seems to be just an unregulated shadow bank: "borrow short lend long", but lending into really risky assets like other cryptocurrency firms. It's not exactly Basel III.

sgt101 4y ago
I don't know a thing about Vauld, so no accusations here, but surely people realize that anything offering +18% on what you can get from a bank will often be a ponzi scheme?
- rvnx 4y ago
  They rather say it's a "high yield investment program"
- lmm 4y ago
  Many of the individual entities are honest as far as it goes (but often the one paying you 18% is just taking your funds and "investing" them in the one paying 19%, hence the current contagion). The crypto ecosystem as a whole is the ponzi scheme, and it's only going to collapse when people lose faith in all of it, bitcoin proper included.
  - yieldcrv 4y ago
    The price will go lower and blocks will still be produced and function just as well
    - lmm 4y ago
      The system will keep working on the way down (at least until the mining world gets small enough that someone can do a 51% attack), but once the expectation of future growth disappears, the price will crater and never come back and the whole thing will be fairly harmless. I guess the network will still work for people buying drugs, but do people even still do that?

Agamus 4y ago

For a long time, I was just annoyed. But it has become clear that these digital currencies are one of the most revolting and pathetic things our species has ever created. Great job!

hotpotamus 4y ago
One of my all time favorite (in a creative thought provoking way) comments from this forum suggested that cryptocurrency may be an answer to the Fermi Paradaox - specifically the Dark Forest theory of it. Instead of going to the trouble of actually physcially trying to destroy us, an alien civilization could simply craft an economic weapon and broadcast it to us as an anonymous whitepaper and we simply destroy ourselves. Far-fetched but darkly comic.
- rchaud 4y ago
  Far-fetched? Russian disinformation ops have succeeded in turning the US upside down with little more than a bot farm and a Facebook ads account.
  - skinnymuch 4y ago
    The Russians couldn’t get Trump close to sniffing a vote count win. I think the shitty system deserves a ton more blame and the focus. The Russians didn’t rig Bernie Sanders out of the nomination of one of the two major parties twice either.
- sgustard 4y ago
  More believable as a machine superintelligence rather than aliens, since we "know" the former will be here in 10 or 20 or 100 years, and immediately formulate ways to get humans out of the picture.
npc12345 4y ago
> Deposits USD into ponzi scam > USD is bad!!11 Does not compute.

lupire 4y ago

If it were a depositer first mindset, the business couldn't exist, because the whole operation is a ponzi. If they held depositor funds safely, they couldn't pay interest. And they did pay interest for a while, that was the liquidity. That's what the deal is, same as any unsecured loan: high risk of losing your deposit, in exchange for steady interest payments for indeterminate amount of time. It's like a casino game that pays 1.1 on a win and 0 on a loss, and you play once a month or whatever your staking period is.