10 ms·

Crypto’s last man standing

74 points by stevenjgarner 4y ago

stevenjgarner 4y ago
Archived : https://archive.ph/Q3S7D https://archive.ph/Q3S7D
woah 4y ago
It's funny to see the Economist try to view crypto through a traditional finance lens. The companies rescued by SBF are idiotic, promising to provide stable returns using extremely risky investment strategies. They are the bottom feeders of crypto, as well as being one of the most boring things about it. The Economist seems to want to make crypto reporting part of their purview- why don't they look at some of the interesting developments such as AMMs, algorithmic stablecoins, DAOs, etc?
- pru567 4y ago
  Aren't algo-stablecoins a refuted concept after IronFinance and Terra/Luna?
  - bhouston 4y ago
    Refuted means you can conclusive prove something. You can only say these attempts at algorithmic stablecoins failed but it doesn’t mean they are destined to always fail. The devil is in the details and honestly Terra was run incompetently and for greed rather than as a true professional endeavor.
    - imron 4y ago
      Like communism, I guess real algo-stablecoins have never been tried.
    - jeromegv 4y ago
      Sounds like a no true Scotsman fallacy. Even has Luna started losing peg, lots of people thought there was no way they would go entirely down because it was one of the biggest name in crypto and supported in the industry by so many. It was very mainstream solution and among the top 10 crypto in market cap. The history of currency and pegs are well documented in the world of finance, for decades. If anything the demonstration that an algorithmic stablecoin is possible is something that must be proven, because every signs are pointing toward the fact that it's not.
      - bhouston 4y ago
        I guess it is a Scotsman like scenario. The issue is that algorithmic lending isn’t uniform nor fully explored yet so it is hard to say that it is proved that it can not work. I would argue that it is akin to saying that because you found 5 Scotland and none of them is tall then it proves all Scotsman’s are short. It is not a true proof that all Scotland are short but rather an observation that all Scotland you’ve seen so far are short. These are different things. Maybe all Scotsman are short but it isn’t yet a hard proof just a conjecture. That is all.
    - thr0wawayf00 4y ago
      > The devil is in the details and honestly Terra was run incompetently and for greed rather than as a true professional endeavor. If the market can't discern honest players from the criminals, then how will an honest attempt at these coins ever succeed? The problem is that we don't know that they're criminals until they've gone under, and there's no due diligence or oversight to verify that they're legit because that would be antithetical to the entire system. It would be like continuing to drop a little money in every single altcoin that hits r/cryptomoonshots because at least one of those people has to be honest, right? If being trustless is central to the technology, then we have no idea if what we're putting our money into is legit or not and that's a fundamental problem with this stuff. The system rewards bad behavior, plain and simple. As long as that's true, I don't see how honest people gain enough influence to actually achieve the vision that the community realizes.
      - wmf 4y ago
        If the market can't discern honest players from the criminals, then how will an honest attempt at these coins ever succeed? Yeah, this is a huge problem for crypto in general. The problem is that we don't know that they're criminals until they've gone under, and there's no due diligence or oversight to verify that they're legit At least one third party analyzed Terra's algorithm and predicted the collapse around 6 months before it happened.
      - solveit 4y ago
        I mean, people were screaming that the Terra ecosystem was going to collapse since forever. It's just that different people invested in it anyway. There's nothing impossible about verifying the legitimacy of any endeavour, people just don't do it. Honest people will do honest work and succeed or fail on their own terms, the fact that there are a hundred scams running adjacent to the honest projects is unfortunate and very disruptive but doesn't actually fundamentally block honest work.
        majormajor 4y ago
        People have been screaming about that for every part of crypto. How is the non-crypto-expert supposed to tell that the Terra and DOGE hate is real but the BTC and ETH hate isn't? Or that the ETH hate also is, and it's only the BTC hate that you should ignore? Or any of a number of different permutations? Isn't the adoption of the honest work blocked by this inability to differentiate without lots of hours of research?
    - deleted 4y ago
      [deleted]
    - skybrian 4y ago
      The reason they failed seems rather general. They are based on assets that can go down in value fast when there is a run to get out of the stablecoin and not enough traders to handle the volume. Essentially, the stablecoin needs to be fully backed by traders who need to be prepared to back most of the market cap by trading at scale. An "algorithmic" stablecoin allows anyone to do that trade, but it doesn't make any particular guarantee that these traders will be there when they're needed. And I don't see how that can be automated unless the algorithm already has the assets, as with an overcollateralized margin loan? So, while innovation is hard to rule out, it seems like you need a good explanation for why this time it's different.
      - wmf 4y ago
        It goes without saying that algorithmic stablecoins have to be overcollateralized. The remaining debate is about the precise mechanism for contracting supply. https://vitalik.ca/general/2022/05/25/stable.html https://vitalik.ca/general/2022/05/25/stable.html
  - clpm4j 4y ago
    There are still some notable people in crypto who want to see the concept succeed. I imagine we'll see at least a few more try (and probably blow up) before they get regulated out of existence.
    - lumost 4y ago
      The concept is pretty interesting if there were real assets behind the coin. Problem is you would need a good counterparty… which means you need a good custodian… which means you might as well just use the counterparty and custodian. The only real benefit of the coin in this case would be programming derivatives without further intermediate custodians and counter parties. This could be useful for some back office finance activities outside of scams.
    - bko 4y ago
      The incentives are such that if you can figure it out you can basically create money out of nothing. So there will always be people that are looking for it to succeed. It's alchemy. It all breaks down if the floater goes to zero or a price such that you can't mint enough to stabilize the coin. And on a long enough time span this is bound to happen. The stable coin can never go above its target value, but it can go below. So you're essentially holding value and then getting wiped out every N years or so. So it's doomed to fail
      - josefrichter 4y ago
        It’s a fascinating intellectual exercise. I think at this point nobody really knows whether or not it can work.
        bko 4y ago
        I ask two questions to see if passes the smell test: 1. Does this work if the floater is worth 0? 2. Is there some kind of natural cap? In other words, can I print an infinite amount of dollars? None of the implementations works without some value being attributable to the floating token(s). Similarly, I never hear of any natural caps. For instance, you can create a stable coin with a market cap of $100 and just mint N tokens of the floater for M where M*N = 100. But why can't you mint more and sell at a slightly lower price? Is there some natural limit? If so, can't the price of the floater go down to such a level to not be able to support the market cap?
  - wmf 4y ago
    Vitalik had some good things to say about RAI recently: https://vitalik.ca/general/2022/05/25/stable.html https://vitalik.ca/general/2022/05/25/stable.html
- RC_ITR 4y ago
  I mean everyone has their idea of what is 'interesting' in crypto, but the counterpoint to your argument is all of those things can be positioned as being just as scammy as yield farming: AMMs = Only work in a world where prevailing prices aren't set by traditional centralized order books. As long as those exist, AMMs will always be 'behind the curve' and lose value to arbitrageurs who buy from central books and sell to AMMs (even if bulls call it 'impermanent loss' it's a core feature of the system). Algorithmic Stable coins = Only work in a world where the market perceives the paired asset as truly 'risk-free' (as evidenced by the Terra/Luna debacle). To date, the only 'risk-free' assets come with a multi-trillion dollar investment in an army, so unclear if there's really anything interesting there. DAOs = Frequently show themselves as insecure, oligopolist, retail un-friendly organizations [0][1][2] In short, be careful what you wish for, because at least by focusing on the SBF-cult, they're not doing the serious journalism needed to prove how atechnological most crypto projects are. [0] https://twitter.com/thedaomaker/status/1425817683635802119 https://twitter.com/thedaomaker/status/1425817683635802119 [1] https://cryptoslate.com/solend-pays-users-to-vote-on-proposal-to-liquidate-whale-wallet-otc-and-avoid-bad-debt/ https://cryptoslate.com/solend-pays-users-to-vote-on-proposa... [2]https://unblock.net/crash-of-the-high-yield-daos/ https://unblock.net/crash-of-the-high-yield-daos/
- bko 4y ago
  AMMs are pretty cool, but like much of crypto today just centered around trading one coin for another. Sure that's useful, but that' assuming that these coins should be worth something and are worth holding in their own right. Algorithmic stablecoins are doomed to fail and not particularly interesting. They're all based on the notion that you can create something out of nothing. It's the cryptocurrency equivalent of a perpetual motion machine. Usually there's a floater coin that's minted and burned based on the supply and demand of the stable coin. But again, nothing answers the question why should this (floater) token be worth anything? If the token goes to 0, it all falls apart, or the more likely case that the price drops enough the there is no amount you can mint to stabilize the stable coin. SBF said as much [0]. DAOs are too complicated and rife for abuse and a constant target for attacks, so I'm not optimistic on. I think what SBF is doing is interesting as he's buying up failing businesses for the users and trust. There's definitely going to be a consolidation going on and I think its for the best. [0] https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-and-matt-levine-on-how-to-make-money-in-crypto https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
  - rglullis 4y ago
    > Sure that's useful, but that' assuming that these coins should be worth something and are worth holding in their own right Take the fiat-backed version of these tokens (not Tether, but ones that are backed by somewhat reputable companies) and you can have a distributed Foreign Exchange who can be reasonably profitable just by being a liquidity provider. Early last year I was getting 2% per month on USDC/DAI and about 1% per month on USDC/EURS. Even today one can get a lot more than you'd get on a savings account.
    - karpierz 4y ago
      > Early last year I was getting 2% per month on USDC/DAI and about 1% per month on USDC/EURS. Even today one can get a lot more than you'd get on a savings account. Ask yourself how risky this investment is, and why existing financial services aren't arbitraging it away. 1% a month is ~12% per year, which is comparable to CCC+ corporate bonds.
- tick_tock_tick 4y ago
  AMMs - are a shitty way to work around blockchain limitations. They would have never gotten any steam if transactions were fast and cheap enough to run an order book. algorithmic stablecoins - great way to lose all your money DAOs - Just direct democracy but without constitutional protects and switching from one human = one vote to one $ = one vote. Interesting in terms of seeing how a libertarian hyper-capitalism future would play out but not something I'd like to see in real life.
  - NovemberWhiskey 4y ago
    >DAOs - Just direct democracy but without constitutional protects and switching from one human = one vote to one $ = one vote. Interesting in terms of seeing how a libertarian hyper-capitalism future would play out but not something I'd like to see in real life. Especially where the DAO decides to renege on previous commitments and/or expropriate the assets of a participant. e.g. https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxPMnXJUZ1Hn/proposal/HuaL6cDtuNtfnJgvwMnYiZDHVCoLAuDtVFgJD8kYChJ4 https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP... https://twitter.com/itstimconnors/status/1536734104422522881 https://twitter.com/itstimconnors/status/1536734104422522881
  - DennisP 4y ago
    I don't see what's fundamentally better about an order book. You still get price slippage, as you eat up the orders.
- quickthrower2 4y ago
  Those things are definitely interesting from a technical point of view, but they solve problems that are uniquely created by crypto, and are not really needed outside of it. For example AMMs are not needed, just use an order book. Stablecoins? Just use currency. DAOs? A corporation.
  - SV_BubbleTime 4y ago
    >Those things are definitely interesting from a technical point of view, but they solve problems that are uniquely created by crypto, and are not really needed outside of it. Well, I mean, this isn't necessarily a bad thing. Lots of new tech brings new problems and new solutions that wouldn't apply at all to old tech. We had very little need for super precision honed turbines in 1900. We sure are happy to have them now though. I look forward to the crypto crash as much as any "paper hands hater". But I can't dislike it for being new or novel.
  - DennisP 4y ago
    An advantage of the AMM is that anyone can get paid for providing liquidity.
    - quickthrower2 4y ago
      Except you can lose money providing liquidity
      - DennisP 4y ago
        Sure, there's some risk. It's not free money.
  - hopfog 4y ago
    I implemented an AMM in my multiplayer game (nothing to do with cryptocurrencies) for players to trade one resource for another. They can always buy/sell into the AMM even at low activity as long as there's liquidity. It's also a fun mechanic for players where they can invest their surplus and get a cut of every trade.
  - 4y ago
- deleted 4y ago
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- gerdesj 4y ago
  "It's funny to see the Economist try to view crypto through a traditional finance lens." I suppose that by "traditional finance" you mean something like economies based on fiat currencies and the like, where the value of something is based on what is agreed by market forces. That something can be a piece of plasticised paper with holograms and windowed cut outs and a symbolic value called "£10" or as I would say: ten quid. It might also mean an economy based on gold reserves (mmmmm pretty) or chickens (barter - at least they are a thing and handy if you are hungry) or something in between. Mud/earth had stupendous value in the film "Waterworld". So, your crypto thingies bring exactly what to the party? It chews through power thanks to mining. Yes, I gather there are other forms of crypto coin that might address this but they have little value yet. The big hitters - Bitcoin etc now consume a lot of power to "mine" but mine what exactly? You can't eat the bloody things but then you can't eat a squid (nickname for GBP - pound - quid - squid) but you can eat a squid (sea living decapod). Crypto coins seem to me to be a properly rubbish "fuck you" modern thing. You expend resources to generate a "value". That value is scaled to other values via a "market". That's how capitalism works and so all is good. However, what exactly have you generated? It's not a useful thing. You have expended multiple KWh on a calculation. I can't eat a calculation, so I think you have slid in via a side door into my market economy and subverted it. I'm not quite sure what my final, formal argument against the current forms of crypto currencies is going to take yet but it looks more and more wrong to me. I'd love to see your (@woah) arguments in reverse of mine. For example what on earth are those "interesting developments"? I'm not a luddite and I run an IT company. Convince me that you bring value and not simply generate profit.
  - ikt 4y ago
    I don't quite understand how we're 10 years into crypto and people still aren't sure the value that a trillion dollar industry generates, I wonder why there's so much confusion around this? It seems like there's a small niche of people who like finance and tech who get it, but if you're not in that group you will (for example) use hCaptcha without even realising it's on Ethereum and will never see the value even when it's right in front of you. Maybe people like using it for cross border payments or getting money out of extremely unstable currencies, or anything to playing a game of godsunchained.com or any of immutable.com's properties (including those damn NFT's), maybe you can get a better interest rate lending a stablecoin on app.aave.com instead of in a trad finance savings account, watch some theta.tv, or just like the whole crypto ecosystem in general? the communities, the telegram group chats, the chart watching, the idea of WAGMI, the idea of directly having a say in a project and talking to the CEO via telegram instead of via an online form where you put in your preferences and then a share holder meeting happens months later etcetc There are a lot of people who see it as a get rich quick scheme in the same way WallStreetBets users use the stock market to try and get rich quick, but ultimately the continued improvements in Ethereum and Bitcoin which push for a faster, cheaper, better digital currency systems are moving it forward and bring something of value to the table, because in reality if it brought nothing no one would be talking about Crypto, it'd just be worthless Disney Dollars like I was told Bitcoin was back when I first looked into it 10 years ago.
paulpauper 4y ago
This only assumes it stops falling. Sub $5k will mean much more failures and losses. I think that is where it's headed. Bargain hunting for crypto today is like bargain hunting for beanie babies in 2002.
- walrus01 4y ago
  how many beanie babies can I buy with my beenz and flooz from 1999?
  - djbusby 4y ago
    Trade you for some Pogs
    - majormajor 4y ago
      I already traded my Pogs for a couple nice ball bearing yoyos, can I interest you in one of them?
      - mirntyfirty 4y ago
        Did you upgrade the strings? Are they competition-ready?
        sshine 4y ago
        Can you embed a zk-rollup?
- gafferongames 4y ago
  Surely these tulips have some intrinsic value?
  - mckirk 4y ago
    To be fair, crypto currencies _are_ more useful than some pretty flowers. You can actually use it to e.g. buy stuff (though most of that is drugs) and to transfer money (though most of that is evading taxes). The use cases discovered so far might not be the most socially beneficial, but crypto currencies and blockchains in general do have some inherent value that's above $0. Where that value actually lies will only become apparent once the people trying to get rich hodling will have become disillusioned, though.
anonu 4y ago
The crypto boom was founded on gambling. The natural next step was to build DeFi but it didn't catch on fast enough and eclipse it's degenerate gambling history. DeFi still depends on CeFi for it's value. In fact let's agree not to call it DeFi anymore since it's a misnomer. Let's just call it cryptotech. I think there's room for some amazing cryptotech to emerge from the rubble. But it won't look like anything we've seen in the last decade. Guys like SBF are super savvy about the markets, but there needs to be a mass appeal application for cryptotech to be truly successful.
- hnthrow1010 4y ago
  >I think there's room for some amazing cryptotech to emerge from the rubble. I don't. There is no purpose to "crypto tech" besides gambling on the price of some unregulated token, it is completely useless otherwise. This is the whole reason why mining/staking works the way it does, the participants are paid in the same token they're processing so they get incentivized to make "number go up". If this wasn't the case, there would be some way to pay them in whatever stable currency you wanted to pay them in instead of the token, but no one wants it because then it would just be the same as a boring old accounting firm. Addendum: The entire idea of DeFi will never work because you cannot actually have basic things needed for a functioning economy like "property" and "credit" when the system works that way. Every "asset" in DeFi is just funny money stacked on top of other funny money. There is no real value to any of it.
  - chii 4y ago
    may be the "finance" portion is leading you astray. Torrents work fine today, as a peer to peer tech. I think there's value in peer to peer, and the killer app for such a crypto chain is not yet found today. Finance just happens to be the first application of the blockchain tech (and as you can obviously see, it's a failure). The same reasoning can be made for the internet - initially, the internet was used as a "document" viewer. But after the crash of 2000, and slowly as the tech improved (computers and browsers got faster), the web has grown to become an application platform (much to my dismay of course). The original inventors of the internet never intended it to be an application platform. I would argue that the block chain tech is going to go thru a similar phase.
deleted 4y ago
[deleted]
SilverBirch 4y ago
The comparison of SBF to JP Morgan is a fantastic example that people are still too bullish on crypto. Firstly, SBF is no where near as important to crypto as JPM was to banking institutions. Secondly, crypto is a tiny tiny tiny asset class compared to the actual banks in 1907, Bitcoin's "market cap" is in the same order of magnitude as Apple's cash on hand, and the outflow of capital from crypto is massive for crypto but a drop in the ocean for real asset classes. Thirdly, even if, in some bizarro world SBF managed to stabilize the crypto companies, who actually cares? 1907 was about real peoples lives and life-savings. Let's assume that all these wobbling crypto companies survive. Will we look back on it like 1907? No - because it genuinely doesn't matter. This whole comparison sits on a pre-crash premise that the crypto space actually represented something of value. That it was some important thing.
catoc 4y ago
Clicked the link expecting an article on cryptography. What am I thinking... it's 2022... crapto

74 points by stevenjgarner 4y ago

Archived : https://archive.ph/Q3S7D https://archive.ph/Q3S7D

woah 4y ago

It's funny to see the Economist try to view crypto through a traditional finance lens. The companies rescued by SBF are idiotic, promising to provide stable returns using extremely risky investment strategies. They are the bottom feeders of crypto, as well as being one of the most boring things about it. The Economist seems to want to make crypto reporting part of their purview- why don't they look at some of the interesting developments such as AMMs, algorithmic stablecoins, DAOs, etc?

pru567 4y ago
Aren't algo-stablecoins a refuted concept after IronFinance and Terra/Luna?
- bhouston 4y ago
  Refuted means you can conclusive prove something. You can only say these attempts at algorithmic stablecoins failed but it doesn’t mean they are destined to always fail. The devil is in the details and honestly Terra was run incompetently and for greed rather than as a true professional endeavor.
  - imron 4y ago
    Like communism, I guess real algo-stablecoins have never been tried.
  - jeromegv 4y ago
    Sounds like a no true Scotsman fallacy. Even has Luna started losing peg, lots of people thought there was no way they would go entirely down because it was one of the biggest name in crypto and supported in the industry by so many. It was very mainstream solution and among the top 10 crypto in market cap. The history of currency and pegs are well documented in the world of finance, for decades. If anything the demonstration that an algorithmic stablecoin is possible is something that must be proven, because every signs are pointing toward the fact that it's not.
    - bhouston 4y ago
      I guess it is a Scotsman like scenario. The issue is that algorithmic lending isn’t uniform nor fully explored yet so it is hard to say that it is proved that it can not work. I would argue that it is akin to saying that because you found 5 Scotland and none of them is tall then it proves all Scotsman’s are short. It is not a true proof that all Scotland are short but rather an observation that all Scotland you’ve seen so far are short. These are different things. Maybe all Scotsman are short but it isn’t yet a hard proof just a conjecture. That is all.
  - thr0wawayf00 4y ago
    > The devil is in the details and honestly Terra was run incompetently and for greed rather than as a true professional endeavor. If the market can't discern honest players from the criminals, then how will an honest attempt at these coins ever succeed? The problem is that we don't know that they're criminals until they've gone under, and there's no due diligence or oversight to verify that they're legit because that would be antithetical to the entire system. It would be like continuing to drop a little money in every single altcoin that hits r/cryptomoonshots because at least one of those people has to be honest, right? If being trustless is central to the technology, then we have no idea if what we're putting our money into is legit or not and that's a fundamental problem with this stuff. The system rewards bad behavior, plain and simple. As long as that's true, I don't see how honest people gain enough influence to actually achieve the vision that the community realizes.
    - wmf 4y ago
      If the market can't discern honest players from the criminals, then how will an honest attempt at these coins ever succeed? Yeah, this is a huge problem for crypto in general. The problem is that we don't know that they're criminals until they've gone under, and there's no due diligence or oversight to verify that they're legit At least one third party analyzed Terra's algorithm and predicted the collapse around 6 months before it happened.
    - solveit 4y ago
      I mean, people were screaming that the Terra ecosystem was going to collapse since forever. It's just that different people invested in it anyway. There's nothing impossible about verifying the legitimacy of any endeavour, people just don't do it. Honest people will do honest work and succeed or fail on their own terms, the fact that there are a hundred scams running adjacent to the honest projects is unfortunate and very disruptive but doesn't actually fundamentally block honest work.
      - majormajor 4y ago
        People have been screaming about that for every part of crypto. How is the non-crypto-expert supposed to tell that the Terra and DOGE hate is real but the BTC and ETH hate isn't? Or that the ETH hate also is, and it's only the BTC hate that you should ignore? Or any of a number of different permutations? Isn't the adoption of the honest work blocked by this inability to differentiate without lots of hours of research?
  - deleted 4y ago
    [deleted]
  - skybrian 4y ago
    The reason they failed seems rather general. They are based on assets that can go down in value fast when there is a run to get out of the stablecoin and not enough traders to handle the volume. Essentially, the stablecoin needs to be fully backed by traders who need to be prepared to back most of the market cap by trading at scale. An "algorithmic" stablecoin allows anyone to do that trade, but it doesn't make any particular guarantee that these traders will be there when they're needed. And I don't see how that can be automated unless the algorithm already has the assets, as with an overcollateralized margin loan? So, while innovation is hard to rule out, it seems like you need a good explanation for why this time it's different.
    - wmf 4y ago
      It goes without saying that algorithmic stablecoins have to be overcollateralized. The remaining debate is about the precise mechanism for contracting supply. https://vitalik.ca/general/2022/05/25/stable.html https://vitalik.ca/general/2022/05/25/stable.html
- clpm4j 4y ago
  There are still some notable people in crypto who want to see the concept succeed. I imagine we'll see at least a few more try (and probably blow up) before they get regulated out of existence.
  - lumost 4y ago
    The concept is pretty interesting if there were real assets behind the coin. Problem is you would need a good counterparty… which means you need a good custodian… which means you might as well just use the counterparty and custodian. The only real benefit of the coin in this case would be programming derivatives without further intermediate custodians and counter parties. This could be useful for some back office finance activities outside of scams.
  - bko 4y ago
    The incentives are such that if you can figure it out you can basically create money out of nothing. So there will always be people that are looking for it to succeed. It's alchemy. It all breaks down if the floater goes to zero or a price such that you can't mint enough to stabilize the coin. And on a long enough time span this is bound to happen. The stable coin can never go above its target value, but it can go below. So you're essentially holding value and then getting wiped out every N years or so. So it's doomed to fail
    - josefrichter 4y ago
      It’s a fascinating intellectual exercise. I think at this point nobody really knows whether or not it can work.
      - bko 4y ago
        I ask two questions to see if passes the smell test: 1. Does this work if the floater is worth 0? 2. Is there some kind of natural cap? In other words, can I print an infinite amount of dollars? None of the implementations works without some value being attributable to the floating token(s). Similarly, I never hear of any natural caps. For instance, you can create a stable coin with a market cap of $100 and just mint N tokens of the floater for M where M*N = 100. But why can't you mint more and sell at a slightly lower price? Is there some natural limit? If so, can't the price of the floater go down to such a level to not be able to support the market cap?
- wmf 4y ago
  Vitalik had some good things to say about RAI recently: https://vitalik.ca/general/2022/05/25/stable.html https://vitalik.ca/general/2022/05/25/stable.html
RC_ITR 4y ago
I mean everyone has their idea of what is 'interesting' in crypto, but the counterpoint to your argument is all of those things can be positioned as being just as scammy as yield farming: AMMs = Only work in a world where prevailing prices aren't set by traditional centralized order books. As long as those exist, AMMs will always be 'behind the curve' and lose value to arbitrageurs who buy from central books and sell to AMMs (even if bulls call it 'impermanent loss' it's a core feature of the system). Algorithmic Stable coins = Only work in a world where the market perceives the paired asset as truly 'risk-free' (as evidenced by the Terra/Luna debacle). To date, the only 'risk-free' assets come with a multi-trillion dollar investment in an army, so unclear if there's really anything interesting there. DAOs = Frequently show themselves as insecure, oligopolist, retail un-friendly organizations [0][1][2] In short, be careful what you wish for, because at least by focusing on the SBF-cult, they're not doing the serious journalism needed to prove how atechnological most crypto projects are. [0] https://twitter.com/thedaomaker/status/1425817683635802119 https://twitter.com/thedaomaker/status/1425817683635802119 [1] https://cryptoslate.com/solend-pays-users-to-vote-on-proposal-to-liquidate-whale-wallet-otc-and-avoid-bad-debt/ https://cryptoslate.com/solend-pays-users-to-vote-on-proposa... [2]https://unblock.net/crash-of-the-high-yield-daos/ https://unblock.net/crash-of-the-high-yield-daos/
bko 4y ago
AMMs are pretty cool, but like much of crypto today just centered around trading one coin for another. Sure that's useful, but that' assuming that these coins should be worth something and are worth holding in their own right. Algorithmic stablecoins are doomed to fail and not particularly interesting. They're all based on the notion that you can create something out of nothing. It's the cryptocurrency equivalent of a perpetual motion machine. Usually there's a floater coin that's minted and burned based on the supply and demand of the stable coin. But again, nothing answers the question why should this (floater) token be worth anything? If the token goes to 0, it all falls apart, or the more likely case that the price drops enough the there is no amount you can mint to stabilize the stable coin. SBF said as much [0]. DAOs are too complicated and rife for abuse and a constant target for attacks, so I'm not optimistic on. I think what SBF is doing is interesting as he's buying up failing businesses for the users and trust. There's definitely going to be a consolidation going on and I think its for the best. [0] https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-and-matt-levine-on-how-to-make-money-in-crypto https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
- rglullis 4y ago
  > Sure that's useful, but that' assuming that these coins should be worth something and are worth holding in their own right Take the fiat-backed version of these tokens (not Tether, but ones that are backed by somewhat reputable companies) and you can have a distributed Foreign Exchange who can be reasonably profitable just by being a liquidity provider. Early last year I was getting 2% per month on USDC/DAI and about 1% per month on USDC/EURS. Even today one can get a lot more than you'd get on a savings account.
  - karpierz 4y ago
    > Early last year I was getting 2% per month on USDC/DAI and about 1% per month on USDC/EURS. Even today one can get a lot more than you'd get on a savings account. Ask yourself how risky this investment is, and why existing financial services aren't arbitraging it away. 1% a month is ~12% per year, which is comparable to CCC+ corporate bonds.
tick_tock_tick 4y ago
AMMs - are a shitty way to work around blockchain limitations. They would have never gotten any steam if transactions were fast and cheap enough to run an order book. algorithmic stablecoins - great way to lose all your money DAOs - Just direct democracy but without constitutional protects and switching from one human = one vote to one $ = one vote. Interesting in terms of seeing how a libertarian hyper-capitalism future would play out but not something I'd like to see in real life.
- NovemberWhiskey 4y ago
  >DAOs - Just direct democracy but without constitutional protects and switching from one human = one vote to one $ = one vote. Interesting in terms of seeing how a libertarian hyper-capitalism future would play out but not something I'd like to see in real life. Especially where the DAO decides to renege on previous commitments and/or expropriate the assets of a participant. e.g. https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxPMnXJUZ1Hn/proposal/HuaL6cDtuNtfnJgvwMnYiZDHVCoLAuDtVFgJD8kYChJ4 https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP... https://twitter.com/itstimconnors/status/1536734104422522881 https://twitter.com/itstimconnors/status/1536734104422522881
- DennisP 4y ago
  I don't see what's fundamentally better about an order book. You still get price slippage, as you eat up the orders.
quickthrower2 4y ago
Those things are definitely interesting from a technical point of view, but they solve problems that are uniquely created by crypto, and are not really needed outside of it. For example AMMs are not needed, just use an order book. Stablecoins? Just use currency. DAOs? A corporation.
- SV_BubbleTime 4y ago
  >Those things are definitely interesting from a technical point of view, but they solve problems that are uniquely created by crypto, and are not really needed outside of it. Well, I mean, this isn't necessarily a bad thing. Lots of new tech brings new problems and new solutions that wouldn't apply at all to old tech. We had very little need for super precision honed turbines in 1900. We sure are happy to have them now though. I look forward to the crypto crash as much as any "paper hands hater". But I can't dislike it for being new or novel.
- DennisP 4y ago
  An advantage of the AMM is that anyone can get paid for providing liquidity.
  - quickthrower2 4y ago
    Except you can lose money providing liquidity
    - DennisP 4y ago
      Sure, there's some risk. It's not free money.
- hopfog 4y ago
  I implemented an AMM in my multiplayer game (nothing to do with cryptocurrencies) for players to trade one resource for another. They can always buy/sell into the AMM even at low activity as long as there's liquidity. It's also a fun mechanic for players where they can invest their surplus and get a cut of every trade.
- 4y ago
deleted 4y ago
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gerdesj 4y ago
"It's funny to see the Economist try to view crypto through a traditional finance lens." I suppose that by "traditional finance" you mean something like economies based on fiat currencies and the like, where the value of something is based on what is agreed by market forces. That something can be a piece of plasticised paper with holograms and windowed cut outs and a symbolic value called "£10" or as I would say: ten quid. It might also mean an economy based on gold reserves (mmmmm pretty) or chickens (barter - at least they are a thing and handy if you are hungry) or something in between. Mud/earth had stupendous value in the film "Waterworld". So, your crypto thingies bring exactly what to the party? It chews through power thanks to mining. Yes, I gather there are other forms of crypto coin that might address this but they have little value yet. The big hitters - Bitcoin etc now consume a lot of power to "mine" but mine what exactly? You can't eat the bloody things but then you can't eat a squid (nickname for GBP - pound - quid - squid) but you can eat a squid (sea living decapod). Crypto coins seem to me to be a properly rubbish "fuck you" modern thing. You expend resources to generate a "value". That value is scaled to other values via a "market". That's how capitalism works and so all is good. However, what exactly have you generated? It's not a useful thing. You have expended multiple KWh on a calculation. I can't eat a calculation, so I think you have slid in via a side door into my market economy and subverted it. I'm not quite sure what my final, formal argument against the current forms of crypto currencies is going to take yet but it looks more and more wrong to me. I'd love to see your (@woah) arguments in reverse of mine. For example what on earth are those "interesting developments"? I'm not a luddite and I run an IT company. Convince me that you bring value and not simply generate profit.
- ikt 4y ago
  I don't quite understand how we're 10 years into crypto and people still aren't sure the value that a trillion dollar industry generates, I wonder why there's so much confusion around this? It seems like there's a small niche of people who like finance and tech who get it, but if you're not in that group you will (for example) use hCaptcha without even realising it's on Ethereum and will never see the value even when it's right in front of you. Maybe people like using it for cross border payments or getting money out of extremely unstable currencies, or anything to playing a game of godsunchained.com or any of immutable.com's properties (including those damn NFT's), maybe you can get a better interest rate lending a stablecoin on app.aave.com instead of in a trad finance savings account, watch some theta.tv, or just like the whole crypto ecosystem in general? the communities, the telegram group chats, the chart watching, the idea of WAGMI, the idea of directly having a say in a project and talking to the CEO via telegram instead of via an online form where you put in your preferences and then a share holder meeting happens months later etcetc There are a lot of people who see it as a get rich quick scheme in the same way WallStreetBets users use the stock market to try and get rich quick, but ultimately the continued improvements in Ethereum and Bitcoin which push for a faster, cheaper, better digital currency systems are moving it forward and bring something of value to the table, because in reality if it brought nothing no one would be talking about Crypto, it'd just be worthless Disney Dollars like I was told Bitcoin was back when I first looked into it 10 years ago.

paulpauper 4y ago

This only assumes it stops falling. Sub $5k will mean much more failures and losses. I think that is where it's headed. Bargain hunting for crypto today is like bargain hunting for beanie babies in 2002.

walrus01 4y ago
how many beanie babies can I buy with my beenz and flooz from 1999?
- djbusby 4y ago
  Trade you for some Pogs
  - majormajor 4y ago
    I already traded my Pogs for a couple nice ball bearing yoyos, can I interest you in one of them?
    - mirntyfirty 4y ago
      Did you upgrade the strings? Are they competition-ready?
      - sshine 4y ago
        Can you embed a zk-rollup?
gafferongames 4y ago
Surely these tulips have some intrinsic value?
- mckirk 4y ago
  To be fair, crypto currencies _are_ more useful than some pretty flowers. You can actually use it to e.g. buy stuff (though most of that is drugs) and to transfer money (though most of that is evading taxes). The use cases discovered so far might not be the most socially beneficial, but crypto currencies and blockchains in general do have some inherent value that's above $0. Where that value actually lies will only become apparent once the people trying to get rich hodling will have become disillusioned, though.

anonu 4y ago

The crypto boom was founded on gambling. The natural next step was to build DeFi but it didn't catch on fast enough and eclipse it's degenerate gambling history. DeFi still depends on CeFi for it's value. In fact let's agree not to call it DeFi anymore since it's a misnomer. Let's just call it cryptotech. I think there's room for some amazing cryptotech to emerge from the rubble. But it won't look like anything we've seen in the last decade. Guys like SBF are super savvy about the markets, but there needs to be a mass appeal application for cryptotech to be truly successful.

hnthrow1010 4y ago
>I think there's room for some amazing cryptotech to emerge from the rubble. I don't. There is no purpose to "crypto tech" besides gambling on the price of some unregulated token, it is completely useless otherwise. This is the whole reason why mining/staking works the way it does, the participants are paid in the same token they're processing so they get incentivized to make "number go up". If this wasn't the case, there would be some way to pay them in whatever stable currency you wanted to pay them in instead of the token, but no one wants it because then it would just be the same as a boring old accounting firm. Addendum: The entire idea of DeFi will never work because you cannot actually have basic things needed for a functioning economy like "property" and "credit" when the system works that way. Every "asset" in DeFi is just funny money stacked on top of other funny money. There is no real value to any of it.
- chii 4y ago
  may be the "finance" portion is leading you astray. Torrents work fine today, as a peer to peer tech. I think there's value in peer to peer, and the killer app for such a crypto chain is not yet found today. Finance just happens to be the first application of the blockchain tech (and as you can obviously see, it's a failure). The same reasoning can be made for the internet - initially, the internet was used as a "document" viewer. But after the crash of 2000, and slowly as the tech improved (computers and browsers got faster), the web has grown to become an application platform (much to my dismay of course). The original inventors of the internet never intended it to be an application platform. I would argue that the block chain tech is going to go thru a similar phase.

deleted 4y ago

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SilverBirch 4y ago

The comparison of SBF to JP Morgan is a fantastic example that people are still too bullish on crypto. Firstly, SBF is no where near as important to crypto as JPM was to banking institutions. Secondly, crypto is a tiny tiny tiny asset class compared to the actual banks in 1907, Bitcoin's "market cap" is in the same order of magnitude as Apple's cash on hand, and the outflow of capital from crypto is massive for crypto but a drop in the ocean for real asset classes. Thirdly, even if, in some bizarro world SBF managed to stabilize the crypto companies, who actually cares? 1907 was about real peoples lives and life-savings. Let's assume that all these wobbling crypto companies survive. Will we look back on it like 1907? No - because it genuinely doesn't matter. This whole comparison sits on a pre-crash premise that the crypto space actually represented something of value. That it was some important thing.

catoc 4y ago

Clicked the link expecting an article on cryptography. What am I thinking... it's 2022... crapto