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The incomparable Molly White has put together a contagion flow chart, which she is updating regularly: https://www.mollywhite.net/etc/ftx-contagion https://www

by jpm_sd 4y ago

The incomparable Molly White has put together a contagion flow chart, which she is updating regularly: https://www.mollywhite.net/etc/ftx-contagion https://www.mollywhite.net/etc/ftx-contagion See also her explanatory newsletter https://newsletter.mollywhite.net/ https://newsletter.mollywhite.net/

shmatt 4y ago
I can't believe I missed the news the big corporate Gemini also halted withdrawals on their APY product If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. I'm sure even Madoff had some good years during bull runs. The only other semi-possible option is burning VC money with those APY's, which is maybe what Coinbase is doing
- zhdc1 4y ago
  > If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. I'm sure even Madoff had some good years during bull runs It's almost impossible to beat the market after fees. Anyone who promises to do so, consistently, is full of it. French (2008) and a whole body of literature before and after.
  - xorcist 4y ago
    Which market? I own some bonds that yields 8%.
    - chollida1 4y ago
      Yield to maturity is far different that yearly yield. though it is possible to find some bonds that have an annual yield of 8%. Though no one would expect them all to make it maturity without any credit issues.
      - bombcar 4y ago
        You can find a very few. But they are limited in some way, and almost always government-funded. https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/ https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-int... iBonds hit above 8% return in a year if you bought at just the right time this year, IIRC. Of course, if you calculate real return then you will have a sad.
        arcticfox 4y ago
        There’s also a very real counterparty risk in bonds that need to give 8%. Inflation bonds are kind of an exception there, since if inflation is 8% the market should be doing much better than that on average.
    - NotYourLawyer 4y ago
      Are they Venezuela or Zimbabwe?
      - mrDmrTmrJ 4y ago
        US federal funds rate hit 19.39 percent in April 1980. As a result long-term state bond did very well for their owners as inflation came down. My mom told stories about "Massachusetts Nines" with legendary 9% yields. Utilities and co-ops issued ~15% paper which also did extremely well for those who purchased it in the early 80s.
        NotYourLawyer 4y ago
        Sure, back then. But I’m guessing these are not 50+ year maturities still paying out.
        everybodyknows 4y ago
        Know offhand what the 30-year yielded back in '80? For reference, the 30 is now at about 100bp less than shorter treasuries: https://www.marketwatch.com/market-data/rates https://www.marketwatch.com/market-data/rates
        mcguire 4y ago
        ~11% (https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-table73.pdf https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-ta...)
  - baobabKoodaa 4y ago
    > It's almost impossible to beat the market after fees. Anyone who promises to do so, consistently, is full of it. French (2008) and a whole body of literature before and after. Not this dead horse again. Yes, academics have written a lot of papers claiming things that turned out to be false. See Renaissance Medallion Fund and Berkshire Hathaway for references.
    - mcguire 4y ago
      I'm not sure Berkshire Hathaway is comparable to anything in the crypto sphere.
      - baobabKoodaa 4y ago
        Parent was referring to French (2008). Bitcoin was created in 2009, so the whole crypto sphere didn't exist in 2008. The reference was in relation to stock markets (and also to some extent derivative markets and bond markets etc.). Berkshire Hathaway is a good example of how stock markets are not efficient.
    - lottin 4y ago
      What exactly turned out to be false?
      - baobabKoodaa 4y ago
        Efficient markets hypothesis in the context of stock and derivatives markets.
        lottin 4y ago
        Has it been disproven? As far as I know the best performing model of stock returns is the Fama-French 5-factor model which assumes efficient markets.
        baobabKoodaa 4y ago
- ceejayoz 4y ago
  8%? Nexo's was promising 16% APR as recently as Nov 11 according to Google's cache (https://webcache.googleusercontent.com/search?q=cache:eN2KEVZClXgJ:https://nexo.io/passive-income https://webcache.googleusercontent.com/search?q=cache:eN2KEV...). The page redirects to the home page now. I've seen "bonus" APRs as high as 40% offered. https://crypto.com/us/earn https://crypto.com/us/earn is still offering 14.5% APR, and 8.5% on stablecoins, after accidentally sending $400M to a competitor.
  - joosters 4y ago
    https://nexo.io/earn-crypto https://nexo.io/earn-crypto is still up and promises 16% APR - I think they are the last ones standing now. I'm sure your money is safe with them, they proudly talk about their excellent Trustpilot rating /s
    - ceejayoz 4y ago
      That page redirects me to the home page, as well. Either it's because I'm in the US or they're taking things down.
      - luckylion 4y ago
        Probably geofenced, it works for me (Germany) and shows the offer > Earn 16% on Crypto > Make your idle digital assets work for you with Nexo. Start earning up to 16% APR, paid out daily.
        opendomain 4y ago
        can you grab a screenshot?
        luckylion 4y ago
        https://archive.ph/Dzojr https://archive.ph/Dzojr this is what it currently shows to me
        4y ago
- pjc50 4y ago
  Yup. Any company offering that will rugpull you in the future, even if that may not have been their original intention. Therefore you should regard them as radioactive and pull all your money from them - and any "institution", contract etc that does invest in them.
- highwaylights 4y ago
  This has all been done before (P2P lending) with exactly the same outcome, in the very recent past (last ten years). It's hard to have empathy for these people when they've been so obnoxious up until now to anyone trying to help them with learned experience. Assuming you're not running an outright Ponzi scheme, then when you increase interest rates, you lower your borrower quality by the same amount, meaning your risk increases by at least the same ratio (or more). By taking 8% interest or more, during a period of historically low interest rates, you were lending to the least reliable borrowers in existence - those borrowers that absolutely everyone lending money at lower rates said no to or, even worse, shady gamblers who can't legitimately draw finance from the traditional financial system without raising alarm bells. There's no surprise in this outcome to anyone with even a basic understanding of maths and/or economics. It's sad, but utterly predictable.
  - adabyron 4y ago
    I got crushed percentage wise but only stuck a few hundred dollars in to P2P lending in the early 2000's before my state & many others made it illegal. I could understand the risk in that situation though. With Crypto, I'm not sure if I do. To my understanding, you deposit money into a cryptocurrency, like ETH for example, in an exchange. The exchange then uses it as liquidity to allow other people to convert one cryptocurrency to another. Am I understanding this right? If so, it was my assumption that they were making 10% on transaction fees & rewarding you with 8% or something lower than 10%. In that case, my risk/reward assumption was that many of them would raise/lower their rates based on the amount of transactions being done & how valuable the liquidity was to them. I saw that some exchanges did this in terms of months & others were constantly changing their rates. Am I wrong in thinking that this is something that should be feasible to do without be a ponzi scheme? Of course there is extra risk based on how long the interest rate is fixed for if the market were to go down fast. I would assume banks are similar in the sense that you might buy a Certificate of Deposit (CD) or type of a bond and you get a fixed rate for a period of time. Your country's currency could drastically change or inflation could change. For most countries this isn't near as volatile though.
    - Robin_Message 4y ago
- xorcist 4y ago
  We should be clear about that Gemini and Coinbase aren't running those schemes. You buy some sort of tokens on their marketplace with which you can partake in (what very much looks like) ponzi schemes. It's far from clear what their role is in all of this, even if I would think we all would be better off if they distanced themselves from it. There is probably a lot of customer demand here too. We've seen even the staunchest opponents give in one after another, and offer marketplaces for these tokens.
- scandox 4y ago
  I didn't think Madoff actually invested in anything. I thought he just used new funds to pay withdrawals.
  - ackbar03 4y ago
    Saint madoff (in comparison) also was ready to turn himself in when the gig was up
- dna_polymerase 4y ago
  > If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. If you look into protocols like Polkadot you will find that inflation is built-in and staking is a mechanism used to secure the protocol. In turn, you get a nice APY, but the coin dilutes over time.
- rr888 4y ago
  > these companies can't promise you 8% APY without essentially running a ponzi scheme It doesn't mean its a ponzi, but certainly an 8% yield isn't a safe investment, there will be some liquidity/market/credit risk. Hopefully its just liquidity.
- deleted 4y ago
  [deleted]
- x3sphere 4y ago
  Coinbase doesn't have any lending products. Aside from one that will give you USD as a loan for holding your BTC as collateral which isn't the same thing. They do offer staking but that's the not the same either. Return is generated from the networks themselves - like with ETH they are offering 4% APY after a 25% cut. That seems completely fine.
- ummonk 4y ago
  Funny, just saw a comment a few days ago on HN advocating Gemini over Tether and I was wondering why he thought 5-8% yields weren't a scam. https://news.ycombinator.com/item?id=33568884 https://news.ycombinator.com/item?id=33568884
colbyhub 4y ago
She also runs https://web3isgoinggreat.com https://web3isgoinggreat.com which is helpful for staying just-enough up to date with all the crazy things going on in the crypto space if you don't want to sign up for her newsletter!
jjfoooo5 4y ago
How does Binance fit into this chart? I understand them to be the biggest remaining exchange

by jpm_sd 4y ago

shmatt 4y ago

I can't believe I missed the news the big corporate Gemini also halted withdrawals on their APY product If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. I'm sure even Madoff had some good years during bull runs. The only other semi-possible option is burning VC money with those APY's, which is maybe what Coinbase is doing

zhdc1 4y ago
> If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. I'm sure even Madoff had some good years during bull runs It's almost impossible to beat the market after fees. Anyone who promises to do so, consistently, is full of it. French (2008) and a whole body of literature before and after.
- xorcist 4y ago
  Which market? I own some bonds that yields 8%.
  - chollida1 4y ago
    Yield to maturity is far different that yearly yield. though it is possible to find some bonds that have an annual yield of 8%. Though no one would expect them all to make it maturity without any credit issues.
    - bombcar 4y ago
      You can find a very few. But they are limited in some way, and almost always government-funded. https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/ https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-int... iBonds hit above 8% return in a year if you bought at just the right time this year, IIRC. Of course, if you calculate real return then you will have a sad.
      - arcticfox 4y ago
        There’s also a very real counterparty risk in bonds that need to give 8%. Inflation bonds are kind of an exception there, since if inflation is 8% the market should be doing much better than that on average.
  - NotYourLawyer 4y ago
    Are they Venezuela or Zimbabwe?
    - mrDmrTmrJ 4y ago
      US federal funds rate hit 19.39 percent in April 1980. As a result long-term state bond did very well for their owners as inflation came down. My mom told stories about "Massachusetts Nines" with legendary 9% yields. Utilities and co-ops issued ~15% paper which also did extremely well for those who purchased it in the early 80s.
      - NotYourLawyer 4y ago
        Sure, back then. But I’m guessing these are not 50+ year maturities still paying out.
      - everybodyknows 4y ago
        Know offhand what the 30-year yielded back in '80? For reference, the 30 is now at about 100bp less than shorter treasuries: https://www.marketwatch.com/market-data/rates https://www.marketwatch.com/market-data/rates
        mcguire 4y ago
        ~11% (https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-table73.pdf https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-ta...)
- baobabKoodaa 4y ago
  > It's almost impossible to beat the market after fees. Anyone who promises to do so, consistently, is full of it. French (2008) and a whole body of literature before and after. Not this dead horse again. Yes, academics have written a lot of papers claiming things that turned out to be false. See Renaissance Medallion Fund and Berkshire Hathaway for references.
  - mcguire 4y ago
    I'm not sure Berkshire Hathaway is comparable to anything in the crypto sphere.
    - baobabKoodaa 4y ago
      Parent was referring to French (2008). Bitcoin was created in 2009, so the whole crypto sphere didn't exist in 2008. The reference was in relation to stock markets (and also to some extent derivative markets and bond markets etc.). Berkshire Hathaway is a good example of how stock markets are not efficient.
  - lottin 4y ago
    What exactly turned out to be false?
    - baobabKoodaa 4y ago
      Efficient markets hypothesis in the context of stock and derivatives markets.
      - lottin 4y ago
        Has it been disproven? As far as I know the best performing model of stock returns is the Fama-French 5-factor model which assumes efficient markets.
        baobabKoodaa 4y ago
ceejayoz 4y ago
8%? Nexo's was promising 16% APR as recently as Nov 11 according to Google's cache (https://webcache.googleusercontent.com/search?q=cache:eN2KEVZClXgJ:https://nexo.io/passive-income https://webcache.googleusercontent.com/search?q=cache:eN2KEV...). The page redirects to the home page now. I've seen "bonus" APRs as high as 40% offered. https://crypto.com/us/earn https://crypto.com/us/earn is still offering 14.5% APR, and 8.5% on stablecoins, after accidentally sending $400M to a competitor.
- joosters 4y ago
  https://nexo.io/earn-crypto https://nexo.io/earn-crypto is still up and promises 16% APR - I think they are the last ones standing now. I'm sure your money is safe with them, they proudly talk about their excellent Trustpilot rating /s
  - ceejayoz 4y ago
    That page redirects me to the home page, as well. Either it's because I'm in the US or they're taking things down.
    - luckylion 4y ago
      Probably geofenced, it works for me (Germany) and shows the offer > Earn 16% on Crypto > Make your idle digital assets work for you with Nexo. Start earning up to 16% APR, paid out daily.
      - opendomain 4y ago
        can you grab a screenshot?
        luckylion 4y ago
        https://archive.ph/Dzojr https://archive.ph/Dzojr this is what it currently shows to me
      - 4y ago
pjc50 4y ago
Yup. Any company offering that will rugpull you in the future, even if that may not have been their original intention. Therefore you should regard them as radioactive and pull all your money from them - and any "institution", contract etc that does invest in them.
highwaylights 4y ago
This has all been done before (P2P lending) with exactly the same outcome, in the very recent past (last ten years). It's hard to have empathy for these people when they've been so obnoxious up until now to anyone trying to help them with learned experience. Assuming you're not running an outright Ponzi scheme, then when you increase interest rates, you lower your borrower quality by the same amount, meaning your risk increases by at least the same ratio (or more). By taking 8% interest or more, during a period of historically low interest rates, you were lending to the least reliable borrowers in existence - those borrowers that absolutely everyone lending money at lower rates said no to or, even worse, shady gamblers who can't legitimately draw finance from the traditional financial system without raising alarm bells. There's no surprise in this outcome to anyone with even a basic understanding of maths and/or economics. It's sad, but utterly predictable.
- adabyron 4y ago
  I got crushed percentage wise but only stuck a few hundred dollars in to P2P lending in the early 2000's before my state & many others made it illegal. I could understand the risk in that situation though. With Crypto, I'm not sure if I do. To my understanding, you deposit money into a cryptocurrency, like ETH for example, in an exchange. The exchange then uses it as liquidity to allow other people to convert one cryptocurrency to another. Am I understanding this right? If so, it was my assumption that they were making 10% on transaction fees & rewarding you with 8% or something lower than 10%. In that case, my risk/reward assumption was that many of them would raise/lower their rates based on the amount of transactions being done & how valuable the liquidity was to them. I saw that some exchanges did this in terms of months & others were constantly changing their rates. Am I wrong in thinking that this is something that should be feasible to do without be a ponzi scheme? Of course there is extra risk based on how long the interest rate is fixed for if the market were to go down fast. I would assume banks are similar in the sense that you might buy a Certificate of Deposit (CD) or type of a bond and you get a fixed rate for a period of time. Your country's currency could drastically change or inflation could change. For most countries this isn't near as volatile though.
  - Robin_Message 4y ago
xorcist 4y ago
We should be clear about that Gemini and Coinbase aren't running those schemes. You buy some sort of tokens on their marketplace with which you can partake in (what very much looks like) ponzi schemes. It's far from clear what their role is in all of this, even if I would think we all would be better off if they distanced themselves from it. There is probably a lot of customer demand here too. We've seen even the staunchest opponents give in one after another, and offer marketplaces for these tokens.
scandox 4y ago
I didn't think Madoff actually invested in anything. I thought he just used new funds to pay withdrawals.
- ackbar03 4y ago
  Saint madoff (in comparison) also was ready to turn himself in when the gig was up
dna_polymerase 4y ago
> If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. If you look into protocols like Polkadot you will find that inflation is built-in and staking is a mechanism used to secure the protocol. In turn, you get a nice APY, but the coin dilutes over time.
rr888 4y ago
> these companies can't promise you 8% APY without essentially running a ponzi scheme It doesn't mean its a ponzi, but certainly an 8% yield isn't a safe investment, there will be some liquidity/market/credit risk. Hopefully its just liquidity.
deleted 4y ago
[deleted]
x3sphere 4y ago
Coinbase doesn't have any lending products. Aside from one that will give you USD as a loan for holding your BTC as collateral which isn't the same thing. They do offer staking but that's the not the same either. Return is generated from the networks themselves - like with ETH they are offering 4% APY after a 25% cut. That seems completely fine.
ummonk 4y ago
Funny, just saw a comment a few days ago on HN advocating Gemini over Tether and I was wondering why he thought 5-8% yields weren't a scam. https://news.ycombinator.com/item?id=33568884 https://news.ycombinator.com/item?id=33568884

colbyhub 4y ago

She also runs https://web3isgoinggreat.com https://web3isgoinggreat.com which is helpful for staying just-enough up to date with all the crazy things going on in the crypto space if you don't want to sign up for her newsletter!

jjfoooo5 4y ago

How does Binance fit into this chart? I understand them to be the biggest remaining exchange