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I own a dog. You own a cat. I say my dog is worth a million dollars. You say your cat is worth a million dollars. I trade you my dog for your cat. Then we tra
by vkou 4y ago
I own a dog. You own a cat.
I say my dog is worth a million dollars. You say your cat is worth a million dollars. I trade you my dog for your cat. Then we trade them back.
We've just created 2 million dollars of daily trade volume, err, economic activity.
When looking at value stolen by scammers, what matters is not the daily trade volume, what matters is how much money was put into the ecosystem [1], and what fraction of it was stolen.
[1] Which is a lot less than 180B/day.
- deleted 4y ago[deleted]
- hailwren 4y ago> what fraction of it was stolen This is the rub. If you’re using mcap and mark-to-market rates for total value stolen, it’s completely reasonable to use the same rate to evaluate the size of the system.
- mattdesl 4y agoEven if you only look at stablecoin volume, it is significant. 110B over the last 7 days: https://dune.com/hagaetc/stablecoins https://dune.com/hagaetc/stablecoins I guess you could argue the billions in daily transfers are wash trading, unless the transfer is part of an exploit, and then it’s not wash trading?
- actionfromafar 4y agoTo be clear, stolen crypto is true economic activity, right? Edit to downvoters: I actually meant it unironically. Thiefs often want to "cash out" as soon as possible. I'm not saying it's a net good, but it feels "real and gritty" as opposed to many other crypto transactions.
- ETH_start 4y ago>>I say my dog is worth a million dollars. You say your cat is worth a million dollars. I trade you my dog for your cat. Then we trade them back. Uniswap liquidity providers charge a fee for every swap, proportional to the volume swapped, so faking volume like this would be prohibitively expensive.
- pcthrowaway 4y agoI think the main difference here is that your dog/cat don't have markets that they can be traded in relatively easily. There aren't pools of liquidity for which they can be exchanged. Also, your dog and your friend's cat aren't like anything else. The example you constructed is superficially more similar to the NFT market anyway. If dogs and cats were fungible, and there was a market for fractions of both that could be exchanged in and out of, and contained hundreds of thousands of USD in standing liquidity, and the value of your dog was $1 million, and the cat was also $1 million, then sure. Swapping the dog for the cat is approximated by $2 million to the same accuracy that many assets (houses, stocks, etc) are described in notional value.
- llanowarelves 4y agoI agree, but everything's price can be (and is) gamed that way though. So to what degree is trade volume indicative of anything in other things?