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If they're in such dire straights, how is it $BNB is hanging there? Is Binance defending their own magic bean? What is the cost of doing so? https://finance.

If they're in such dire straights, how is it $BNB is hanging there? Is Binance defending their own magic bean? What is the cost of doing so? https://finance.yahoo.com/quote/BNB-USD/ https://finance.yahoo.com/quote/BNB-USD/

europeanguy 4y ago
I'm not suggesting you're wrong, but would you care to clarify how exactly binance being "in dire straits" (in the sense of not being able to honor withdrawals, I presume you mean) would affect the value of BNB?
- funstuff007 4y ago
  Yes, my poetic license path is very heavy withdrawals -> bank run -> dire straits (money for nothing pun). $60B in assets, $8B in withdrawals. Even if all the assets are correctly valued, I don't anyone would envy their position. But given their own coin in holding in there, maybe they are devoting some money to defend it, or maybe they are actually in decent shape and can handle this quasi bank run. More succinctly, if they were really toast, then $BNB would be cratering. Given it's holding in there, it seems they are OK (at this very instant in time).
  - europeanguy 4y ago
    > if they were really toast, then $BNB would be cratering Why exactly, though? That's what I'm asking. I promise I'm not trolling, I just don't understand the connection.
    - funstuff007 4y ago
      My presumption is Binance is the buyer of last resort for $BNB.
    - crtified 4y ago
      Well it has lost about one quarter of it's value VS Bitcoin in the past 3 weeks. Whether or not that fits the definition of cratering is up to the individual. 27 Nov: 1 BNB = 0.0188 Bitcoin; 17 Dec: 1 BNB = 0.0142 Bitcoin
  - ineedasername 4y ago
    Collapses often happen very gradually (in a time span relative the the majority proportion of the collapse) and then all at once. As such, its failure to collapse as the crisis continues is not strong evidence that it’s not toast. Consider the examples of any system subject to cascading failures. But neither is there sufficient evidence to determine if it’s in the early stages of a death spiral. What seems clear to me is that it’s unlikely to improve in value in the very short term, and might indeed collapse, so it could be prudent to transfer assets out while there’s still liquidity to do so especially in light of recent collapses. Of course this has the downside of accelerating or even making a collapse a self-fulfilling prophesy: that’s inherent to the nature of any asset where user confidence is a tent pole of stability. It is also why traditional finance has evolved mechanisms to have lenders of last resort so that there is no death-spiraling perverse incentive to get your money out early in those situations. But that sort of back stop takes truly massive resources that need to dwarf those of the potentially failing organizations, which is why you see nation-states filling the role. It may take a nation issuing debt against the guarantee assets of a $trillion+ GDP (and really the taxation ability that comes with, though even that oversimplifies things…) in order to back stop and perform that role for organizations on the scale of many $Billions.
- onlyrealcuzzo 4y ago
  There's not much BNB volume outside of Binance: https://coinmarketcap.com/currencies/bnb/markets/ https://coinmarketcap.com/currencies/bnb/markets/ They could defend the price pretty easily by rigging the price on their exchange by printing BUSD to buy BNB. I will be shocked if we don't find proof they've done this in the past. You can do this w/o screwing customers. Let's assume that some percentage of BUSD is legit (likely a lot of it is). This means BUSD has some value. Let's say everytime someone converts real money to BUSD - Binance spends 100% of treasuries and then an additional 10% to buy BNB. They can keep that 10% in their own wallet - and if the value of BNB someone goes to $0 with them playing this game - they can just wipe that account out. They still have all the treasuries to pay their real customers. However, if you're doing fraud - you're probably doing a lot more of it than this... So you probably won't be able to pay out your customers, because you probably blew all their money on coke and hookers like FTX and every other crypto company so far.
  - matthewdgreen 4y ago
    Actual BUSD is issued on Ethereum by Paxos, which is a separate US company that is licensed and regulated by NYDFS. I think it’s unlikely that any of this issuance is fraudulent. Binance then maintains a “pegged BUSD” token on the BNB chain (and other chains.) This is supposed to be backed “1 to 1” by Real-BUSD held in a Binance wallet on chain. They could break this peg at any instant they chose, but it would be visible. I did the math a few days ago over here [1] and it checked out. I’m posting this not to say the situation isn’t risky, just that it seems risky in a highly-transparent way - ie, I can’t see how they would manufacture BUSD without someone noticing. Maybe there’s a loophole I don’t see. [1] https://news.ycombinator.com/item?id=33976228 https://news.ycombinator.com/item?id=33976228
- deleted 4y ago
  [deleted]
crtified 4y ago
One manipulation mechanism is leverage. Binance and other crypto exchanges offer leveraged trading to all members, and it's fair to say [1] that there's a huge uptake of those services due to their open-door nature, crypto's volatility, and the illusion of fast money. And human psychology, of course. This means that at any given time, a dominant exchange (i.e. Binance) can run an order books VS leverage liquidations system, where it can be continually (and exclusively) evaluating the cost/profit of using their internal market makers to shift the price of any given asset counter to the leverage trend. Which they, as the exchange holding ALL the data, have full insight into. When we're talking about an asset that's near-exclusively controlled by a particular exchange - e.g. FTT, BNB, ... - this becomes an even simpler manipulation for the exchange. This gives them options. They can allow a "natural" price trend to play out, OR, they can buy out the order books in the opposite direction, and liquidate/take all the money of every leverage trader who tried to leap onboard the trend. The harder the market movement, the more gamblers try to leap onboard, giving the exchange proportional fuel to do as they please. Until a point. [1] https://www.cryptometer.io/open-interest https://www.cryptometer.io/open-interest

europeanguy 4y ago

I'm not suggesting you're wrong, but would you care to clarify how exactly binance being "in dire straits" (in the sense of not being able to honor withdrawals, I presume you mean) would affect the value of BNB?

funstuff007 4y ago
Yes, my poetic license path is very heavy withdrawals -> bank run -> dire straits (money for nothing pun). $60B in assets, $8B in withdrawals. Even if all the assets are correctly valued, I don't anyone would envy their position. But given their own coin in holding in there, maybe they are devoting some money to defend it, or maybe they are actually in decent shape and can handle this quasi bank run. More succinctly, if they were really toast, then $BNB would be cratering. Given it's holding in there, it seems they are OK (at this very instant in time).
- europeanguy 4y ago
  > if they were really toast, then $BNB would be cratering Why exactly, though? That's what I'm asking. I promise I'm not trolling, I just don't understand the connection.
  - funstuff007 4y ago
    My presumption is Binance is the buyer of last resort for $BNB.
  - crtified 4y ago
    Well it has lost about one quarter of it's value VS Bitcoin in the past 3 weeks. Whether or not that fits the definition of cratering is up to the individual. 27 Nov: 1 BNB = 0.0188 Bitcoin; 17 Dec: 1 BNB = 0.0142 Bitcoin
- ineedasername 4y ago
  Collapses often happen very gradually (in a time span relative the the majority proportion of the collapse) and then all at once. As such, its failure to collapse as the crisis continues is not strong evidence that it’s not toast. Consider the examples of any system subject to cascading failures. But neither is there sufficient evidence to determine if it’s in the early stages of a death spiral. What seems clear to me is that it’s unlikely to improve in value in the very short term, and might indeed collapse, so it could be prudent to transfer assets out while there’s still liquidity to do so especially in light of recent collapses. Of course this has the downside of accelerating or even making a collapse a self-fulfilling prophesy: that’s inherent to the nature of any asset where user confidence is a tent pole of stability. It is also why traditional finance has evolved mechanisms to have lenders of last resort so that there is no death-spiraling perverse incentive to get your money out early in those situations. But that sort of back stop takes truly massive resources that need to dwarf those of the potentially failing organizations, which is why you see nation-states filling the role. It may take a nation issuing debt against the guarantee assets of a $trillion+ GDP (and really the taxation ability that comes with, though even that oversimplifies things…) in order to back stop and perform that role for organizations on the scale of many $Billions.
onlyrealcuzzo 4y ago
There's not much BNB volume outside of Binance: https://coinmarketcap.com/currencies/bnb/markets/ https://coinmarketcap.com/currencies/bnb/markets/ They could defend the price pretty easily by rigging the price on their exchange by printing BUSD to buy BNB. I will be shocked if we don't find proof they've done this in the past. You can do this w/o screwing customers. Let's assume that some percentage of BUSD is legit (likely a lot of it is). This means BUSD has some value. Let's say everytime someone converts real money to BUSD - Binance spends 100% of treasuries and then an additional 10% to buy BNB. They can keep that 10% in their own wallet - and if the value of BNB someone goes to $0 with them playing this game - they can just wipe that account out. They still have all the treasuries to pay their real customers. However, if you're doing fraud - you're probably doing a lot more of it than this... So you probably won't be able to pay out your customers, because you probably blew all their money on coke and hookers like FTX and every other crypto company so far.
- matthewdgreen 4y ago
  Actual BUSD is issued on Ethereum by Paxos, which is a separate US company that is licensed and regulated by NYDFS. I think it’s unlikely that any of this issuance is fraudulent. Binance then maintains a “pegged BUSD” token on the BNB chain (and other chains.) This is supposed to be backed “1 to 1” by Real-BUSD held in a Binance wallet on chain. They could break this peg at any instant they chose, but it would be visible. I did the math a few days ago over here [1] and it checked out. I’m posting this not to say the situation isn’t risky, just that it seems risky in a highly-transparent way - ie, I can’t see how they would manufacture BUSD without someone noticing. Maybe there’s a loophole I don’t see. [1] https://news.ycombinator.com/item?id=33976228 https://news.ycombinator.com/item?id=33976228
deleted 4y ago
[deleted]

crtified 4y ago

One manipulation mechanism is leverage. Binance and other crypto exchanges offer leveraged trading to all members, and it's fair to say [1] that there's a huge uptake of those services due to their open-door nature, crypto's volatility, and the illusion of fast money. And human psychology, of course. This means that at any given time, a dominant exchange (i.e. Binance) can run an order books VS leverage liquidations system, where it can be continually (and exclusively) evaluating the cost/profit of using their internal market makers to shift the price of any given asset counter to the leverage trend. Which they, as the exchange holding ALL the data, have full insight into. When we're talking about an asset that's near-exclusively controlled by a particular exchange - e.g. FTT, BNB, ... - this becomes an even simpler manipulation for the exchange. This gives them options. They can allow a "natural" price trend to play out, OR, they can buy out the order books in the opposite direction, and liquidate/take all the money of every leverage trader who tried to leap onboard the trend. The harder the market movement, the more gamblers try to leap onboard, giving the exchange proportional fuel to do as they please. Until a point. [1] https://www.cryptometer.io/open-interest https://www.cryptometer.io/open-interest