Comparing and Contrasting: DeFi vs ICOs

Decentralized Finance tokens have been leading this general crypto bull run in much the same way that ICOs were a focus of the 2016-2017 bull run. But is that where the analogy ends? Here’s a walkthrough of some similarities and differences.

Similarities

  1. They reduce ETH circulating supply. Bullish for ETH in that both ICOs and Defi incentivize purchasing and locking up ETH and ETH tokens; reducing the circulating supply of crypto assets often supports price appreciation. ICOs generally accepted ETH as investment, gave investors a new token, and held a large percentage of the ETH in treasury. DeFi provides new minted tokens in exchange for staking ETH and ETH tokens.
  2. Started slowly with long-term VC money, accelerated with fast moving “retail” money. The ICO boom arguably began with VC and angel investor capital into the ethereum ICO. Technical innovation (ERC20s) and early investment successes then supported many follow-on ICO projects with investment by an increasingly retail community. The DeFi boom similarly began with long-term VC and angel investment into early projects. We now have a plethora of projects launching and attracting more “fast moving” capital.
  3. ICOs and Defi aim to decentralize existing business models, but largely built usage and communities via token speculation. Both ICOs and DeFi were largely centered around taking existing business models and decentralizing them, and bootstrapping early network effects with speculation on token price appreciation. ICOs that aimed to build a “decentralized version of X” attracted initial communities with the potential for financial gains from speculation on the token. DeFi provides decentralized versions of exchanges and lending platforms but has largely grown liquidity by with speculation on new tokens.
  4. Both ICOs and DeFi caused extremely high fees and congestion on the ethereum blockchain, incentivizing research and investment into scalability solutions. 2017 gave us a long slate of “ethereum killers”, many focused on scaleability. We also saw a focus on plasma chains, sidechains, and other layer 2 scaleability solutions. Scaleability research continues today (including with ETH 2.0 plans), and this focus may be accelerated with record high ethereum fees.
  5. Other protocols followed ethereum’s footsteps to support both ICOs and DeFi, but ethereum had the vast majority of both ICO and DeFi activity. For ICOs, the “composability” benefits of launching ERC20s included having a broad base of infrastructure support including wallet support and easy addition to exchanges. For DeFi, the composability benefits may go further, as DeFi protocols generally interact extensively, and cross-chain solutions remain nascent.

Differences

  1. ICOs sold new tokens in exchange for ETH. DeFi generally gives away new tokens for free in exchange for temporarily staking ETH (and other ethereum based assets). This may be a meaningful difference from a regulatory perspective as most ICOs were security sales, whereas DeFi tokens are generally provided in exchange for “work”, which may allow some to be exempt from security regulations as non-securities.This may also be less bullish for ETH than ICOs, since the same ETH is quickly recycled between projects to farm new tokens by the same set of investors.
  2. Unlike with ICOs, DeFi has a relatively modest set of use cases that are naturally “crypto native.” In ICOs, the target user of the product was often entirely distinct from the natural investor base in the token (e.g. a cosmetics ICO that sells cosmetics products to women in South Korea but raises money from ETH holders.) DeFi in contrast is providing crypto trading and lending services and distributing tokens to that same set of target customers. Enabling investors to instantly be users allows for faster growth in communities.
  3. While much of DeFi activity may be “circular” that exists because of temporary token incentives, that activity is still “real” and provides immediate value in the form of liquidity to crypto traders. In contrast, most ICO projects never launched a usable product.

What similarities and differences have I overlooked?

Posted in Cryptocurrency | Tagged , , | 5 Comments

“Is it priced in?” – thoughts on valuing BTC and the upcoming Halving

Is the Bitcoin halving priced in?  If so, when did that happen?  Are all future bitcoin halvings priced in today?  I promise to come back to these questions, but first I’ll explore the idea of information and events being “priced in” in traditional asset classes.

Pedantry Disclaimer: I oversimplify a bit in this essay, in ways that I think don’t sacrifice any meaning.  For example, a stock’s fair value is dependent not just on its earnings, but also its current book value, interest rates, volatility, and even tax policy, but I’m only focusing on the first variable here.

Legal disclaimer: I may be long or short BTC in the past, present, and future.  Not investment advice.

Is it priced in?  The question implies that there is some “fair” price for an asset after the effects of some new information or new event.  A trader who says they’re bullish because of an upcoming event would reasonably ask if the bullish impact of that event is already reflected in the current price.  For example, let’s imagine you said that you were bullish on Amazon because it has an amazing CEO, monopolistic power in some business lines, and strong network effects.  I might ask you if you think that other market participants who are setting the price for AMZN disagree with you.  If they agree with you, then presumably the current price of AMZN already embodies all of these positive attributes – maybe that’s why Amazon is valued at $886 billion.

In equities, bonds, and consumable commodities, there are robust frameworks for identifying intrinsic value.  These assets ultimately provide concrete value to holders in countable USD terms.  An owner of AMZN is entitled to their share of AMZN profits via dividends or share buybacks.  So all an investor has to due is to accurately identify AMZN’s future profits to come up with a “fair” value for the stock.  Of course this is a tall task, but it facilitates easy discussion around valuation.  If someone thinks AMZN is worth more than you do, they likely believe that future profits will be greater than you think they will be.  You can then dig in to why.  And they “why” falls into two categories:  analysis or information.  For example, you and another investor may analyze the same information but you may conclude that Amazon’s expansion into same-day delivery is likely to turbocharge sales, while another investor may be skeptical of the expansion.  Alternatively, another investor may have information you don’t.  Maybe Bezos told a few friends that he’s considering retiring, and this investor is bearish on the basis of this non-public information (which may be legal to trade on, depending on how the information was gained.)

In the context of AMZN, “is it priced in” is asking, “does the market have this information, and are they appreciating its bullishness or bearishness as I see it?”

Now for Bitcoin: while there are some nascent valuation approaches to Bitcoin, models like Stock-to-flow don’t even attempt to identify intrinsic value.  Rather, they observe a historical relationship.  What is the intrinsic value of bitcoin?  1. Bitcoins are how you pay to transact on the bitcoin protocol, so the value of a bitcoin can be modeled as a derivative of transaction demand, but this gets circular given that many bitcoin transactions are currently speculative in nature (arbitrage, trading, etc).  Any valuation of Bitcoin based on this approach yields a fair value far below the current price.  2.  Bitcoin provides utility to a holder who wants to store wealth in a confiscation-resistant way.  This doesn’t easily contribute to a pricing model however, since for this use case, the bitcoin buyer is entirely price insensitive.  If I want to store $10k of wealth in a seizure resistant way, I need to buy $10k worth of Bitcoin, regardless of the price per BTC.

So, we don’t have an easy way to connect fundamentals to price for bitcoin (or other speculative commodities).  Imagine this conversation in late 2017:

Bitcoin bull: over the next 12 months, we’ll see further development in all areas around Bitcoin – infrastructure like ATMs and trading products, development of LN and the core client, broader education and adoption etc.  So…I’m bullish.

Bitcoin bear: I agree with everything you said, but the current price is a bubble and even with improving fundamentals, we’ll still have a lower priced BTC in 12 months.

The bear is arguing that the “fair” price at the end of 2017 was much lower than the market price, and so despite their optimism for fundamentals over the coming year, they’re still bearish on price.  How is the bear deriving a “fair” price?  Not from a fundamental model, but with a trader’s mindset – by noting that the price was driven higher was short-term speculators, “weak hands”, and that when these people inevitably cut their overextended positions, we should expect a crash.

Okay, so what about the halving?  With only 2 prior data points, we’re far short of sufficient data for a quantitative model, but it’s still worth a look.  If I showed you a chart of Bitcoin, you couldn’t identify the halvings without knowing where to look ahead of time.  Both halvings occurred in the midst of bull runs, without a clear change in slope of the rally.  The simplest interpretation would be that the halving appears to have no effect.  But how can that be?  How could a 50% reduction in new supply be irrelevant?

halvinggraphic

One possible explanation is that the halving is “priced in” ahead of time.  But when?  Are all future halvings priced in today?  I think the problem is that the whole framework of “pricing in” is wrong for long-term early stage investments.  The concept of an efficient market, or of information being “priced in” is an inherently short-term framework.  It assumes a consistent set of market participants who are constantly evaluating an asset.

In contrast, bitcoin wasn’t “investable” by a pension fund or bank in 2011.  They didn’t avoid buying it in 2011 because they thought it was overvalued, they couldn’t buy it.  It wasn’t part of their investable universe for a mix of regulatory, operational, and bureaucratic reasons.  As bitcoin matures, the market participants who set its price evolves.  In 2011, the exchange price was set by a small number of early bitcoin miners, investors, and developers.  Today, the bitcoin price is set by that group, but also by professional crypto funds and some traditional investors and funds.  Soon we may have pensions and sovereign wealth funds participating in price discovery in a big way.  “Is it priced in” assumes some group doing the pricing.  For an early stage asset, the pricing group evolves over time.

But I still haven’t answered the questions.  Is the halving priced in?  The lack of clear inflection points on the chart suggest that if the halving has an effect, some sort of “pricing in” must be happening.  Often events are partially priced in to asset prices  Rational traders and investors require a return for every risk.  On average, they should “underprice” every bullish event by a bit – that bit is the profit on the trade or investment.  This is the average result, but not a consistent one.  Sometimes the market certainly “overprices” a bullish event, leading to the common “sell the news” situations.  But I struggle to think of why the halving should be viewed as an “event” at all.  I think it’s best characterized as just part of the general optimistic roadmap of bitcoin continuing to gain adoption and accrue network effects.  Certainly bitcoin’s emission schedule is core to its value proposition.  If 2020 was scheduled to be the last bitcoin halving, BTC probably wouldn’t have a $137 billion market cap today.  So in that sense, all future halvings are “priced in” to some degree – they’re intrinsic to what Bitcoin is and why it’s as valuable as it is today.  But again, this is an ineffectual framing.  So let me throw it out and try for something different.

My mental model for Bitcoin’s returns is the same as for an early stage project with value coming primarily from network effects: its current value includes optimism about all future possible events, but the price increases over time as our confidence in those future events increases.  Within this framework, the halvings are more like signposts that Bitcoin is passing along its trajectory of accruing network effects and intrinsic value.  And as that future fundamental value becomes less risky, the BTC price increases over time.  And, the BTC price increases as the project matures, and the pool of market participants who view it as within their investable universe increases.

With all of this said, when we zoom in a bit to a trading timeframe (<6 months), I do think “is it priced in” is a useful question, but as applies to second order effects.  The halving causes miner profitability to suddenly plummet.  This may cause miners to liquidate BTC to cover fixed costs or to invest in more ASICs.  To at least some degree, miners try to “price in” these issues and adjust their behavior in advance.  Diving deeper into these questions require an exploration of miner incentives and the current mining ecosystem, which will have to wait for a future essay.

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Millennials and Crisis

(this is a repost of an essay I wrote in 2016, perhaps more relevant today.)

Investors,

This is going to be a very strange commentary, almost entirely sociological in nature. I think I’ve found a useful lens to explain a wide variety of emerging social/political/economic puzzles.

  • Why do 70% of Americans think the country is heading in the wrong direction even as violent crime, deaths from terrorism, and unemployment are near the lows of the last 100 years?
  • Why do so many people from all over the ideological spectrum think the US is in the midst of a crisis (for such wildly different and conflicting reasons)?
    Why do young progressive liberals seem to be demanding very “illiberal” social justice policies (like racial quotas for professors and campus censorship)?
    Why is most popular media today so “squeaky clean” (Taylor Swift, Drake, “Modern Family”, super hero movies)?
  • Why are technologically “boring” products like Twitter, Game of War, and Pokemon Go so successful, and should we expect that to continue?
  • Why did Bernie Sanders produce such strong youth turnout and earn nearly half of Democratic support in the primary; can we expect high youth turnout going forward?
  • Why are teen suicides rising even as academic performance and optimism among that age group are off the charts, and violence in general is falling?
  • Will the push for radical changes to our economy and political system from both left and right succeed? What form will the changes take?

Synopsis:
The questions above became less puzzling to me after thinking about them within a generational framework that properly identifies the Millennial zeitgeist.
Millennials (currently aged 12 to 34) are civic-minded collectivists. They trust authority and government institutions, but think little of current leadership. They are optimistic and conformist. They’re outer-directed; instead of self-improvement, they focus on improving the world around them. They’re team players.

As consumers they will look for products that let them engage with a community (e.g. Twitter, Pokemon Go), they will continue preferring media that is idealistic and “clean” (e.g. Taylor Swift, “Modern Family”, and simple super hero movies.) As voters they will produce record turnout and throw their support behind politicians who promise ambitious social reforms via a larger federal government (i.e. Bernie Sanders.) As employees, they will demand meaningful work and a sense of being part of a team. As citizens, they will be honest collectivists with a strong sense of social responsibility. They’ll ambitiously and optimistically rebuild large institutions around themselves and their vision for the country. While they tend to be more liberal and atheistic than previous generations, the civic collectivism crosses party and theological lines. Religious millennials are embracing huge christian rock concerts and public purity ring ceremonies. Millennials are in many ways traditional, non-rebellious, and conformist; a generation of boy scouts…and occasionally bullies.

I am of course grossly simplifying when I reduce the extreme diversity of a generation to a set of common traits, but capturing general trends is useful. This commentary draws very heavily on the work of authors William Strauss and Neil Howe.

​​Social Justice: Rejecting Baby Boomer Individualism
There have been major protests on over two hundred college campuses in the last 18 months, with some of the most newsworthy at the University of Missouri, Yale, and Amherst. The protests have centered primarily around social justice for black Americans, with demands and tactics that are problematic for even most self-described leftist liberals. For example, students at many schools are demanding quotas for black professors, mandatory “cultural competency training” for all students, censorship of political discourse, and the renaming of buildings named after US presidents like Thomas Jefferson and Woodrow Wilson. The latest version of the “Movement for Black Lives” platform (which has been endorsed by Black Lives Matter), demands legalized racial discrimination, including free national education exclusively for people with black skin. To many veterans of the civil rights movement, these demands threaten the rights of others, through active censorship and racial discrimination.

I previously thought of Millennials as continuing the idealism, materialism, and individualism of the Baby Boomers, and that left me perplexed by the form that some of the recent social justice protests have taken. The Baby Boomers (born between 1943-1960) were inner-directed idealists. Some of their most famous and representative members were president Bill Clinton, comedian Steve Martin, and entrepreneur Steve Jobs. They believed in the individual – individual rights, individual transformation (through drugs and dance as adolescents, and now through diets and exercise schemes and religious revival movements as adults), and individual success (through materialist consumption). The civil rights movement was focused on the individual and the argument could be summed up simply: people are people, treat them the same. A black person should be treated equally to a white person, a gay person deserves the same rights as a straight person, immigrants the same rights as native born Americans etc.

In contrast, Millennials care about injustice, but frame it not as justice for individuals, but as justice for groups. Previously, assistance to the poor or oppressed was generally framed in terms of providing equal opportunity. But the rhetoric of Bernie Sanders, the Millennials’ candidate, is about outcomes of groups – that income inequality is in itself an obvious problem and inherently wrong. To put it simply: Civil rights advocates of the baby boom generation were fighting to remove institutional obstacles from individuals. Social justice minded millennials are fighting to provide equal opportunity for groups, and measure opportunity in terms of outcomes.

The inward-focus of Baby Boomers led to the surge in psychedelic drug use, therapy and self-help books, fad diets and gym memberships. As adolescents they sought inner purity, as adults they chased personal wealth and happiness, and as parents they believed in coaching their children to personal perfection. In contrast, Millennials are outward-focused; when they talk about “fixing things”, they don’t mean their waistlines or relationships with their mothers, they mean the environment and the societal institutions around them.

Optimism and Ambition: Rejecting Gen X Cynicism
Gen X (born 1961 to 1981) was a cynical, pessimistic generation. Nihilistic, rebellious, and scared, they came of age in an atmosphere of low expectations and neglect. They caused a spike in crime rates and a drop in academic performance. Gen X is the generation of punk rock, Marilyn Manson, Dennis Rodman, “South Park”, and “heroin chic” fashion. Gen X views the world as a cold and unforgiving place. They don’t trust authority or each other and subscribe to a mantra that if you don’t look out for yourself, no one else will. To Gen X, success is self-sufficiency, independence, and survival.
In contrast, Millennials are incredibly optimistic and ambitious. They reject the cynicism of “Seinfeld” in favor of idealistic “Modern Family” and “Parks and Recreation.” Their favorite musicians are squeaky clean idealists in every subgenre – Drake, Taylor Swift, NSYNC, and Skrillex. I’m personally a fan of electronic music so I’ll use that as an example to dive a little deeper: Gen X listened to electronic music in illegal underground raves in filthy warehouses in groups of a few hundred or a couple thousand adolescents; millennials fill stadiums to hear their favorite DJs and buy their tickets 6 months in advance via Ticketmaster.

Boy Scouts: Embracing GI Collectivism
So if Millennials are are wildly different from Gen Xers and Baby Boomers, who can we compare them to? The GI generation (currently between 93 and 115). As youths they were similarly civic-minded team players. Theirs was the generation that started the Boy Scouts, built the nation’s highway system, and put a man on the moon. They gave us sunny idealists like JFK and Reagan the pols, Artie Shaw and Judy Garland the musicians, and Joe DiMaggio the sportsman.

Millennials began developing their worldview with a childhood of “gold stars.” They grew up in a culture that embraced children as the future, with mothers that kept a pile of child-rearing books on the bedside table, and with schools that sought to replace competition with encouragement. They could do no wrong. Unlike most previous generations, they were told even as children that their views were important and valuable. Their parents and society as a whole demonstrated they were constantly here to protect and support them.

By the time Bill Clinton took office, “kinderpolitics” dominated the political scene – it seemed like every public policy debate was framed in terms of what was best for children. “Children are our future” became the mantra. Adults were expected to embrace parenthood as a defining role of their life. Adults who chose not to have children, or to have children but not make them a central priority of their life, were viewed as selfish.
As a result, Millennials trust authority and are quick to anger when high expectations aren’t met. Their childhood made them ambitious, confident, demanding, and fragile. They don’t know how to deal with disappointment or failure. On college campuses, this manifests as a very specific type of protest. Unlike the civil rights protesters of the 60s, today’s students have no desire to “burn it down.” When they encounter something they don’t like, like a school newspaper that publishes Op-Eds they view as insensitive, today’s protesters don’t react by creating an alternative/competing paper – rather they demand that the administration fix or replace the existing newspaper. Millennials believe in institutions (even if they think those institutions are currently run by corrupt people).

Millennials’ life is always quantified. They count their Facebook “likes” and Twitter “followers.” They know how many Pokemon are in their Pokedex. Their popular computer games always include some form of “leveling up.” In public policy, they reject abstract ideals in favor of tangible results on both sides of the political spectrum. Debates over the role of government or constitutional interpretation, are the domain of ideological Boomers. For Millennials, these abstract discussions are uninteresting and unimportant. They’re far less interested in thought experiments than concrete results.

Sense of Crisis:
Strauss and Howe’s generational model suggests that “hero” generations like the GIs and Millennials always come of age during a time of crisis. The idea of “crisis” is less about fact than about narrative.

I look at statistics that define our quality of life – violent crime, deaths from terrorism, hunger, infant mortality, life expectancy, etc, and by almost every measure imaginable, Americans (and people throughout most of the world) have never had it so good. Yet, 70% of Americans say they believe the country is headed in the wrong direction. Many black Americans feel like they’re in the midst of a crisis after watching youtube videos of police killing unarmed black teens. The LGBT community feels under assault after the North Carolina Trans Bathroom bill and Orlando terrorist attack. Middle-America whites feel under assault from a variety of angles – they feel unsafe from foreign risks due to Islamic terrorism, unsafe from domestic threats of racial violence and the recent assassinations of police officers; and they feel like they’re losing the “culture wars” and being painted as villains for being christian, straight, and white. Blue collar workers have a sense of economic hopelessness after a generation of stagnant wages and decreasing job security. Parents feel helpless in the face of school shootings.
Perhaps most nefarious is the perception that our political system is increasingly corrupt. More people believe that the economy and political system are rigged and controlled by a small number of elites. People have less faith in police and congress and industry leaders than at any time in the last century.

This sense of crisis was launched by the 2008 economic collapse. High school and college age millennials went from a certainty that they would have wonderful job offers showered on them to a reality of moving back in with their parents, scrambling for unpaid internships, and returning to grad school or taking disappointing low-skilled jobs as a fallback. It seemed like overnight the narrative for a 16 year old went from, “get good grades, go to a good college, and you’ll have a wonderful life” to “if you’re lucky, you may some day be able to pay off your student debt and afford a mortgage.” The financial sector bailouts made Americans believe the economy was rigged in favor of the already rich and powerful. Some of the hardest hit in the Great Recession were the black and hispanic poor who experienced a disproportionate increase in unemployment and destroyed the sense of slow progress in those communities. While the economy has largely recovered since 2008, the sense of disillusionment and lack of opportunity remains.

For the GI generation, the crisis began with the 1929 stock market crash and culminated in WW2 victory. So far we seem to be following a similar timing. If history continues to rhyme, this crisis period might culminate around 2022, possibly against an external threat like Radical Islam, or perhaps as domestic crisis in the form of a massive corruption scandal that shakes our confidence in government (far deeper than even our current distrust.)

This sense of crisis spawned both the Trump and Sanders candidacies. Millennials are still too young to take control of the political sphere, but we can expect to see them playing an increasing role each coming election.

Millennials as Populists: The Dangers of Collectivism
What’s the next step? This cohort of Millennials isn’t going to fade away quietly. Rather, we’ll see a rebirth of civic engagement, rising rates of voter participation, and increasing (often shrill) public discourse over expanding the role of government. The danger (at least to people with Boomer values) is that the civic minded Millennials will demand too heavy handed intervention from the government. Their trust in authority and belief in collectivism may slide into fascist tendencies. Millennials weren’t outraged by Edward Snowden’s revelations of government spying; they’re more outraged by a lack of government action to right historical wrongs, to prevent domestic violence, to censor hate speech, to prevent terrorism, etc. Traditionally, liberals believe in “big government” on economic issues, and “small government” on social issues, while conservatives believed in the opposite. But millennial liberals expect increasing involvement from the government on social issues as well to enforce their sense of fairness, shifting liberalism into populism.

The Millennial belief in collectivism can take the form of bullying. In the Baby Boomer’s adolescence – individualism was hip. In the Gen X world – rebellion was cool. In the Millennials world – being a team-player is paramount. The millennial generation is quick to ostracize, condemn, and bully those who fail to conform. As a result, we’re seeing an increase in teen suicides and an increase in school shootings by self-identified outcasts.

Conclusion
This whole essay is a great oversimplification of the infinite diversity of humanity…but hopefully a useful one for explanatory and maybe even predictive purposes. Let me try to reduce all of this to a single takeaway that transcends context and may be useful to you when you think about economic and political issues:
In every aspect of life, Millennials want to join a team, set a quantifiable goal, and climb a ladder with measurable steps to that goal. They are collectivists, and institution builders.

Credit:
This essay is based directly on work by Strauss and Howe, especially “Generations” and “Millennials Rising”, (with a few twists by me, for better or worse). Finally, I owe thanks to my friend Ben Kream for recommending the authors to me.

Posted in Cryptocurrency | 2 Comments

Thoughts on Cryptocurrency Lending

There’s two basic models, custodial and non-custodial. The vast majority of options are custodial, and that means a third party has your coins. This entails counterparty risk.

What is a reasonable return to lend out your Bitcoin? Is 6% good? Is 15%? It entirely depends on the counterparty risk. You’re not earning money for lending out BTC, you’re earning money for lending to a specific counterparty like BlockFi.

So, what’s a reasonable yield? Junk bonds in the US have typically paid 4-6% over treasury rates. For a risky start-up, uncollateralized loans would typically be more like 15-25% over treasury yields.

Short-term treasury yields are currently 2.5%, so I’d look for ~22%+ yield to lend my BTC to a start-up at a minimum. Now, this superficial analysis is unfair to Blockfi and others who would rightly argue this isn’t a purely uncollateralized loan.

On their website, Blockfi says they “typically lends crypto on overcollateralized terms.” The specifics matter a lot here. If that collateral was legally owed to you as a specific lender, these should probably be viewed as collateralized loans. They’re probably not.

If you as the lender have no legal right to specific collateral, then you’re simply a creditor to a single company, Blockfi (or whomever else), and you might not even be a senior creditor (for Blockfi, I believe you are a senior creditor, but this should be confirmed for each platform.)

So the right way to think about making a loan on a platform like this is very similar to if a crypto start-up asked you for a loan and offered you some interest to borrow your money, and promised to keep a pile of cash representing their general obligations to investors.

Non-custodial solutions are very different. With these, you may potentially have zero counterparty risk, rather you’d be subject to some sort of liquidation risk and protocol risk. If the market gaps lower, the proceeds from liquidating collateral might not pay you back.
Additionally, using things like multisig solutions for a lending platform have serious risk of bugs. Just how serious? Ask Parity, undoubted experts on ethereum smart contracts, who twice lost tremendous sums to bugs in the simplest type of multisig smart contract.
TDLR: The growth in crypto lending markets is awesome for the ecosystem (separate topic), but is extremely risky today however it’s done, and I think the yields are far too low to price that risk from my perspective.
Posted in Cryptocurrency | Tagged | 2 Comments