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Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

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Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#21

Post by Jommi »

mywaifuismeta wrote: post #15
darawk wrote: post #3

What farming actually is is companies using their equity directly as marketing incentives. In principle, there is nothing really wrong with this, although usually companies don't find that to be the most efficient way to use their equity. The problem with farming was that, in many, but not all, cases, the equity in question had no value. It isn't true that they were all ponzi schemes, though. Many of the tokens did g…

While the analogy is correct, a key difference is that startups are illiquid by definition. Founders can't just cash out and are thus incentivized by build something of value. With protocols, there is no incentive to build something of value. Instead, the incentive is to building something that looks valuable on the surface to generate liquidity and cash out at the best point.

"What are secondaries?"

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#22

Post by drumhead »

I heard this for the first time last week and I couldnt believe the business model. Its effectively a ponzi scheme but the scheme originater was just so relaxed about it as if it was nothing to be concerned about and was perfectly normal. I think in the Cryto world though the participants, on buy and sell sides, are all fully aware though, all they seem to be concerned with is how much of a speculative boost it will give to the coin price so they can land a 1000% gain in a few days/weeks/months and then cash out leaving someone else holding the baby.

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#23

Post by Jommi »

He is not really describing yield-farming here, he is describing what kind of price action happens when anyone can create a global, liquid, unregulated with just a computer as a tool.

In the US, people can get 100-500$ just by creating a new bank account and deposting money into it. Some people do that, but then immedietly remove the funds once the bonus is paid out.

In reality, yield farming is just that, except in crypto: https://www.reddit.com/r/churning/

It's people chasing bank / credit card marketing bonuses without really any thought of actually using those banks/credit cards in the long term.

This is the correct analogy.

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#24

Post by mywaifuismeta »

Jommi wrote: post #21
mywaifuismeta wrote: post #15

Earlier quoted context omitted.

While the analogy is correct, a key difference is that startups are illiquid by definition. Founders can't just cash out and are thus incentivized by build something of value. With protocols, there is no incentive to build something of value. Instead, the incentive is to building something that looks valuable on the surface to generate liquidity and cash out at the best point.

"What are secondaries?"

Not for super early stage. Crypto projects cash out after a few months or so. That's pre-seed/seed startups.

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#25

Post by lizknope »

This video was from a month ago and is about the same podcast with Sam Bankman-Fried. The way he describes the box and how it isn't a Ponzi scheme is just ridiculous

Crypto CEO Accidentally Describes Ponzi Scheme

https://www.youtube.com/watch?v=C6nAxiym9oc

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#26

Post by Jommi »

mywaifuismeta wrote: post #24
Jommi wrote: post #21

Earlier quoted context omitted.

"What are secondaries?"

Not for super early stage. Crypto projects cash out after a few months or so. That's pre-seed/seed startups.

But you used a binary term "illiquid" rather than opting for something more open like "most illiquid". Just wanted to make a clarificaiton for other readers.

Are you aware that most crypto projects also opt into vesting patterns - and this is an increasing trend overall?

Another thing that might be interesting to you is that in most countries we have close to no public information if founders sell on secondaries. Your C-Suite might have maximized their secondaries in mutliple rounds and you wouldn't even know that incentives have changed.

In Crypto this is fully transparent and there are people bringing these to light on a consistent basis.

Some stuff to think about!

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#27

Post by Jabbles »

mywaifuismeta wrote: post #19
Jabbles wrote: post #17

Earlier quoted context omitted.

Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry. https://twitter.com/patdennis/status/1518637225789042688

What I don't like about this terminology is that I associate these "schemes" with a malicious actor. Someone trying to scam you. But often that's not the case with these crypto projects. Often, nobody is explicitly trying to scam anyone, but everyone looks out for themselves first and wants to make money, which inevitably results in other people losing money if they are too late. If a traditional startup is valued at…

I think the word valued is hiding a lot.

With startups, the "value" comes from investors who are willing to buy stock at a certain price with certain conditions, one of which is that the rule of law prevents you from stealing company money. If that law were not there, or could not be relied upon, investors would not be willing to invest at that price, and the "value" would be much less.

Or at least, that is my theory of how things should work, because crypto valuations seem to have proved me wrong.

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#28

Post by CryptoPunk »

Jabbles wrote: post #17
mywaifuismeta wrote: post #12

It's kind of a Ponzi scheme, but not really since it's not (usually) orchestrated by one malicious entity. Instead, it's a collaborative community effort with the community doing marketing and driving the price. In other words, the dirty work if customer acquisition and advertising is outsourced. It's not so different from crazy startup valuations that are often a result of market forces and competition, with the hop…

Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry. https://twitter.com/patdennis/status/1518637225789042688

No post body was provided.

Re: Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

#30

Post by onlyrealcuzzo »

thematrixturtle wrote: post #6

> SBF: Well, okay. So you've got this boxes and it’s kind of dumb, but like what's the end game, right? This box is worth zero obviously. It blows my mind that the people profiting from this are publicly describing the scheme like this, and nobody seems to care.

Nobody cares if the make money.

Everyone is still filled with hope.

They'll care if/when they lose.

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