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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

#71

Post by s1artibartfast »

CTDOCodebases wrote: post #51
throwaway_1928 wrote: post #45

Earlier quoted context omitted.

No because Amazon generates earnings but reinvests those in its business to make each share worth more.

How does it make the shares worth more if they are not entitled to dividends?

Two additional points

Stock buybacks are one way that is theoretically equivalent to dividends. Amazon recently announced a $10 billion buyback which is about a 1% dividend for owners. [1]

Also, amazon has underlying assets worth 420 billion [2], which the the stock owners own. As Amazon grows, the assets/share also grow

https://www.cnbc.com/2022/03/09/amazon-announces-20-for-1-st...

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/f965e5c...

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

#72

Post by s1artibartfast »

nivertech wrote: post #57
throwaway_1928 wrote: post #55

Earlier quoted context omitted.

Say I own 1 share of Amazon worth $10 and Amazon earns $1 on that share. Bezos has 2 options. He can pay me $1 as a dividend or he can reinvest that $1 into his business and make my share worth $11. His choice does not matter in the absence of taxes and other costs. If he does not pay out a $1 dividend but I want a $1 dividend, I will sell 1/11th of my $11 share and get $1. If he does pay out a $1 dividend but I do n…

Stock buyback is also equivalent to paying cash dividend (ignoring the tax issues).

Stock buybacks have advantages relative to cash dividends for tax purposes because tax on dividend profits are taxed annually, and stock appreciation is taxed in the year of sale.

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

#73

Post by throwaway_1928 »

Supermancho wrote: post #68
throwaway_1928 wrote: post #47

Earlier quoted context omitted.

> It's a fun game to play, just like casinos are fun. In 99.9% of cases nothing of value is behind these protocols. It is a lot of fun until people start becoming homeless and consider ending their life. https://www.reddit.com/r/terraluna/comments/un3w7t/i_lost_ov...

> It is a lot of fun until people start becoming homeless and consider ending their life. It's still fun. People make bad decisions all over the world all the time. The fact you read and dwell on the consequences some people suffer over it is not a problem, for other people, to solve.

> The fact you read and dwell on the consequences some people suffer over it is not a problem, for other people, to solve.

Unless those other people are the government. In which case it is their obligation to reasonably check predatory fraudulent activity, including ponzi schemes.

And unless those other people are simply concerned citizens who bring dubious schemes to the attention of the public at large.

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

#74

Post by kwertyoowiyop »

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…

If I squint, they are. They’ve already established what kind of person they are, now we are just haggling over the price.

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

#75

Post by Jommi »

gregsadetsky wrote: post #38
Jommi wrote: post #23

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…

To my knowledge, credit card / bank signup bonus are not marketed / packaged as asset classes. Learning that a non-crypto investment instrument was based on bank signup bonuses would be shocking to most, no? To me, that’s the source of the astonishment in the podcast. If what we’re talking about is built on non-sustainable foundations, fine. Call it that. But that’s the opposite of an investment opportunity.

Yes, indeed this is credit card / bank signup bonus but it's actually giving you equity in the bank instead of pure USD.

Yield farming is usualled called "mercenary" because of this, as instead of specualting, some instantly just sell whatever "equity" or token back into USD.

Some prefer to keep the token and speculate on its value.

Everyone is making their own decisions.

>Learning that a non-crypto investment instrument was based on bank signup bonuses would be shocking to most, no?

What do you mean by this?

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

#76

Post by gregsadetsky »

Jommi wrote: post #75
gregsadetsky wrote: post #38

Earlier quoted context omitted.

To my knowledge, credit card / bank signup bonus are not marketed / packaged as asset classes. Learning that a non-crypto investment instrument was based on bank signup bonuses would be shocking to most, no? To me, that’s the source of the astonishment in the podcast. If what we’re talking about is built on non-sustainable foundations, fine. Call it that. But that’s the opposite of an investment opportunity.

Yes, indeed this is credit card / bank signup bonus but it's actually giving you equity in the bank instead of pure USD. Yield farming is usualled called "mercenary" because of this, as instead of specualting, some instantly just sell whatever "equity" or token back into USD. Some prefer to keep the token and speculate on its value. Everyone is making their own decisions. >Learning that a non-crypto investment instru…

As far as I understand (and from an extremely cursory google search), (crypto) yield farming is described as "An investing strategy". Not as a bonus on top of something else. i.e. the "bonus" is the only point.

Your argument (again, afaik) was that yield farming should be likened to bank sign up bonuses.

If I follow that argument:

If someone were to tell me in the non-crypto world that there was a new "Investment strategy" and when I asked what it was based on, the answer was that my money would be used to pay people to open bank accounts to get the sign up bonus and that part of those bonuses would trickle back to me (making this, in some sense, "an investment strategy") -- I would run away.

But maybe I'm taking the analogy too far :-)

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

#77

Post by Supermancho »

throwaway_1928 wrote: post #73
Supermancho wrote: post #68

Earlier quoted context omitted.

> It is a lot of fun until people start becoming homeless and consider ending their life. It's still fun. People make bad decisions all over the world all the time. The fact you read and dwell on the consequences some people suffer over it is not a problem, for other people, to solve.

> The fact you read and dwell on the consequences some people suffer over it is not a problem, for other people, to solve. Unless those other people are the government. In which case it is their obligation to reasonably check predatory fraudulent activity, including ponzi schemes. And unless those other people are simply concerned citizens who bring dubious schemes to the attention of the public at large.

> Unless those other people are the government.

> it is their (US government's) obligation to reasonably check predatory fraudulent activity

Crypto, by-in-large, is not predatory. Most fraud checks are after the fact. Fraud can be triaged, but there is no getting around the reality that there will always be people who don't value risk properly. Again, this is not a problem for other people to solve.

This is not a reason to pretend it's a larger issue that will affect your gambling experience.

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

#78

Post by Jommi »

gregsadetsky wrote: post #76
Jommi wrote: post #75

Earlier quoted context omitted.

Yes, indeed this is credit card / bank signup bonus but it's actually giving you equity in the bank instead of pure USD. Yield farming is usualled called "mercenary" because of this, as instead of specualting, some instantly just sell whatever "equity" or token back into USD. Some prefer to keep the token and speculate on its value. Everyone is making their own decisions. >Learning that a non-crypto investment instru…

As far as I understand (and from an extremely cursory google search), (crypto) yield farming is described as "An investing strategy". Not as a bonus on top of something else. i.e. the "bonus" is the only point. Your argument (again, afaik) was that yield farming should be likened to bank sign up bonuses. If I follow that argument: If someone were to tell me in the non-crypto world that there was a new "Investment str…

You have it slightly wrong - I guess that's why you think it's a ponzi.

In Churning you're not paying anyone or forcing any to open up bank accounts to get the sign up bonus.

You're signing up to bank accounts and credits cards yourself, getting the bonus, and then leaving the service onto the next one. --- In Crypto, you "sign up to the service" which can mean a whole variety of things. For example for an AMM it could mean providing liquidity on the USDC - USDT pair. As a marketing incentive, you start getting a "bonus" that is in the project's own token.

Every time you earn some of that token, you take it and sell it on the open market for more USD. There are actually even "auto-compounders" that do this for you.

This is yield farming.

-- The point here is that in both cases you take something that is meant to be a marketing incentive, and make it into cashflow for yourself.

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

#79

Post by gregsadetsky »

Jommi wrote: post #78
gregsadetsky wrote: post #76

Earlier quoted context omitted.

As far as I understand (and from an extremely cursory google search), (crypto) yield farming is described as "An investing strategy". Not as a bonus on top of something else. i.e. the "bonus" is the only point. Your argument (again, afaik) was that yield farming should be likened to bank sign up bonuses. If I follow that argument: If someone were to tell me in the non-crypto world that there was a new "Investment str…

You have it slightly wrong - I guess that's why you think it's a ponzi. In Churning you're not paying anyone or forcing any to open up bank accounts to get the sign up bonus. You're signing up to bank accounts and credits cards yourself, getting the bonus, and then leaving the service onto the next one. --- In Crypto, you "sign up to the service" which can mean a whole variety of things. For example for an AMM it cou…

I appreciate the explanation, thank you.

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

#80

Post by acjohnson55 »

api wrote: post #34
perihelions wrote: post #18

It's a Ponzi scheme. He doesn't even seem to push back against the "Ponzi" phrasing. Also -- this is merely a footnote -- his Ponzi scheme is currently the 3rd-largest political donation source in the USA. https://www.opensecrets.org/outsidespending/summ.php?GoToPag... https://www.nbcnews.com/politics/2022-election/-crypto-cash-...

Regulatory capture by a Ponzi scheme was just added to my "list of things that could legitimately destroy the USA from within." Did Bernie Madoff ever do this? I feel like he did, but maybe not so effectively or at such scale.

This has happened a number of times in this country. One major example is MLM, which was fully legitimized in 70s and 80s, after spending some time in a legal gray area. Ever since, the industry has expanded, even though it largely functions as wealth transfer from late arrivals to early incumbents, with a sprinkling of sustainable external commerce.
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