Crypto trading firm Alameda Research might be insolvent • Hacker News Board

Re: Crypto trading firm Alameda Research might be insolvent

#121

Post by vgatherps » Fri, Nov 04, 2022, 2:53 PM UTC

cryptoanon wrote: post #95

Mistletoe wrote: post #57

Earlier quoted context omitted.

The guy that wrote it, Dirty Bubble, was big on the Celsius exposé train and he is trying to strike gold again. Idk how accurate any of it is though but that’s Dirty Bubble’s history and backstory. Kind of like FatMan and Luna. They want to stay relevant and get the next “big scoop”.

They gladly and unapologetically have posted fake material for engagement https://twitter.com/otteroooo/status/1548010114136715264

Is this otteroooo trying to get famous again under a new name?

Re: Crypto trading firm Alameda Research might be insolvent

#122

Post by mritchie712 » Fri, Nov 04, 2022, 2:55 PM UTC

shawabawa3 wrote: post #119

mritchie712 wrote: post #74

Earlier quoted context omitted.

It'd be pretty easy to create a "defi credit union" that's not a scam, it'd just be hard to cut thru all the noise. Give 3% to 5% yields on saving, lend at 8% to 12%. The problem is people see "230% yields" (which are scams) and wouldn't know your legit 5% yield is for real.

There are tons of legit projects that do exactly that The most well known is probably Maker https://makerdao.com/en/ But there's also Aave, Benqi, and a bunch of others.

yeah, I'm with you, it's just hard to tell which ones are reputable

Re: Crypto trading firm Alameda Research might be insolvent

#123

Post by dekervin » Fri, Nov 04, 2022, 2:57 PM UTC

tom-thistime wrote: post #118

dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

On 2022 11/4 7:50 am Pacific, this was the top-ranked comment on this article on HN.

Why do you timestamp it ?

Re: Crypto trading firm Alameda Research might be insolvent

#124

Post by shorthistory » Fri, Nov 04, 2022, 2:59 PM UTC

dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

FTT 24h volume is ~$100M according to coinmarketcap.com

Alameda hold $5.8B FTT according to the article.

Any market makers able to advise how much is normally held relative to daily volume/mean transaction size?

Re: Crypto trading firm Alameda Research might be insolvent

#125

Post by [deleted] » Fri, Nov 04, 2022, 2:59 PM UTC

HelloNurse wrote: post #43

cryptoanon wrote: post #8

I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are…

> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Fair point, but why do you seem to think you are defending Alameda? Collateralizing loans from fools with your own brand of worthless bullshit is the very definition of a Ponzi scheme.

[deleted]

Re: Crypto trading firm Alameda Research might be insolvent

#126

Post by wyxuan » Fri, Nov 04, 2022, 3:04 PM UTC

dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

There are FTT denominated loan(s), to MIM for instance, but I’m not sure there are that many others willing to accept FTT given the thin liquidity

Re: Crypto trading firm Alameda Research might be insolvent

#127

Post by paulusthe » Fri, Nov 04, 2022, 3:04 PM UTC

dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

Sure, but at some point real dollars enter the financial equation, backed by these coins, none of which are probably priced correctly to serve as collateral.

The ftt coin is shady as hell though. A 40% trading rebate for holding $1m is insane; that's nothing. And it's not open to anybody touching the US - a blatant attempt to prevent US regulations, which would catch this stuff.

It's very weird for exchange owners to get rich overnight. That doesn't happen in real markets, and it seems to only happen in crypto when the exchange is using customer deposits as leverage (Celsius) or trading on their own account, which means against their customers (binance, probably ftx)

Re: Crypto trading firm Alameda Research might be insolvent

#128

Post by eldenwrong » Fri, Nov 04, 2022, 3:05 PM UTC

blitzar wrote: post #101

neilc wrote: post #84

Earlier quoted context omitted.

> Alameda is helmed by quants from Jane Street etc., The CEO worked at Jane Street for less than 18 months and appears to have had a fairly junior role there. I'm sure they are smart folks but there's a limit to how much you can learn in 18 months, in your first job after college.

Nobody is leaving Jane Street after 18 months - straight out of college, of their own accord.

What are you implying?

Re: Crypto trading firm Alameda Research might be insolvent

#129

Post by tough » Fri, Nov 04, 2022, 3:05 PM UTC

dekervin wrote: post #123

tom-thistime wrote: post #118

Earlier quoted context omitted.

On 2022 11/4 7:50 am Pacific, this was the top-ranked comment on this article on HN.

Why do you timestamp it ?

Fear of manual moderation bringing it down?

Re: Crypto trading firm Alameda Research might be insolvent

#130

Post by vgatherps » Fri, Nov 04, 2022, 3:06 PM UTC

adamsmith143 wrote: post #80

cryptoanon wrote: post #8

I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are…

>1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are collateralized by assets on their balance sheet, then the financial risk is…

I'm assuming you are implying that alameda is taking loans to cover insolvency?

There are plenty of reasons why a trading firm takes loans (it's also possible the FTT is structured as a long, inflating said number)

1. I want to short X, but don't actually have X. I borrow X and sell it.

2. I want to sell X and buy a derivative paying people who are long the derivative. Goto step 2.

3. I want to trade X but don't know how ahead of time, so i need inventory of X in case I want to sell RIGHT NOW. I don't want to actually have exposure to a ton of X, so I borrow it instead. Very common for a market maker like alameda, although there's no way they actually need billions of collateral for market making purposes.

4. I can borrow X, and put it in a defi yield farm for a better rate than what I borrowed it for.

5. I have a ton of Y, and I don't have any plans to use it soon. I put Y up as collateral to borrow X which I can meaningfully trade. This gets you in a lot of trouble when Y values goes down and X doesn't. Say "Four Bullets Investments" has some BTC, they post BTC as collateral to borrow dollars, and use that to buy more BTC. Then BTC goes down a lot - oops!

Not making value judgements on what risks are and aren't entailed here, just pointing out that there are reasons aside from covering losses. 1-3+5 equally apply in tradfi as well.

The really interesting thing, which you touched upon, is to what extent are they collateralising loans with FTT. COllateralising loans with a coin you hold isn't unusual at all, but what's unusual is that the potential FTT collateral size is monstrous compared to realistic available liquidity minus alameda.

Posting BTC is one thing since there are liquid spot markets trading billions a day, not to mention derivatives. But FTT? Good luck liquidation even 10-20MM without moving markets a lot.