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How an obscure OTC-traded derivative from the 80s took over crypto

blog.everstrike.io

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Re: How an obscure OTC-traded derivative from the 80s took over crypto

#61

Post by throw0101b »

imtringued wrote: post #57
zhte415 wrote: post #12

Earlier quoted context omitted.

Cash does not have a negative coupon. Cash has no coupon. I feel introducing quasi terminology helps confuse rather than help. Index linked bonds, I think you're getting at the concept by talking about inflation, are linked to price changes. Check the actual price index (CPI, RPI, etc) of linkage for what price changes. Most bonds are not index linked, not hedged against inflation, and have a fixed coupon. Whether or…

Inflation is a necessary evil because paper is static and can't display real values. People who expect money to store value directly must be insane. I mean think about Roman empire currency being valid today. That is impossible. Money is only valuable within an economy that accepts it. Money from the past is no longer in the economy that is used to be accepted in. Every time period could be considered its own economy…

> Inflation is a necessary evil because paper is static and can't display real values.

In some way (low) inflation is a feature and not bug: having money just sit around unproductively Scrooge McDuck-style is a waste of resources. Having cash (slowly) lose its value incentivizes its investment into productive assets and help move the economy around.

Why does anyone expect / 'deserve' to earn returns on money that just sits around doing nothing?

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#62

Post by jpadkins »

maxbond wrote: post #60
ourmandave wrote: post #10

Earlier quoted context omitted.

From OP link: The value of cryptocurrencies, in spite of a collapse in value, is stopped from falling to their natural value, i.e. zero, by a combination of market manipulation, investor ignorance and a tsunami of lies on social media from those paid to promote these worthless frauds. Which isn't how the US government backing the USD works at all.

The implication being the US government pays people to shill USD? I can't say I've come across that, on social media or otherwise.

That's because the USG (CIA, fed reserve, banking sector) are really good at propaganda. The best propaganda is the one you don't even realize.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#63

Post by jpadkins »

maxbond wrote: post #59
bandrami wrote: post #46

Earlier quoted context omitted.

It's not a Ponzi scheme if you have aircraft carriers (people think I'm joking but that difference is real and important).

It's not a Ponzi scheme if you have a real economy generating real economic activity. The military isn't really the important part, it's the ability to tax a massive economy and then invest that money in eg infrastructure projects that help the economy grow. Ponzi schemes fail because the money isn't invested anywhere, it's just moved around. This makes it impossible for Ponzi schemes to be positive sum, so they're i…

Are you staying that fed taxes are positive sum for the economy? That's a pretty bold claim, as most people would have trouble citing $3 trillion in real value the fed gov creates each year.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#64

Post by csomar »

> These two properties together - the elimination of expiration, and the elimination of contango/backwardation, led to massive cost savings for the miners.

This is either an Ad or the writer has no experience trading these instruments. As someone who traded these instruments, I'd take the defined future which has a fixed contango/backwardation over the "risky" perpetual which charges daily "funding/interest" that is more volatile than crypto itself.

If Basis risk is annoying, interest rate risk is a real and dangerous risk.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#65

Post by maxbond »

jpadkins wrote: post #63
maxbond wrote: post #59

Earlier quoted context omitted.

It's not a Ponzi scheme if you have a real economy generating real economic activity. The military isn't really the important part, it's the ability to tax a massive economy and then invest that money in eg infrastructure projects that help the economy grow. Ponzi schemes fail because the money isn't invested anywhere, it's just moved around. This makes it impossible for Ponzi schemes to be positive sum, so they're i…

Are you staying that fed taxes are positive sum for the economy? That's a pretty bold claim, as most people would have trouble citing $3 trillion in real value the fed gov creates each year.

Things like creating highways, making sure our food is uncontaminated, running the GPS, etc, etc, provide incredible value to the economy, yes. We are after all talking across an internet developed with public funding. They might not do so in a way people take note of, but it doesn't seem like a particularly bold claim to me.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#66

Post by maxbond »

jpadkins wrote: post #62
maxbond wrote: post #60

Earlier quoted context omitted.

The implication being the US government pays people to shill USD? I can't say I've come across that, on social media or otherwise.

That's because the USG (CIA, fed reserve, banking sector) are really good at propaganda. The best propaganda is the one you don't even realize.

Would you kindly enlighten us then? I'm pretty averse to taking on faith that supposedly undetectable things are real.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#67

Post by smabie »

csomar wrote: post #64

> These two properties together - the elimination of expiration, and the elimination of contango/backwardation, led to massive cost savings for the miners. This is either an Ad or the writer has no experience trading these instruments. As someone who traded these instruments, I'd take the defined future which has a fixed contango/backwardation over the "risky" perpetual which charges daily "funding/interest" that is…

While perpetuals are riskier, you're under playing the risk of traditional futures: even though your rate component is locked in if you hold to expiry, you could still get liquidated in the meantime if the curve moves violently against you.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#68

Post by smabie »

monero-xmr wrote: post #8
ProjectArcturis wrote: post #4

If the contract never expires, what mechanism keeps the price of the contract in line with the price of the physical good?

Pay a fee to maintain the contract. Must post collateral if price moves against you or get liquidated.

This doesn't answer his question.

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#69

Post by julianhul »

csomar wrote: post #64

> These two properties together - the elimination of expiration, and the elimination of contango/backwardation, led to massive cost savings for the miners. This is either an Ad or the writer has no experience trading these instruments. As someone who traded these instruments, I'd take the defined future which has a fixed contango/backwardation over the "risky" perpetual which charges daily "funding/interest" that is…

What gold future are you trading where the contango/backwardation is fixed?

Re: How an obscure OTC-traded derivative from the 80s took over crypto

#70

Post by julianhul »

smabie wrote: post #14
greggsy wrote: post #13

> “The only question is: Which exotic derivative will be the next? At Everstrike, we think it will be the everlasting option.” Wasn’t expecting that promo at the end, but who am I kidding, no one writes seriously about crypto without promoting something.

Perpetual options already exist, ie squeeth

I would hesitate calling squeeth an option. No expiration, no strike price. Is it really an option anymore? Or just a perp with gamma?
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