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Crypto lending company Babel Finance halts redemptions and withdrawals

babel.finance

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Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#141

Post by O__________O »

youessayyyaway wrote: post #107
Barrera wrote: post #98

This article gives some context, including this: > At the end of 2021, Babel Finance had an outstanding loan balance of over $3 billion, up from $2 billion the previous February. It averaged $800 million in monthly derivatives trading volume and had structured and traded over $20 billion in options products. https://www.coindesk.com/business/2022/06/17/babel-finance-s... The ripple effects here are going to be substa…

>Please explain to me the difference between a bank and a Ponzi Scheme. Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US). Ponzi schemes ignore regulations and laws, and their customers' deposits are not insured or backed by any organization. The laws that banks are…

250k is per entity, per bank — perfectly legal to use multiple banks and banks publicly offer this as a service to businesses and high net worth individuals.

Example: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_banksw...

Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#142

Post by ndury »

cdiddy2 wrote: post #115
O__________O wrote: post #50

Besides Terra (LUNA), Celsius Network (CEL), 3AC, and Babel Finance —- are there other examples? * As is, while clearly some of these failures have had a massive impact, there clearly a lot of DeFi projects of significance still standing: https://coinmarketcap.com/view/defi/

Most things collapsing aren't defi, with the exception of Terra which, as an algo stable was expected to fail like all algo stables before it. Celsius/3AC/Babel are all not defi and we would know about their health and risk factors much sooner if they were defi.

DAI is doing just fine and will continue to do so.

Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#143

Post by Majromax »

youessayyyaway wrote: post #107
Barrera wrote: post #98

This article gives some context, including this: > At the end of 2021, Babel Finance had an outstanding loan balance of over $3 billion, up from $2 billion the previous February. It averaged $800 million in monthly derivatives trading volume and had structured and traded over $20 billion in options products. https://www.coindesk.com/business/2022/06/17/babel-finance-s... The ripple effects here are going to be substa…

>Please explain to me the difference between a bank and a Ponzi Scheme. Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US). Ponzi schemes ignore regulations and laws, and their customers' deposits are not insured or backed by any organization. The laws that banks are…

> Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US).

Depositors also have first claim against assets in insolvency, so even uninsured accounts will be paid back before bondholders or equity owners. Even a well-intentioned crypto security has no such strict prioritization.

Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#145

Post by giaour »

aaaaaaaaaaab wrote: post #122
giaour wrote: post #109

Earlier quoted context omitted.

I believe we're seeing the end of "retail crypto." Just like agricultural futures, crypto will continue to exist but will mostly be known outside of institutional trading as a good way to lose your shirt. As far as underlying value goes: one thing we've learned from the constant scamming is that a protocol designed for trustless interactions will inevitably devolve into purely adversial interactions. Consider it a so…

>Central banks, multinational corporations, and others who can afford to marshal the resources to perform extensive audits will probably use smart contracts on a proof-of-stake chain for large, adversarial transactions Arbitration at the highest echelons of power is done with weapons. I don’t give a shit about what your blockchain says when I can force you to the negotiating table Commodore Perry style.

> Arbitration at the highest echelons of power is done with weapons

True, there is an implicit threat of violence when parties interact at that level. But there is also a hope on both sides that if all the rules are followed, violence will not be necessary even if one party gets the better of the other. E.g., the central banks of unfriendly nations transact with one another according to international norms and rules, even though either side could escalate to "kinetic" reprisals. The force of norms and rules is strongest between parties with balanced power (otherwise the stronger side can just pull a Commodore Perry like you say).

Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#146

Post by youessayyyaway »

zeven7 wrote: post #133
youessayyyaway wrote: post #128

Earlier quoted context omitted.

Rate of return is a remarkably good metric for identifying scams. If they offer more than ~12.5%, run away. Avast, ye salty dogs: a piece o' eight ain't worth losing yer shirt over.

IMO your number is still too high

My actual red-flag point was closer to 8-9% pre-inflation. But that is less amenable to pirate jokes, and you can get I-bonds approaching 10% from the government now.

Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#148

Post by bhaak »

icu wrote: post #85
bhaak wrote: post #53

Earlier quoted context omitted.

Terra was no stable coin. It was pointed out constantly that it can't work as an algorithmic stable coin. But the shill army was strong. There's an even easier metric for measuring crypto project. The bigger and dumber the shill army the more shady the project.

Thanks for your comment. Any chance you could please point me to the sources that constantly pointed out it wouldn't work?

Besides Reddit, Crypto Twitter was very vocal.

So vocal in fact that the man himself was quite annoyed to constantly being told that UST can't be stable: https://twitter.com/stablekwon/status/1462063962506338318

Do Kwon in general was a red flag. There are a lot of strong opinioned and self confident people in crypto. But when the representative of the crypto project is a toxic participant of the space, you should think really hard about putting your money into such a project.

For example: https://twitter.com/stablekwon/status/1396735774737928192 (note, this tweet was after the whole disaster, losing billions weren't a humbling experience for him).

If you decide to put money into crypto you need to do your own risk management. I especially look how dissenting voices are treated.

A good starting point is Eric Wall https://twitter.com/ercwl. He's not a maximalist of any coins and as such is often very critical of projects and gets a lot of flak for this even though he usually has a thorough explanation how he gets to his conclusions.

Re: Crypto lending company Babel Finance halts redemptions and withdrawals

#149

Post by cdiddy2 »

airza wrote: post #138
cdiddy2 wrote: post #115

Earlier quoted context omitted.

Most things collapsing aren't defi, with the exception of Terra which, as an algo stable was expected to fail like all algo stables before it. Celsius/3AC/Babel are all not defi and we would know about their health and risk factors much sooner if they were defi.

What is celsius if not defi?

Its completely centralized. They take user funds and put them in defi products, but the funds are completely under Celsius control not the users control. Thats how they were able to turn off withdrawals. Its like if JPMorgan were putting client funds in AAVE, that doesn't suddenly make JPMorgan defi.
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