Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

Post by HWR_14 » Fri, Jun 17, 2022, 4:21 PM UTC

airza wrote: post #26

dcolkitt wrote: post #18

Earlier quoted context omitted.

> Crypto has tried to solve this by strict liquidation rules that tend to make things worse by turning firms into forced sellers This is literally how traditional finance works as well. If you have a leveraged position at a futures or options exchange, you absolutely will be liquidated as soon as your position gets close to being in the red. I 100% guarantee you that the CME or Goldman will not let you "ride things o…

Individual investors tend to get liquidated, but for hedge funds larger investors the story is more complex. See https://www.bloomberg.com/opinion/articles/2021-07-29/archeg... >: > In the traditional financial system, very few things work like this. One thing that mostly does is a margin account at a retail stock brokerage: If your stock declines, you will get a margin call, and if you don’t post margin within a def…

Post by brink » Fri, Jun 17, 2022, 4:32 PM UTC

Post by rawoke083600 » Fri, Jun 17, 2022, 4:35 PM UTC

ShamelessC wrote: post #49

rawoke083600 wrote: post #31

Earlier quoted context omitted.

This ! The "idea" of Defi was that w wouldn't need "regulations and rules" since we could 'just' look at the actual deployed code(eth contract for example) to see if you going to get screwed. Of course few ppl actually look at the code, or sometimes the code is just bad and you get bad actors willing to exploit this. That being said: In practice and real life there are a bunch of dodgy companies and badly written eth…

I suspect most experienced software engineers would find that all rather obvious. Bugs are a fact of life. Even formal verification can't save you from this. Good software is built to be resilient to our own bugs, because they are simply inevitable. It's not about good or bad programming, every one has the ability to make a simple mistake resulting in huge consequences. It's basically a rite of passage to have crashe…

Post by DebtDeflation » Fri, Jun 17, 2022, 4:54 PM UTC

joosters wrote: post #24

dcolkitt wrote: post #18

Earlier quoted context omitted.

> Crypto has tried to solve this by strict liquidation rules that tend to make things worse by turning firms into forced sellers This is literally how traditional finance works as well. If you have a leveraged position at a futures or options exchange, you absolutely will be liquidated as soon as your position gets close to being in the red. I 100% guarantee you that the CME or Goldman will not let you "ride things o…

As per Matt Levine: ... The way the traditional system works is that if you have a margin loan, and the value of your collateral declines, your broker calls you up and says “hey we need more collateral,” and you either post more collateral and it’s fine, or you don’t post more collateral and your broker liquidates your position. Or sometimes you say something like “hang on I’ve got another call, I’ll call you back af…

Post by mccorrinall » Fri, Jun 17, 2022, 5:13 PM UTC

abiro wrote: post #52

chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

> Tehter has lent money to almost all these firms Do you have a source for this?