The music is about to stop!
Just like it has for every previous crypto bull market. The casinos will be back in another 3 years.
Hopefully enough normies lose their life savings that they’ll demand government regulation.
Crypto lending company Babel Finance halts redemptions and withdrawals
91–100 of 188 posts
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#92My biggest takeaway right now is to study the crypto firms and projects that are having trouble as a way to abstract what red flags to look for. For example, with Terra the abstraction was that pegs don't work as we've seen many a time, especially when Soros broke the BoE. I took a small bath with my Terra holding and life goes on. I can do that because I didn't use leverage, I can lose everything I put into crypto,…
> Moving forward I'm staying away from projects with a "stable coin" component as I don't think the fundamentals work. Not all stable-coins are the same. Out of all of them USDC seems to be the strongest out of the rest of them and is more likely to survive in the long term out of the others. That does not mean you should put your whole savings into it. It is still very early for stable-coins. I would rather wait for…
I kind of agree, but at the risk of being completely wrong, I think in the future central banks, or global financial institutions backed by central banks, are probably going to be the issuers of stable coins.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#93Earlier quoted context omitted.
I do have a great analysis framework for crypto projects: "is crypto project?" -> "stay away"
Sure I get that, but I'm old enough to remember the .com crash carnage and people saying that the web was a total waste of time etc and look how wrong they were. I think that the future is a probability distribution, and there is a non-zero probability that crypto doesn't die but keeps growing. Therefore, I'm not all in, but I'm not all out.
Old enough to remember that, but not old enough to remember have been times that it turned out everything was a fraud or scam. It sometimes turns out an entire industry/etc has no clothes. :)
If your goal is "avoid frauds/scams", then the framework you were given works for sure (of course, it trivially works for anything).
If your goal is "make money", then investing in frauds/scams can in fact be quite profitable and then you are a bit stuck.
If your goal is "make money while avoiding anything that appears to be fraud/scam", then, honestly, at this point, i think that brings you back to "avoid crypto projects".
While there are obvious scams/fraud, there is also much higher than normal probability (relative to regulated stock markets, etc) that anything you choose is scam whether it looks okay or not.
Remember that one of the fundamental reasons that regulated markets exist is to be able to tell (with high probability) what is a fraud/scam not due to required disclosures, etc This is because otherwise it can be remarkably hard to tell anything but the obvious scams.
Since crypto is a non-regulated market, finding/identifying scams is, by definition, a crapshoot. The only ones you will identify are the ones that are obvious scams.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#94Earlier quoted context omitted.
> With DeFi (decentralized finance) you have transparency over what the smart contract does. No, you don't. People find subtle bugs in open source code all the time, some of them disastrous. Unintentional bugs in smart contracts have lost tens of millions of dollars multiple times; imagine what you could accomplish with intentional holes. Parity lost $280M alone. https://www.cnbc.com/2017/11/08/accidental-bug-may-hav…
Smart contracts for sure have their issues. But I would still choose a smart contract any time over these crypto companies which are completely opaque and unregulated, and basically "just trust me bro".
That's a false dichotomy; "neither" is an option.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#95Question for the crypto skeptics of HN. Do you think this cycle the whole crypto space goes down the drain never to be heard of again? Do you think the whole space is a fad or do you think there are patches of values underneath the froth? How do you see the space evolving? Thanks!
I think a similar thing as with the ICO boom will happen: The current mechanisms of fraud (ICOs) will become regulated, so the industry will move on and create new ones (NFTs, DeFi/"yield"). This cycle will continue until the SEC stops listening to smoothtalking lobbyists fearmongering about the SEC blocking "important innovation" and decides to fully pull cryptocurrency into the banking regulatory framework. At that point, lacking the ability to do things that are illegal to do for good reasons, cryptocurrency becomes pretty irrelevant.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#96Earlier quoted context omitted.
Just like it has for every previous crypto bull market. The casinos will be back in another 3 years.
Don't think so. The casino existed for its entire lifetime in a bull run. No one knows how they'll survive a recession
We’re likely in a recession by next quarter. On average, recessions last about 12 months. We won’t be in a recession by the time the next bull run starts.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#97Earlier quoted context omitted.
This is sarcasm, right?
Why sarcasm? Centralized crypto "banking" institutions are the worst of both worlds. You are giving away your money to someone else, and there are no regulations to protect you from being screwed over by them. With DeFi (decentralized finance) you have transparency over what the smart contract does. (Of course you have to be careful because a lot of things claim to be decentralized but are actually centralized)
It seems that the remaining players will get larger leading to more centralization.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#98This 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 substantial and unpredictable. This was a toy bank/hedge fund that grew to monstrous proportions. Now that bank is experiencing a run and it has done what every bank before it facing a similar problem has done: blocked withdrawals.
Please explain to me the difference between a bank and a Ponzi Scheme.
Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#99Question for the crypto skeptics of HN. Do you think this cycle the whole crypto space goes down the drain never to be heard of again? Do you think the whole space is a fad or do you think there are patches of values underneath the froth? How do you see the space evolving? Thanks!
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Re: Crypto lending company Babel Finance halts redemptions and withdrawals
#100I found it amusing that this notice says "Due to the current situation, Babel Finance is facing unusual liquidity pressures" and their homepage says "Seeking Certainty in Uncertainty".
Naming your company after a failed experiment is also an ironic choice. What’s next… Icarus Investments?
Perhaps inevitably: