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Eric Conner @econoar
, 6 tweets, 3 min read Read on Twitter
Curious why the @compoundfinance Dai rate is so high? Someone is trying to protect a massive @MakerDAO CDP. Here's how...

1. Supply 724,000 REP as collateral
2. Borrow all the Dai available.
3. Send Dai to @ParadexIO and buy ETH.
4. Lock ETH in CDP to protect.

Proof below...
Here we can see the address supplying all the REP (7% of all in circulation) and borrowing ETH and DAI. Thanks to curiousgiraffe.io for the data.
All the borrowed Dai comes in here etherscan.io/tokentxns?a=0x…

And then gets moved here etherscan.io/address/0xe4a8…

At that point, it's used to buy ETH on @ParadexIO
That ETH then ends up on Maker, example here: etherscan.io/tx/0x450028fe3…

You can see that ties out to a wipe of the same amount (1291) on their CDP mkr.tools/cdp/2715
With 88,000 ETH on the line, this user clearly doesn't care about paying 20% APR on their Dai borrow.

Why not flip the REP for ETH and pay that way? My hunch is taxes.
Side note, Decentralized Finance is clearly not private.
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More from @econoar see all

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0/ A thread on blockchain economics and how price volatility wildly impacts the security and fundamentals of each chain, especially block rewards and staking.

Let's dive right in...
1/ The issue with any blockchain economic discussion is that realistically, most people still think about their returns and costs in fiat.

We are pricing things like block rewards and staking entry in crypto but those participating are worried about net fiat returns.
2/ Take the block reward debates for example. Originally, ETH set the block reward at 5. Price then went up astronomically. Now, instead of paying $200k a day to miners ($10 eth), the network was paying $6mn a day ($300 eth).

Sure there is more to secure but is it proportional?
Read 12 tweets
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0/ A thread on Ethereum economic abstraction. I’ve recently seen a lot of nonsense spread about how Ethereum could be wildly successful but ETH itself could be worth 0. It’s time to debunk this myth so why don’t you go on a journey with me into economic abstraction?
1/ So what IS economic abstraction when it comes to Ethereum and why is it used to argue Ether will go to 0? The theory is that users could pay their transaction costs to miners in something other than Ether. Therefore, if that becomes rampant, Ether itself would have no value.
2/ Let me start by saying this argument can be used against ANY PoW blockchain (yes, even you, Bitcoin).
Read 15 tweets
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0/ I see a lot of discussion about the technicals of Ethereum’s Casper PoS but not much discussion around the economics. I’ve been giving a lot of thought to the current incentive structure and here are my thoughts. SPOILER: I think we need more discussion around the economics.
1/ First, a quick reminder that PoS will allow users to “lock up” their Ether (32 of them) in order to secure the network. In doing this, you run a “validator” which votes on blocks. You are rewarded for this effort by paid interest on your total stake in ETH.
2/ The current spec lays out an incentive structure for stakers that is based on total Ether staked on the network. The less Eth staked, the higher the interest paid to stakers. This is to incentivize more stake if it’s too low.
Read 15 tweets

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