1) Is yield farming sustainable? Is it stupid? Is it revolutionary?
2) This is *not* trying to answer the question of whether food tokens will go up or down short-term. It's trying focus on the long-term ramifications of it.
NOT FINANCIAL ADVICE. I OWN SOME FOOD TOKENS.
3) What is the core financial transaction behind yield farming?
Well, basically: new projects drop most or all of their tokens on DeFi users in return for valuation and TVL.
Are those justified?
4) A lot for this will come down to what you think DeFi should be worth.
For now, I'm going to make the following arbitrary assumption: that ftx.com/trade/DEFI-PERP is "fair". DEFI-PERP is currently basically made up of the largest DeFi projects pre-yield-farming.
5) So, the projects in DEFI-PERP are worth about $200m-$2b right now.
I think that optimistically, vegetables all together are worth about as much as the rest of DeFi -- so maybe like $6b or so.
6) That means that giving away all the yield farming coins can generate at most that amount of valuation, and that amount of transaction costs.
So how much is it in fact generating?
7) Well a few of the valuations make no sense, and I don't really know who's buying them.
If you remove those, things actually aren't that crazy. YFI is at $1b, some of COMP/BAL/SNX/LEND comes from this, and then a collection of tokens around a few hundred million.
8) OK, and how about the transaction costs?
Well people are spending about $100m per month on gas.
In addition people are locking up about $10b of capital; if you use 20%/year as the baseline Crypto cost, that's another $1b or so of expenses.
9) So put it all together and you get....
....well, you know, $6b or so.
I'm gonna be honest, I wasn't expecting that, at all.
10) Now I ignored some coins from the calculation, intentionally; and I ignored the opportunity cost of peoples' time.
But, like, ok, so I'm still surprised. I thought food tokens were obviously a bubble.
Now I'm not so sure.
11) This is also obviously ignoring the difference between different coins. Some have obvious utility!
12) @iearnfinance is a weird case -- right now it's mostly just about farming, but it's also the king of farming, the meta-farming coin, and so it kinda makes sense that it should get a decent piece of that pie.
13) So, TL;DR: obviously food tokens are a ridiculous bubble, it was clear to me from the beginning.
But also maybe it's not and maybe I was wrong about that?
14) Obviously some will still crash, and some will founder, and some will fuck up magnificently, but if even a few get to where they're trying to go, that could make up for the rest.
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Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US.
2) I'm really sorry, again, that we ended up here.
Hopefully things can find a way to recover. Hopefully this can bring some amount of transparency, trust, and governance to them.
Ultimately hopefully it can be better for customers.
3) This doesn't necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes.
Ultimately I'm optimistic that Mr. Ray and others can help provide whatever is best.
2) I also should have been communicating more very recently.
Transparently--my hands were tied during the duration of the possible Binance deal; I wasn't particularly allowed to say much publicly. But of course it's on me that we ended up there in the first place.
3) So here's an update on where things are.
[THIS IS ALL ABOUT FTX INTERNATIONAL, THE NON-US EXCHANGE. FTX US USERS ARE FINE!]
[TREAT ALL OF THESE NUMBERS AS ROUGH. THERE ARE APPROXIMATIONS HERE.]
Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).
2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. -- we apologize for that.
3) But the important thing is that customers are protected.
FTX keeps audited financials etc. And, though it slows us down sometimes on product, we're highly regulated.
3) We've already processed billions of dollars of deposits/withdrawals today; we'll keep going. (Taking up anti-spam checks to process more--sorry if you got those. We're hitting node rate capacity, will keep going.) Also tons of USD <> stablecoin conversions going on.