Question: what are the sources of demand for crypto loans/borrowing? Here’s my list, but may be missing something. /1
2/ borrowing crypto to act as a market maker (on either CEXs or AMMs and other DEXs). Borrowing to yield farm airdrops (limited by new money willing to buy those airdrops from farmers).
3/ borrowing to collateralize speculative positions (like borrowing BTC to use as collateral on bitmex). Imo, this probably dwindles as stablecoins become accepted collateral.
4/ borrowing to grease the wheels of institutions (like commercial paper for traditional companies), to bridge duration gaps.
5/ why else would someone borrow cryptocurrencies other than stablecoins?

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More from @AriDavidPaul

13 Oct
The right to encryption is the new 2nd amendment. 2A was intended to enable citizenry to protect themselves from dictatorship. Today, guns are both harder to police (with 3d printing) and arguably less effective. IMO, encryption of money and information is the new battleground.
2/ the arguments against both rights are the same: criminals will abuse these rights and create harm. In the past, without 2A, there was little to stop a despot from consolidating power. I think encryption is an even more powerful defensive weapon today.
3/ encryption enables those resisting dictatorship to fight with information and money. With 3d printing today, information and money can be effortlessly converted into weaponry (not to mention influence, education, and other forms of soft power.)
Read 4 tweets
12 Oct
Last bull run we got the first wave of wall street and general retail interest, almost entirely devoted to price speculation since there wasn't all that much else to do with cryptocurrency and little reason to use it for P2P payments. In this bull run,
2/ we may start seeing more P2P usage, partly just from UX improvements, partly as an alternative to surveillance state central bank digital currencies like the one China is rolling out. We'll definitely see retail interaction with NFTs and crypto games.
3/ I think we'll see an extension of the "bitcoin as fiat hedge" where many investors follow PTJ's lead, and "bitcoin as treasury asset" led by Saylor's Microstrategy. By the end of this run, bitcoin is probably talked about alongside gold or ahead of it in these roles.
Read 5 tweets
1 Oct
Early thoughts on the Bitmex indictment. A. charges are serious, including evading iran sanctions. B. A half dozen other large exchanges are probably at risk of similar action. C. defi doesn't win to this short-term, but also very unlikely to face…
2/ regulatory action in the next 6 months. Consider how long it took for these indictments. Defi projects probably need to worry in 6-12+ months. D. derivatives traders were roughly flat, so relatively small effect from unwinding leverage.
3/ E. this will likely reduce leverage and liquidity in the system for a while, that's bearish at the margin. F. This will likely be the start of an ongoing string of negative regulatory headlines that scare new investors at the margin. But....G. lots of value buyers ready.
Read 4 tweets
1 Oct
Luck determines our genetic gifts and our early environment entirely. A child growing up with below average intelligence to subsistence farmers in a rural area is obviously less likely to be successful than a high IQ child of well connected financiers. Given a starting point, /1
2/ after we take the starting point (innate ability and early environment) as a given, then indeed we mostly make our own luck. Perhaps most importantly, *believing* that we make our own luck is one of the most important variables in a person's success.
3/ chess youth programs for example have been powerfully beneficial for underprivileged kids specifically because it teaches them that outcomes are in their control. To the extent to which that is true or not is separate, that belief in self-determination is critical motivation.
Read 9 tweets
1 Oct
Thoughts on the psychology of the crypto cycle: Entrepreneurs and traders in any industry go through cycles of exuberance and burnout. Crypto accelerates both the magnitude and speed of swings. The second best mentality is to maintain an even keel throughout the whole cycle /1
2/ the best mentality is to manage your workflow around the cycle. Bear markets are for building and rejuvenation. Take a long vacation, work on long-term projects, study, recruit, code. Bull markets are for seizing and monetizing the opportunities available, aggressively.
3/ in 2017 I worked 18 hour days to the point of burnout. No regrets on that. But I tried (unsuccessfully) to maintain that in 2018 and continued prioritizing shorter term objectives. If I had it to do over again (and I assume I will in the next bear market),
Read 4 tweets
30 Sep
Watching self-proclaimed cypherpunks reveling in regulatory enforcement against cryptocurrencies 🤷‍♂️ Bitcoin’s ultimate reason to exist is censorship and seizure resistance in the face of governments.
2/ well, that and depreciation resistance to undermine fiat. If bitcoin grows to non-trivial scale at any of those use cases, many governments will eventually criminalize some or all elements of bitcoin.
3/ I also enjoy seeing actual scams punished. But it’s pure hypocrisy to advocate for bitcoin, a network created to undermine fiat and government control over peoples’ finances while arguing that anything that violates a regulation shouldn’t exist.
Read 4 tweets

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