Thread by @calchulus

In case you were wondering why the NYAG's letter is so condemning and the Tether perspective, let me introduce you to a concept called "scarecrow governance"

I've forgotten the real term because I was reading white papers in lecture halls with nobel lecturers during my time at uchicago, but the general premise is that governments are also profit-maximising entities, and as such, seek to perform actions with the lowest costs

This then means that if they can "scare" bad actors away from attempting heinous crimes in the first place, it is a worthwhile attempt to spend resources on, in terms of reducing the likelihood of crime

it's a bit of the converse of the broken windows theory - if the government can spend time making an example out of a broken window, maybe less broken windows will happen (but not necessarily all crimes)

The Tether case is similar - if you make a scapegoat or an example out of some actors that may be "chaotic neutral", you deter more folks from trying to do the same. Thus, from the government's perspective, they have put up their scarecrow and done their best to deter scams.

In reality, humans tend to like to rebel against structure. When Etherdelta's founder was faced with a significant fine in 2017 from the SEC, that didn't stop dexes from growing massively in 2020, even US-based ones.

Setting up a scarecrow only does so much, eventually the crows sit and poop on it too. It's up to us to tend the fields we reap the benefits from, and work on our own frameworks to self-govern our ecosystems for the betterment of our community

In a rational market, someone with no skin in the game has a very low influence on the market. Yet we let large macro things like stock markets, inflation, Bill Gates/Yellen denouncing crypto affect how people trade

The long term picture is that crypto can eventually evolve into its own sovereign entity and be much more insulated against outside calamities in the regular world, and it's that safehaven that we in this space seek to build for ourselves

@elonmusk wants to build for us to go to Mars. In Defi, we want to build for us to be able to stay here, in a new, transparent, interoperable environment. So let's build in the f-ing dip, not just buy it.