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Anthony Lee Zhang Profile picture
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11 Jun, 4 tweets, 1 min read
There seems to be a kind of interesting "banks as secret keepers" / "opacity of debt" thing going on with DAI. My understanding is that DAI is a stablecoin backed by many different kinds of collateral: ETH, USDC, etc.

reddit.com/r/MakerDAO/com…
So each DAI is actually backed by a different kind of collateral... but my understanding is they trade in a market with a uniform price? Which I suppose reflects the average value of the entire collateral pool
Which means that, by injecting a bunch of pretty safe collateral (USDC's) the average quality of the pool increases. But why don't market participants try to differentiate between "good collateral" DAI and "bad collateral" DAI?
I don't know the mechanics super well, but my impression was this was possible? Or are DAIs, once created, fully fungible e.g. each DAI is a claim on the entire pool of collateral, not one specific piece of it?

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More from @AnthonyLeeZhang

Anthony Lee Zhang Profile picture
11 Jun
So I randomly got a text from an unknown number to join a whatsapp crypto trading group Image
The goal of the group seems to be to "analyze the BTC and ETH markets" jointly...? and make money? Image
I thought the group was about making money, but there is a bunch of weird talk about reincarnation Image
Read 16 tweets
Anthony Lee Zhang Profile picture
11 Jun
Thinking about the Coase theorem. What would happen if there was a way to just paid NIMBYs for new buildings next to them. For example, when a new building goes up, developer pays each resident within 2 blocks or so, say, $1000 or so
If a new building comes up next to me and I get nothing but crowding and neighbors I don't like, obviously I'm going to oppose it. If I get some $$$ that might change my feelings. I guess the question is, what's the effective WTP of a representative NIMBY for keeping others out?
I get all the responses about consolidation as a first-best, but in practice it's not going to happen everywhere. Why not some form of externality payments as a second-best?
Read 5 tweets
Anthony Lee Zhang Profile picture
16 May
Thesis: crypto developers should explore the broad idea of "non-transferable tokens" (NTTs)

In the classical economy, there are many instances where firms attempt to limit the transferability of products they sell
A few examples:

- Tickets (concert, airlines)
- Video games (steam), other e-content (e-books, movies)
- Parking spaces
There's a couple motives for this.

- Price discrimination: firms may want to charge diff prices to diff parties. Transferrability makes this impossible
- Limiting speculation/bubbles: ticket "scalpers" buy tickets to flip, which may crowd out fundamental buyers
Read 10 tweets
Anthony Lee Zhang Profile picture
16 May
A sort of incredible thing about markets is that they aggregate information and coordinate behavior, often without any participant really seeing/understanding the "big picture"
In this case, if Xinjiang miners were sufficiently decentralized, perhaps even they were surprised that they collectively made up 35% of hash rate!
I speculate this is true of most markets: nobody really understands, for example, the exact breakdown of who is doing what in cases like GME, treasury market craziness of March, etc
Read 14 tweets
Anthony Lee Zhang Profile picture
30 Mar
This is interesting as it raises a fun "boundaries of the firm" question. In the past, writing, editing, publishing, graphics, etc. were organized within firm boundaries. Substack makes writers mini-entrepreneurs
At the moment they do their own editing/etc., but you can imagine industries will pop up to provide editing, etc. services for creator economies.

But if these are organized as arms-length transactions rather than within a firm, how does this affect moral hazard/agency issues?
In a big firm, proofreaders/researcher/editors have reputational incentives to get things right. If you hire these Upwork-style, do they have similar incentives? Presumably ratings matter, so that's one thing
Read 5 tweets
Anthony Lee Zhang Profile picture
30 Mar
The recent Archegos saga is a fun piece of game theory. Stylized model:

- Suppose Hwang is long $50bil of, e.g. Tencent on 5x leverage. Technically this is being held by a few banks on his behalf, say, Goldman, Morgan Stanley, Nomura
Suppose Hwang runs out of margin and the banks decide to sell off his position. They realize they are stuck in a kind of prisoner's dilemma.
Trades move markets. If you try to sell $50bil of Tencent into the markets in a day, well, there aren't many buyers so you'll end up with much less than $50bil.
Read 7 tweets

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