Thread by @patio11

One thing that I non-ironically appreciate about the cryptocurrency community is that the transparency ethos from those projects that are not outright frauds will provide an unprecedented amount of historical content into e.g. collapse of financial institutions.

https://twitter.com/IronFinance/status/1405311044235505664

Years of Congressional inquiries, books, etc later, most people (even very interested people) have a very poor mental model of what happened during the global financial crisis.

Meanwhile in crypto you can literally see the warroom chat logs as they're losing tens of millions of dollars of depositor's money and trying frantically to stop it.

(I feel torn between "Don't kick technologists when they're down" and "It is really important that we be honest about the consequences for project failure here, rather than just saying Financial Freedom Happened Very Rapidly In An Other Than Planned Fashion.")

Yep, bank runs are unfun, and during them there will be an inevitable suspension of redemption of bank deposits.

Example:

https://twitter.com/ironfinance/status/1405328550606028809

Since these particular bank deposits trade 24/7 on unregulated markets, people aware there is a bank run and aware they do not hold sufficient assets to satisfy depositors are currently attempting to stampede to liquidity providers.

(Sometimes I wonder whether if the yield farming crowd signing up to be liquidity providers for automated marketmaking understands what happens to market makers who do not cancel bids very quickly when news breaks that the security is probably worth much less than consensus.)

("Hmm almost like there could possibly be a reason why traditional finance has most liquidity provided by specialized firms with armies of PhDs doing risk analysis. Whatever could it be. Probably just FUD for the HFTs to keep screwing over retail with payment for order flow.")

Less than a month ago, they published this document bragging (I believe that is a fair characterization) that they maintained the peg during a market downturn.

Pegs: they break. That’s why they’re pegs. If they couldn’t break they wouldn’t be a peg.

docs.iron.finance/price-stabilit…

I originally said this very archly, implying that *of course* the yield farming crowd mostly does not understand what will happen, and while a quick perusal of related Twitter threads suggests that is accurate for many the individual stories are often quite sympathy inducing.

I continue to believe that the tech community has a degree of complicity in creating rails that are being used by predation machines to soak people who most in tech would not feel comfortable directly defrauding or inducing to engage in risky behavior w/on understanding.

This is a common critique thrown at the tech community, but most of the time it is applied to something which has overwhelming positive use but a seedy underbelly.

Years of close study of the crypto economy may eventually discover an underbelly of legitimate commerce.