Empire 🟪 Profile picture
Aug 12 6 tweets 2 min read
How do privacy protocols like Tornado Cash work? 🧵 👇
1/ A tumbler/mixer is a service in which you can mix traceable coins with other “clean” tokens in an effort to make it harder to trace the original source.

Think of it like a blender.
2/ You input the coin in which you wish to anonymize, it gets chopped up into pieces and mixed with a bunch of other coins, and then it’s sent to a new address.

To make it even harder to trace, most tumblers also randomize the amount that they pay you back.
3/ You’ll get your full value back (minus the transaction fee), but instead of being one ETH, it might be four or five fractions of ETH in separate transactions.

Because these mixers work by distributing coins at random, there’s no telling where your coin actually came from.
4/ The efficacy of a privacy protocol is dependent on the number of users, the anonymity set.

Think of a ballpark crowd: If the stands are full of fans, it’s hard to pick out a singular person in the upper deck. Conversely, an empty stadium only helps frame the lone fanatic
5/ If you enjoyed this thread, tune in to our latest episode, where we explore the US sanctions on Tornado Cash, the USDC blacklisting and KYC DeFi.

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More from @theempirepod

Aug 1
Two of crypto's top traders step into a room...

@cmsholdings and @AviFelman episode just dropped 🔥

Sneak peek 🧵 ↓
1/ Crypto has been subject to the whims of macro in 2022, trading as a levered bet on equities but with additional regulatory/contract risk.

Today, crypto is a speculation tool, and speculation tools just follow liquidity.
2/ To decorrelate from macro, we need real adoption.

Avi believes this will come from gaming or the movement of traditional financial products onto crypto rails.

In steps DeFi 👑
Read 9 tweets
Jul 15
Bitcoin miners are fighting to stay solvent

1. What happened?
2. How are miners responding?
3. Will they survive the bear market?

We explain everything in this thread 🧵
1/ What do you do if you are a Bitcoin miner in March 2020 and you see the start of a bull run?

You raise capital, order ASICs, build infrastructure and mine that sweet Bitcorn.
2/ For the first time, miners had deep access to debt capital markets.

So they took out a little, I mean, a lot of leverage.

Bitcoin miners were long BTC via loans, long BTC via mining and long BTC via hodling.
Read 11 tweets
Jul 13
He Bought $600M Worth of Bitcoin 🧵

The future of Bitcoin and DeFi by Eric Peters:
1/ DeFi, in its current form, won't exist 💡

Eric believes that if you want to bring the financial system onto crypto rails, you must implement KYC and AML.

Non-regulated DeFi will still exist, but that's not where [most] users will be.
2/ One River, a $2B+ AUM Institutional fund, can't touch DeFi because they have to know who is on the other side of the trade.

Most DeFi liquidity is from whales, and future whales will swim in regulated waters.
Read 7 tweets
Jul 12
1/ CeFi's contagion wouldn't have happened if it was all on-chain

Maybe, but it's a weak argument.

Here's why 🧵
2/ An analogy for crypto & interactions with CeFi is autonomous cars

Autonomous car designers wish only driverless cars were allowed (aka all on-chain), but human-driven cars will be on the road for the foreseeable future.

You have to plan risk mgmt & systems around this.
3/ When autonomous cars launch, there will be a crash (multiple!), and the whole industry will be attacked for it - despite 10x efficiency.

They’ll have to deal with this, and so will we.
Read 4 tweets
Jul 6
Crypto funds are closing shop

Breakdown as to why 🧵
1/ Hedge funds and their GPs (general partners) make money in two ways:

Mgmt Fees = a ~2% fee on a fund's AUM (assets under management)

So for a $1B fund, GPs will make $20M in mgmt fees to pay for operating expenses, salaries, etc.
2/ Performance Fees = ~20% of all profits earned by the fund

If a $1B fund grows to $1.5B, the GPs will make $100M ($500M x 20%) in performance fees.

This performance fee is often called "carry"
Read 11 tweets
Apr 28
1/ Is Illuvium the Pokémon of Web3?

@KieranWarwick from @illuviumio explains how Illuvium will be the first AAA game in crypto. 🧵 ↓
2/ Illuvium ✔️

Illuvium is an open-world exploration, NFT creature collector and auto battler game built on Ethereum and Immutable X.
3/ So what makes Illuvium unique? The team set out to create the first high-quality/budget, fun-to-play game in crypto.

This means high-res graphics, dynamic gameplay and a complex/evolving ecosystem. This isn't your typical P2E game.

Read 13 tweets

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