Yano 🟪 Profile picture
Nov 16 15 tweets 5 min read
If this is really the end for Genesis, this could be more impactful than FTX.

FTX hurt liquid funds and consumers. Genesis impacts nearly every company in crypto.

Let's dig in.
1/ For those who aren't familiar, Genesis started as the first OTC Bitcoin desk in 2013. They're now crypto's largest lending desk.

Genesis is part of DCG, Barry Silbert's holding company that owns CoinDesk, Foundry, Genesis, Grayscale, and Luno. DCG also runs a huge VC firm.
2/ At the height of the market, Genesis was moving SIZE.

Check out these Q4 2021 numbers:

- $50B in loan originations
- $12.5B active loans
- $31B spot volume traded
- $21B derivatives traded Image
3/ Then 3AC happened.

Genesis was the biggest creditor to 3AC having lent them a whopping $2.4 billion.

Genesis then filed a $1.2B claim against 3AC. DCG (parent co) stepped in and assumed the $1.2B claim, leaving Genesis with no outstanding liabilities tied to 3AC. Image
4/ But then things continued to unravel.

Genesis also had large exposure to Babel Finance, the CeFi platform that got hit hard in the June unwind.

In August, longtime CEO Michael Moro resigned. Nearly everyone I know who was at Genesis is no longer there.
5/ By Q3 2022, their numbers had fallen drastically.

- $8.4B in loan originations
- $2.8B active loans
- $18.7B spot volume traded
- $9.6B derivatives traded

Still, everyone felt like they were crypto's safest counter-party. Image
6/ So why is the downfall of Genesis so bad?

Dozens of companies like Gemini use Genesis to help their consumers earn yield.

If you're a CeFi platform that offers yield, you probably use Genesis.

Using some rough numbers and simplifying the process a bit, here's how it works.. Image
7/ You give your crypto to Gemini → Gemini gives your crypto to Genesis → Genesis lends your crypto to a fund → the fund borrows from Genesis X+2% → Genesis gives Gemini X+1% → Gemini gives you X%

Voila! You now earn yield. Image
8/ But! This only works if the counter-parties that Genesis lent to can actually repay their borrow.

If Genesis can't get their crypto back, they can't give the crypto back to Gemini (or insert any other crypto CeFi platform), which means Gemini can't give you your crypto.
9/ Beyond that, nearly every whale I know that plays in crypto gives money to Genesis.

Instead of earning yield on the BlockFis and Geminis of the world, they give direct to Genesis to earn yield.

Now those institutions, family offices, and whales can't get their crypto back.
10/ And this is why Genesis halting withdrawals is so bad.

They sit at the direct center of crypto capital markets. They custody funds. They help institutions earn yield. They are the yield product for CeFi platforms.

It's not good.
11/ Where do we go from here?

Hopefully DCG has the funds to backstop this. I would assume they don't and that they're racing to raise money right now.

They raised at $10B in Nov 2021. I'd guess they raise at a valuation roughly 10-20% of that.
12/ Stay safe out there.

If you have funds on a CeFi platform, think about going to cold storage using Ledger.

If you really don't want to go to cold storage, use Coinbase.

Long live DeFi.
13/ Subscribe to our free newsletter to give even deeper insights into the Genesis and FTX contagion.

14/ @0xfoobar joined @santiagoroel and me to discuss the unfolding Genesis situation.

Would highly recommend this one to understand who is (and could be) impacted.

Listen 🔊 sptfy.com/Mi0P Image

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More from @JasonYanowitz

Oct 30
NFT Pro markets are coming and traders plan on arbitraging your jpegs in size 🧵
Right now, NFT trading is the equivalent of crypto trading in 2017.

OpenSea is like Coinbase's consumer app in 2017. You can buy and sell some assets but not much else.

That's all about to change. Image
So what's missing?

1. Price discovery
2. Trade Execution
3. Margin & Clearing
4. Settlement & Post Trade Reconciliation

Would highly recommend this piece by @Melt_Dem. A lot of these thoughts comes from it + our podcast on @theempirepod a few weeks ago.

Read 10 tweets
Oct 28
Season 1 of Bell Curve is officially in the books.

The thesis was that the birth of fixed rate borrow and lend in DeFi would kick off a credit driven bull run.

We called it: "The DeFi Credit Boom"

Here's a review 🧵
Ep 0: @MikeIppolito_ and I laid out the thesis for the season.

a) CeFi's implosion will push activity into DeFi

b) The next wave of DeFi products will be unlocked by fixed rate borrow/lend

c) Structured products that utilize fixed borrow/lend will be key part of the next bull Image
Ep 1: CeFi is Dead, Long Live DeFi

We kicked off with @pythianism + @im_manderson from @hiFramework. Vance and Michael also host a weekly roundup on Bell Curve.

Spotify: sptfy.com/M2Sy
Apple: apple.co/3WceFJK

This episodes teed up the rest of the season nicely. Image
Read 10 tweets
Sep 15
1/ Green ETH will be the best narrative in crypto's history.

Here's why 🧵
2/ Let's start with ESG mandates.

Most large institutions now have ESG mandates.

Fidelity, BlackRock, Goldman, etc... whether or not they like it, they now have to consider the environmental impacts of their portfolios. ImageImage
3/ This is why the "Bitcoin is bad for the environment" narrative was so impactful.

The narrative spread like wildfire and eventually, institutions stopped buying because of its supposed negative environmental impact.
Read 11 tweets
Aug 30
⚡️ Announcement ⚡️

Today we launch Bell Curve, a new podcast from Blockworks.

We've put an insane amount of work into this show.

Details below.
1/ Bell Curve is a show for those who, like Mike and me, are confined to the middle of the bell curve.

Each season @MikeIppolito_ and I will explore a crypto thesis.

Over the course of 7 episodes, we'll review the thesis with big guests.

At the end of the season, we'll recap.
2/ Season 1 thesis: The DeFi Credit Boom

Our thesis is that the birth of fixed rate borrowing and lending in crypto will kick off a credit boom that catalyzes the next bull cycle.

We’ve broken the thesis down into 3 parts, summarized below:
Read 8 tweets
Aug 29
Have spent the last few months going deep into @MakerDAO.

After lots of reading, conversations, and learning, I've decided to become a delegate.

A few thoughts 🧵
1/ I have strong conviction that DeFi will grow exponentially in the coming decades and that Maker has the opportunity to become the backbone of DeFi.

If that happens, Maker will become one of the most impactful initiatives in the history of global finance.
2/ To achieve that, Maker needs to evolve.

It needs a better growth strategy, improved governance, and more scalable operations.

I'm hopeful that I can take what we've learned from building @Blockworks_ and apply some of those strategies to Maker's growth.
Read 6 tweets
Jun 13
1/ In bear markets, it's crucial to remember why you're building.

I'd recommend reading the classics this week.

Here's a running list of my all-time favorites 🧵
2/ Go back to basics.

Bitcoin Whitepaper: bitcoin.org/bitcoin.pdf

Ethereum Whitepaper: ethereum.org/en/whitepaper
3/ Why Decentralization Matters

By @cdixon

Read 9 tweets

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