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Commentary: Why I’m still not taking crypto seriously


May 8, 2022

Yield-farming– a rather intricate practice that basically provides financiers an opportunity to turn their crypto into more crypto, by obtaining cash from the clients, providing a “governance token” in exchange, and farming out this crypto into other coins and “DeFi” tasks using high yields– has actually long raised eyebrows.

That’s not even if of the abnormally high returns it assures, however likewise due to issues that retail financiers do not actually comprehend it and hence are not completely knowledgeable about the threats included.

You may believe for that reason that Bankman-Fried, whose platform provides this really thing, may attempt to dress it up as a developed monetary item.

Not a lot. Bankman-Fried, utilizing the example of a box to explain among these yield-farming platforms, discussed its worth proposal hence: “This is an important box as shown by all the cash that individuals have actually obviously chosen ought to remain in package. And who are we to state that they’re incorrect about that?”

He then explained how all this ends up being a sort of self-fulfilling prediction, due to the fact that as soon as financiers begin feeling bullish about it, the token ends up being better and they “go and put another US$ 300 million in package. and after that it goes to infinity. And after that everybody earns money.”

Bloomberg’s Matt Levine, plainly rather shocked, explained that Bankman-Fried appears to be stating something along the lines of: “Well, I remain in the Ponzi company, and it’s respectable.”


Bankman-Fried’s remarks have actually been extensively buffooned, and they are certainly risible, however what is possibly funnier is that what he is explaining can be used to the rest of crypto, too. I have actually long compared crypto to a Ponzi plan, though there are some distinctions, such as the absence of a main administrator.

Crypto, like Bankman-Fried’s box, has no fundamental worth; it deserves merely what everybody has actually chosen that it deserves. And similar to this box, which as the FTX creator describes can be developed “in like 5 minutes with a Web connection”, crypto tokens can be made simply as quickly.

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