LibreCharts

2021-05-14 06:26:16 Fool if You Aren't Following This Channel

This channel provides the same type of high-caliber information that you'd expect in one of the infrequently published 'market reports' from entities like JP Morgan, Morgan Stanley, a16z, DGC, and other big tier, hero-worshipped funds / firms.

The only difference is that the information in here is more excising and to the point because we're actually in the space vs. sitting behind a desk in a lofty NY highrise examining crypto through the lens of an institutional investor.

Defer to These Sources For a Macro Interpretation

They have eyes in the sky from creatures that fly much higher than Librehash ever could.

So you should defer to 'The Block', Morgan Stanley, etc etc etc. if you want high-level macro information (assuming you're able to actually gain access to their published pdfs ; one good source is @CosimaResearch // they're plugged in with all of the market reports and analyses). Open / Comment

2021-05-14 06:23:22 Forgot to mention that the interest probably doesn't even cover the fees you incur in gas from executing said transaction (since the high APR is paid out by block & you'll likely be trying to exit your position as soon as the markets tank, which is frequently seeing how often we get whipsawed back & forth).

Is that what they refer to as 'impermanent loss'?

This is covered in Uniswap v3 documentation where they state:

"First, without layer 2 scaling solutions, Ethereum can currently only handle 12-15 transactions/second [this is understated]. On top of that, every interaction with the network to buy/sell orders incurs gas fees. This means that a market maker may not be able to update their orders fast enough to respond to already volatile crypto prices and would potentially pay more in gas fees than the profits they earn from the spread." (source)

Womp-womp.

This is ponzi nestled into a pyramid and it will implode at a certain point. Who knows when.

But if you're curious as to why there are frequent asset dumps in the crypto market DeFi is a huge fucking reason why. Open / Comment

2021-05-14 06:23:22 DeFi is Used as a Way to Offload Worthless Ponzi Tokens + Tether in Exchange For Ethereum and DAI

Explicitly.

And its very lucrative for token owners too since they're sitting on a pre-minted supply of millions / billions of tokens.

Since they have zero real use case, its hard to find a lot of buyers and dumping them on the real markets will just discourage people even more from buying them since that would drown the price.

So what do you do? Convince people to be unwitting counterparties in trades with these worthless assets by dangling "interest rates" paid in (more Ponzi tokens) as the carrot on the string.

Nobody cares if the interest is paid in a legitimate asset or not, as long as they can sell that awarded interest for actual USD or some other asset they think is truly valuable like $ETH.

And the one that gave you that worthless asset as interest doesn't give a fuck either because, again, they just minted it all up front by executing a 'smart contract' (most of them copy/pasted & riddled with errors, too).

Want to launch a smart contract? Librehash has a guide right here: https://dev.to/librehash/programming-an-ethereum-smart-contract-with-vyper-218g Open / Comment

2021-05-14 06:23:22 Reason #2 - People Got Hustled by Ethereum Again

Not going to say this comes from Vitalik or any of the top brass at Ethereum, but this is game is exactly the same as what we described in this channel before.

step 1 - pump the price of DeFi projects

step 2 - flood that money back into Ethereum and pump $ETH

step 3 - as ETH pumps, "staked" + "locked" ETH skyrockets (which we showed) in exchange for DeFi rewards (which look even more juicy following the pump in step 1)

step 4 - since the "interest" you're accruing is being paid in ponzi tokens that were generated en masse at will by named & unnamed developers, those that have created these tokens have essentially finessed you out of your Ethereum (in the form of DAI, mostly) by convincing you to "liquidity mine" in exchange for these worthless rewards

Liquidity Mining is For Suckers

If you're putting funds up for "liquidity", then your funds are being used by whomever the counterparties of the transaction are as a way to "short" whatever asset they're borrowing against for your funds.

Let's look at 'Compound Finance'.

"Compound Protocol allows users to borrow crypto assets, using any other supported asset as collateral - giving them the flexibility to settle a trade, or use an application, with an asset that they don't already own." (source)

Okay. So $ETH is going up. You're smart. Put that up for collateral and borrow some $DAI.

But be smarter, use Compound Finance and get rewarded back 'cDAI' in exchange for your DAI from Maker, or skip Uniswap altogether and swap the ETH straight out for cDAI - now you're thinking big.

But wait, your DAI is provided as liquidity against traders that are now going to be borrowing assets like 'Tether', 'Uniswap', 'BAT', 'Rep', and others.

If someone owned a ton of $BAT (for some reason; i.e., they created it), Compound Finance would be an awesome way to hedge against it as a short while dumping it (its down -15% in the last couple of days).

How This Could Be Done

$BAT pumps, sell that for $ETH, borrow against that same ETH to obtain some $BAT, sell the $BAT immediately and buy more $ETH (pumping the price of $ETH), rinse repeat.

If you're a token owner, sell even more of your token to flush the price out additionally.

When $BAT (or something else is down -15%), you grab it back up at spot price and fulfill your obligation.

Adjust the $BAT Price in the Sample Above

-15% is its losses against USD. Its losses against $ETH in the last week are >22%.

Conveniently, ETH fees spiked right before the market dump, which locked in traders that had provided all of this $ETH to get DAI or "liquidity mine".

The fees were so outrageously high that most probably were in jeopardy of exiting positions with a net loss.

Gas Prices Are Back Down Now

Funny how that works. Is it because there's less trading activity?

Librehash did the research and found out that the answer to that question is a resounding, "No." (https://librehash.org/ethereum-fees-are-back-to-where-they-were/) <— published just 3 days ago Open / Comment

2021-05-14 06:23:22 Reason #1 For the Drop in Bitcoin's Price and the Overall Crypto Markets

There are a few things at play here.

#1 - is the fact that the global markets took a dive this week. This was triggered by the recent job reports that came out this week in the U.S.

The reports indicated inflation levels that are a lot higher than previously expected. Also, the # of jobs added significantly underperformed expectations (proj. at 1M+ vs. 200k+ added in actuality).

Unemployment also increased by a tick from March to April (6% -> 6.1%). Although this change is minimal, the bigger worry by some investors lies in the fact that it moved negatively (higher & not lower; the latter is expected to accompany an economy recovering from COVID's impact).

Fears about inflation stem from the logic that a) assets could be grossly overpriced b) Fed may be tempted to take corrective action in a way that could create a 'shock' to the markets c) economy could be "overheating"

Since we're still in a post-COVID phase, economies are still delicate - even the United States. Despite all of the gains & ATHs we see notched by the stock market, the vast majority of the planet is still below pre-COVID levels.

Sources

1. Jobs Report by U.S. Bureau of Labor Statistics (published May 7th, 2021) - https://www.bls.gov/news.release/empsit.nr0.htm

2. Press Release For the Jobs Report (the tl;dr version basically) - https://www.bls.gov/news.release/pdf/empsit.pdf

3. CNBC Article Covering the Fallout on Wall St. From Jobs Report - https://www.cnbc.com/2021/05/07/jobs-report-april-2021.html

From May 10th-12th, Dow Jones Fell By -4.2% (pretty significant) ; Nasdaq got crushed too (loss -5.67% over that same span).

Nasdaq is worth watching since mos tech stocks are traded in that index, so its general performance tends to be indicative of how the tech sector is doing - which Bitcoin is firmly attached to (this is where Coinbase got listed following their IPO) Open / Comment

2021-05-12 19:06:57 Motivation For the Lenders

This is lightly mentioned in MakerDAO's documentation, but if borrowing against an asset is the equivalent of going 'short' on that asset (assuming that you sell immediately after you do so for the raw underlying USD value).

*Example*

A) I want to borrow 10 BAT tokens ; they're worth 10 USD each ($100)

B) Luckily I can put up cDAI (which I recently obtained for my DAI). Let's say 2 cDAI = 1 DAI (one cDAI = $0.50) ; that means that I need 200 cDAI for this transaction (assume no collateralization for simplicity sake)

C) If I want to get my 200 cDAI back, then I need to return those 10 BAT tokens that I borrowed.

Short Seller Play

I could sell those 10 $BAT immediately once I receive them (again, there would be collateralization in a real-world scenario - we're just simplifying shit down here to make it more digestible).

That would give me $100 cash outright.

Now let's say that $BAT dumps...hard. It goes down to $2/token. That's awesome for me. I still just need 10 $BAT token to get those 200 cDAI back and since DAI is a stablecoin, we'll assume that the value of that exchanged asset (for collateral) is the same as it was originally $200.

This now has enabled me to essentially liquidate the position up to the fullest extent (i.e., collateralization rate), enjoy those funds, then use a fractional portion of them (20% if $BAT dropped that dramatically), to re-obtain the 10 $BAT necessary (i.e., from an exchange or anywhere...like Uniswap maybe).

That only cost me $20. Perfect, doesn't matter. I can still exchange that back (in theory), get my cDAI back that were collateralized and still worth $100 USD (saving $80 in value, giving me a total of $180 USD now vs. $100 that I started with ; total appreciation of +80%).

Of course, my cDAI was gaining interest (in COMP) during that time, so I'm going to want those rewards too - no problem; I'll just exchange this synthetic derivative for its underlying base asset (i.e., $DAI) + my interest rate fees, which make allow me to gain another hypothetical +$20 because the markets are bullish as all fuck.

Now I'm up to $200 total (instead of the $100 that I started with). Oh, and Ethereum has appreciated by 50% as well. Good for me though because I can take those 200 DAI and purchase WETH with it (since I think ETH will keep raising), and re-stake that back into MakerDAO and get even more $DAI than I originally did before.

If I'm smart, then I can wash, rinse, repeat this situation with extraordinary ease (making free money almost and providing a near infinite faucet to pump the price of $ETH with the demand that I'm generating) Open / Comment

2021-05-12 19:06:57 Price is the Anchor For Compound Finance

To say that this extracted price data is important would be a vast understatement.

According to their website, "The Compound Protocol allows users to borrow crypto assets, using any other supported asset as collateral - giving them the flexibility to settle a trade, or use an application, with an asset that they don't already own. For example, a user holding ETH may supply it to Compound and borrow DAI from Compound instantly." (bypassing the process of obtaining WETH ; probably favorable in times like this where the gas rate is through the fucking roof along w the price of Ethereum itself).

There is an Attached Interest Rate for Borrowers and Lenders as Well

Collateralization is not a 'cost', per se, since you will receive the full amount of your collateralized belongings once you have returned back the value loaned out to you (assuming that the borrower's additional interest rate fees are taken out at the top of this pipeline so that doesn't need to be settled at a latter time).

Thus, in order to ensure that this protocol is 'eating' properly, the stakeholders of Compound are enriched with the difference between the interest rate given to 'suppliers' vs. what's charged to the 'borrowers'.

This Logic is a Bit Convoluted

The interest rate (APY) given to suppliers is in 'Compound' itself (governance token). However, the additional interest rate that is taxed to borrowers is assessed to the underlying currency that they are looking to borrow against (which can be any of the compatible assets that it allows users to interact / trade / collateralize on their protocol).

Thus, that difference between the interest rate paid to suppliers and what's eventually assessed to borrowers could end up diverging significantly over time.

*Example of This Principle*

Compound interest is worth (aggregate) $50 (paid out as 12.3% APY in this random hypothetical). This interest is paid APY for those willing to lend $DAI.

Those looking to borrow $DAI must pay 20.3% interest (again, hypothetical). That's a absolute value difference of +8%. That would be assessed in the cryptoasset that the borrower is looking to borrow against.

So if $DAI were worth $10/each and I want 100 $DAI ($1k in value in this universe), I could provide $BAT as an asset. Let's say $BAT is worth $25/each in this world. That means I need to put up 40 $BAT in order to borrow the full $1k of $DAI. However, I also need to pay an additional +20.3% in $BAT (which amounts to 8.12 additional units for a total of 48.12 $BAT to obtain $1k DAI) [we'll put collateralization to the side for the sake of simplicity].

How does Compound Finance assess the value of the 12.3% that should be given back to the supplier to draw the difference between the two values and glean only that which is meant to be considered excess? (i.e., the +8% we mentioned prior).

They Can't - So They Don't

Why do they need to? You're being paid in Compound governance token. This is a fixed, finite asset (at least insofar as the smart contract owner has pledged not to arbitrarily produce more of it at some point ; but after all, this decision is to ultimately be up to the will of the 'people', so who knows how philosophies will change in the future).

Either way, if you're Compound Finance, you don't need to even consider the difference between the 12.3% and the 20.3% (in raw value) because the 12.3% is already paid off with an asset of imaginary value (i.e., Compound Governance Token <— this is the primary ponzi in this entire scheme because you're able to get a ton of users to accept this as a form of money in this convoluted scheme, even though there is no demand for this token at all beyond sheer price speculation on centralized and decentralized markets created by entities that likely own both).

Therefore, the +20.3% assessed to borrowers becomes pure unadulterated fucking profit if you're the managers of the protocol. Open / Comment

2021-05-12 19:06:57 Compound Finance (Where You Get Trapped)

Now that you have this $DAI on-hand, you want to make your money work for you.

Fortunately, you're in a space full of nothing but philanthropists whom are deeply concerned with you making as much money as you possibly can. So they derive something called 'Compound.Finance'.

Once again, the name is intimidating, but the concept is fairly simple once you dig into it.

Compound is a borrowing / lending protocol. Specifically, users are encouraged to interact with the protocol to make money via fees (Compound governance token) accrued as a 'reward' for providing an eligible asset to the protocol to be borrowed by someone else.

If you decide to provide 'DAI' as liquidity, you will be given 'cDAI' in exchange (this is placeholder derivative worth some fractional amount of $DAI). Supposedly you can swap this cDAI back out for your DAI whenever you'd like, making it much more flexible than protocols that require you to stake your funds for X amount of time before you can redeem the value accrued by interest or other promised rewards.

Utilization Rate

The utilization rate at a given point of time represents how much of a deposited asset on the protocol is being lent back out to borrowers (i.e., a utilization rate of 90% means that 90% of the total asset being contributed for liquidity mining is being actively loaned back out to borrowers).

In theory, this means that - at best - only 10% of the users with staked $DAI are able to redeem their synthetic derivative assets via the protocol directly. For those that aren't, they'll be forced to use 3rd-party markets like Binance or whomever else will accept these 'cTokens' and/or provide a market for them.

If only there were some sort of service / market maker out there like that, that could just automatically order, sift & match make makers with takers in a decentralized, algorithmic manner - then that would take a ton of pressure off of Compound.Finance (especially in instances where the utilization rate is fairly high - you don't want to trigger a bank run).

Who could provide such a service? Uniswap!

This is Part of Where Uniswap's Gas Guzzling Reputation Comes From

Uniswap is the preferred gateway for those looking to convert Ethereum into WETH (necessary to interact w smart contracts ; ERC20, ERC721, etc.) like MakerDAO - so you're probably going to at least start there.

But let's say you're in a situation where you have a cToken asset and you would like to trade that back out for something other than the base asset you used to create this derivative, then a market like Uniswap could be invaluable.

Turns out that it is (because this is one of the primary sources that they use in order to draw the price for a given asset [Coinbase being the biggest source of authority for price information ; pretty severe conflict of interest seeing as Coinbase Ventures is invested directly into Uniswap as is Union Ventures + Andreesen Horowitz, both of which are major Coinbase backers as well [keeping it all well within the family]).

Here's a URL with more information on how that's supposed to work = https://compound.finance/docs/prices Open / Comment

2021-05-12 19:06:56 We're at the phase where Ethereum has been pumped and everyone has just finished rushing to stake / lock / farm / whatever their Ethereum.

Motivation to do So (MakerDAO is the Gateway Drug)

MakerDAO is deceptively simple.

Let's say Ethereum is valued at $1k each and you have 10 Ethereum ($10k).

MakerDAO will give you the option to put that Ethereum up as 'collateral' for some $DAI (each worth 1 USD). We're going to skip the conversion on WETH for simplicity sake here.

In exchange for putting up your 10 ETH (worth $10k), you're given 7.25k DAI, let's say (worth $7.25k). This $DAI is yours to do as you please. You don't even need to return it - but if you don't, you forfeit your Ethereum.

But if you do want your Ethereum back, you just need to return the 7.25k (plus some amount of $MKR at a rate which fluctuates to help maintain the peg of $DAI supposedly).

The Idea is That This is Like a Quasi Futures Contract

Perhaps you're really bullish on Ethereum. You think that its going to go to $2k (from $1k). So you have no problem locking up 10 ETH (worth $10k at the time).

After all, you just need to return the 7.25k $DAI you were loaned and you'll get your $ETH back, no problem. Even if that $ETH is now worth $20k instead of the $10k you originally paid.

That's pretty sweet. You got "liquidate" some of your money without having to really liquidate it. If it weren't for Maker, you'd have to actually sell some of your Ethereum in order to get those funds liquid. And who wants to do that in a bull market like this? Open / Comment

2021-05-12 19:06:56 Here's a Copy of What Was Written, Verbatim:

1. Create a spark / interest in DeFi projects (again) via pumping their price subtly around the space

2. After that's done for a while, send the price of Ethereum up. Have influencers talk and obsess about it and give crazy price predictions for it (i.e., $5,000 or more).

3. Then, start promoting crazy DeFi deals, partnerships, projects, etc. The goal is to get as many people to lock in their Ethereum as possible

4. Once that's done, jam the protocol up with as many transactions as humanly possible. Even though there's palpably no greater volume of trading, just send the fees flying and claim that its from the frenzy

5. With fees so high, people will be deterred from moving their Ethereum in hopes of having the amount they need to pay reduced in the future (or assuming that it becomes more affordable for them at some point later during the ebbs & flow of the protocol) <--- by ebbs and flow, I mean manipulation

Use all of the generated "liquidity" from the people locking up their ETH on AMMs as a way of grabbing a greater supply of Ethereum when you're done (in exchange for made up tokens that are essentially worthless). When people realize they got fucked at some point, just make something up like "impermanent loss" and claim that its all part of the greater game of DeFi. Open / Comment