The thought process for VCs investing in crypto is simple: they get a huge discount on the tokens in the raise that they can turn around and dump on retail a few months later for huge returns. Instead of waiting 10+ years for a traditional exit, they can get liquidity in a few months.
As Chamath admitted on the podcast, even when they're on a vesting schedule they can sell the claims to future vesting prior to actually receiving the tokens.
I'm despondent about the overall crypto situation, please forgive me for my cynicism, because I'm genuinely concerned about how many times people can exclaim the king is naked the cupboard is bare the promises aren't merely empty but never had meaning, and yet the socialized penny just won't drop.
This FT article [0] goes some way to describing how vulnerable young and low income people are to false investment scheming. What's needed (very rapidly) is to reveal the full extent of behavioural and technical engineering used in exploitation, instead of blaming the phenomenon on concocted reductio ad infortunium.
[0] Financial Times article "Generation Moonshot": https://archive.ph/3d4DW
Edit,: added for clarity, "...from which...the simulacra.."; corrected "onto" as "on" and thereafter revised with clearer unchanged meaning the rest of final sentence. (and Ed2 sp ip.); E3 people instead of folk ,(mobile sorry) E4 added, "scheming" after "false investment" for clarity.
Lots of smaller projects are priced below VC prices. For example, CowSwap is at like 12c when private rounds were at 15c.
VC buying - aka VC selling to greater fool LPs, with purported guarantees trails a wake of retail that fuels their vig.
I know nothing concrete about crypto n.b. but I think I can recognize the structured avarice. If my precis is all that's happening I'd convict this kind of VC instantly.
How do you know what the VCs paid? These are private transactions. Sometimes they invest in equity in the business at the published round price, but get tokens for almost free on the side.
The multiple investment rounds followed by eventual IPO is typically just a legal ponzi scheme.
Businesses make money from customers. Ponzis shuffle around capital from late investors to early investors
Just think about it, if these data point of selling claims get be bought to on-chain then I am sure people and next set of companies will not borrow some such investors.
because of this particular reason I feel DeFi will replace traditional finance first before any other form of crypto companies takes.
A recent IMF admitted that DeFi is 10x efficient than TradFi.I am sure once DeFi get a bit regulated and has better risk management principal embedded into code the system will become more efficient
I also see the recent housing crackdown and loss of money for common people playing an important role of smart contract lead world for the financial safety of the larger population. People are losing trust way faster than they are able to change systems
Do you have the source for this?
Oh, yeah? Here's the document: https://www.imf.org/en/Publications/fintech-notes/Issues/202...
Where does it say that?
It doesn't say that, because it isn't true.
You continue to reinforce the idea that cryptocurrency advocates deliberately make up false statements.
For example you need to have locked $400 of some token for a "loan" of $100. How is this efficient?
It's like a lawyer getting into crypto, they do contracts for the companies, they're not buying tokens for themselves.
I'd hazard a guess that it's something along the lines of "throw shit against the wall and see if anything sticks," or less cynically "run it up the flagpole and see if anyone salutes."
Isn't that pretty much the modus operandi of VCs? Invest in a bunch of speculative ventures and hopefully make all of it (and much, much more) back if/when one or more becomes profitable?
Some VCs, some even with legendary reputations, are going to ruin said reputations from the scams they're pushing. In 10 years much of the sheen of Silicon Valley will have worn off. Tech will be as beloved as banking.
