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.
It will collapse. It is simply masked to some extent by the fact that industrial civilization is a generational Ponzi scheme.
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
This is not the same as a cryptocurrency which relies solely on later investors to create returns for earlier investors. There are no non-investor participants from which profits can be derived, period. Cryptocurrencies are in aggregate either zero-sum (best case, PoS) or massively negative-sum (worst case, PoW, especially Bitcoin).
This represents a pretty fundamental misunderstanding of, well, investing.
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?
For the efficiency part. To be fair, traditional finance as an industry operates as a super inefficient, regulatory-captured pyramid scheme. Shouldn’t be too hard to beat.
They're dense. They don't get it at all.
The "super inefficient, regulatory-captured" part is a feature, not a bug. We want transactions to be reasonably slow and checked by a human somewhere along the way. We want a myriad legal protections.
"pyramid scheme", that's rich, coming from cryptocurrency companies.
With all the large firms (crashing daily) that provided impossible ~19% returns still trying to attract new investors, there's just no defense of the 'industry'.
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?
if just making them on-chain improves the provability that an asset is not getting leverage multiple time in an ecosystem
