There is a brand new DeFi protocol that lets you immediately take out a loan for half your collateral and the protocol will automatically pay back your loan. Financial magic, involving transmuting one coin, into another, while depositing one in a pool, magically you can get a loan and have no risk of liquidations (not really but that’s what people are claiming [1, 2, 3, 4, 5, 6, and the coup de grace their website (archive)]). I think this protocol is flawed. You can find the whitepaper here. (Archive) (My copy)
This is one of my most in-depth analyses yet. You can find the interactive version of this article here: note this may take a minute or two to build, but it allows you to manipulate my code and see how I worked through the assumptions. Otherwise I will do my best to recreate it below:
I wrote a piece about Dai in which I suggested it was vulnerable to certain black swan events that I felt were not being given appropriate consideration. I do still feel that those are accurate opinions, however, I have also come to appreciate more of the ethos surrounding Dai.
I wrote about a deeply exploitive scam called The Billion Coins. Unfortunately, that coin is still active and is still taking advantage of people. They have tried to rebrand to make themselves look more official, but are still the same group of scum.
I once wrote about a worthless token called slidebits. Now the creator himself removed the blockchain from his app.
I wrote an article presenting a bearish case for a token when I was applying to a crypto hedge fund. That token has a market cap 1/10 of it’s all time high. Though I must admit, it has not seemed to be affected by any of the issues I pointed out. Sometimes things just break your way.
If there is one thing that crypto can regularly provide it is drama. Today, the controversy (or at least one of them) centers around a token called Few. The token seems to have started when Sam Ratnakar decided to invite a small number of influential people from cryptocurrency to work on an “Experiment”. Each would receive an equal proportion of the tokens and a small proportion would be reserved for liquidity.
Many members of the telegram who received the token seem to have an honest desire to build something. However, the Telegram was also quickly filled with ‘jokes’ about pumping and dumping the token.
Now let’s give all of these people the benefit of the doubt and assume they were working honestly with the goal of building something important. Even still they are doing it in what seems to be an inexplicable manner.
Generally, tokens should be created in order to serve a purpose. You decide on a project, a protocol, something, that in order to function optimally requires a token. What happened instead here seems to be that the token was created, distributed to a list of people with influence in crypto, many of them started “jokingly” shilling it on Twitter, and there was still no reason for the token to exist.
My intuition, and I hope I am wrong, is that the earliest creators and shills of $FEW were not doing it entirely as a joke. I believe many of them were experiencing FOMO (Fear Of Missing Out) and in order to rectify that feeling settled on creating their own token, airdropping it to a small group of influencers, and then “influencing”, so that they too could share in the mania.
Even if it was all a “joke”, where’s the punchline? Is it a meta point that most tokens are worthless? Is it a commentary on the large amounts of wealth that generally accrue to the earliest and most connected in crypto? Is it supposed to be a mockery of the “great team” method of crypto investing? None of those feel convincing to me, and I am left with a sadness about the state of cryptocurrency.