DeFi

gandalf'ed

grumpygrandpa

— 2 min read
gandalf'ed
Photo by Matthew Ball / Unsplash

Structurally market wide not a lot has changed over past couple of days except following notable events:

  • There exists an ETH whale known for marking price tops & bottoms - s/he has made a billion $ last year easily if the exchange data can be trusted
  • The same whale just yesterday closed out approx. $2.0 billion position
  • Moreover, the ETH foundation (aka Vitalik & co) are another crew known
    for being very prescient in their market timings. They sent $90 million worth of ETH to exchange wallets (presumably for cashing out)
  • Similarly, Gandalf visited the BTC order books with a visibly large sell wall
    around $70k. This same pattern in order book was last seen in July but with bid around $30k
  • Lastly, just minutes ago as expected the VanEck's BTC spot ETF got
    rejected

Just for fun since we all learning about DeFi

A protocol is built out to allow users to perform certain functions (e.g. trade options, get flash loans for some quick liquidity needs etc). As natural progression or evolutionary step; the developers of protocol and their VC backers (e.g. a16z, 3AC etc) decide at one point that they would wish to reward their users with tokens (e.g. say you were using Microsoft's tools for 3 years and then Microsoft decide to conduct an IPO so as a result of your usage they donate you some shares). It's a great marketing tool, a way to control governance, build up a war chest of cash for future & get paid.

Token award process requires the developers / VC backers to determine their potential future token holders. Usually this involves taking a snapshot of network at a predetermined & secret time. Snapshot provides a view of all users until that specific time. Upon token distribution; you as potential token holder simply need to provide the address you used their tools with. If your address was part of the snapshot then happy days - you get some tokens. Market determines the price post listing.

Thought experiment: What would happen if instead of a secret snapshot time; everyone is publicly made aware of the exact time at which this will occur. I leave you with some hints of tools available

  • to be a user you must have had to use some other token to pay for the
    usage
  • flash loans to get $
  • ability to borrow tokens
  • perpetual swaps - i.e. ability to go long or short for eternity as long as you can afford to pay the funding costs (remember you don't always pay the funding; sometimes you receive also from your counterpart)

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