Author: miaohash Editor: Wu said block chain
FTX is about to release tokens anchoring well-known US stocks, attracting a large wave of traffic. Not long ago, the DeFi giant YFI fell from its highest point of US$43,966 to about US$16,000, and the retracement reached an astonishing 64% (recently it fell below US$12,000).
The community blamed all this on the legendary trader Sam Bankman-Fried (hereinafter referred to as SBF), believing that his vigorous short-selling led to the plunge of YFI. SBF is also the CEO of FTX and Alameda Research. He has led the issuance of platform currencies FTT and SRM, and has control of the decentralized exchange SushiSwap.
According to the chain news report, SBF has pledged a large number of FTT, SUSHI and SRM on the decentralized lending platform Cream Finance, and at the same time loaned out valuable ETH and USDT, as well as various DeFi coins such as UNI, MTA, CREAM, LINK, and The trading platform makes profits from short selling. Therefore, it was questioned that he was using the centralized tokens he issued to manipulate decentralized assets.
The Cream community believes that FTT may bring systemic risks to the entire platform, and therefore initiated a proposal to vote to delist FTT. SBF’s response can be found in “FTX founder SBF’s response to the CREAM community’s proposal to vote to delist FTT: Discussion on the Pros and Cons”.
His views can be summarized in three points: First, he believes that the market value of CREAM is mainly supported by FTT, and the removal of FTT will cause investors to suffer losses; second, the price volatility of FTT is much lower than that of other DeFi tokens, which is not risky The main source; third, reducing the FTT mortgage rate or setting a 20% lock-up upper limit for a single asset is a compromise. However, we believe that SBF’s rhetoric is suspected of sophistry, and it does not respond positively to the real risks of its operations.
Use Cream to cash out FTT in disguise, and no transaction slippage
According to data from Cream Finance, as of October 13, the total lock-up volume of the platform reached 170 million U.S. dollars, of which the asset value of FTT reached 78.3 million U.S. dollars, accounting for 46.19% of the total lock-up volume. It can be said that almost half of Cream are serving FTT. The APY of FTT on CREAM is 0, which means that users have almost no borrowing demand for FTT. It also means that no one else will mortgage FTT to the CREAM platform except for the issuer of FTT tokens SBF with a holding cost of 0.
As a platform currency, FTT has poor liquidity. Coinmarketcap’s transaction data shows that most FTT trading pairs have a single-day transaction volume of less than 1 million U.S. dollars. In the past 24 hours, the total FTT transaction volume on the entire network is less than 5 million U.S. dollars. The mortgage rate of FTT on Cream is 20%, that is, FTT worth $78.3 million is mortgaged to the platform, and other cryptocurrencies worth $15.66 million can be cashed out. This amount is more than 3 times the total daily transactions of FTT on centralized exchanges. !
Imagine that if SBF sells $15.6 million of FTT in the market, it can almost smash the currency price to zero, but with Cream, he can borrow DeFi coins with a higher valuation and poor transaction depth (only a small amount of coins are needed) You can hit more than 10% of the market), and at the same time exchange for a large amount of low-cost ETH and USDT, by selling borrowed DeFi coins, and using USDT or ETH to make a profit when the market panics down. This approach is equivalent to cashing out FTT in disguise, using an empty glove white wolf to squeeze the market.
So the question is, who is the biggest loser in this game? Obviously, it is the other lenders of the Cream platform. Once these lenders are attracted by the high APY of the platform, they can easily make their loaned tokens become short prey and suffer a larger holding loss.
This is a siege of centralized cryptocurrency against decentralized cryptocurrency. Not only FTT, any lending platform that simultaneously launches company currency and community currency will cause similar risks. This may cause a devastating blow to the growing cryptocurrency community.
It can be seen that Cream launched SUSHI and FTT on September 2, and it was from this day that DeFi coins started a battle royale-like cliff drop. Is it a coincidence, or another mystery?
Who decides to list coins on decentralized lending platforms?
Why can FTT be used as collateral? Who decides the tokens and mortgage rates listed on the decentralized lending platform? The official answer seems to be community autonomy, but from the Cream’s announcement, the platform does not have clear rules for listing. The development team may listen to some community opinions, but the loan currencies listed on the website are still mainly based on the Cream project. Fang decides. In addition, although FTT has received a lot of criticism in the Cream community, there are only 37 voting addresses on the topic of “whether to delist FTT”, and the total market value of CREAM held by these addresses is less than $500,000.
As the fork source of Cream, the Compound platform may be a better example. For every currency listing, mortgage rate, and interest rate adjustment, the community needs to vote.
However, the standardization of the process does not prevent the community from being manipulated by capital. Taking UNI as an example, a total of 57 addresses in the Compound community participated in the voting for “Online UNI Coins”, with a total of 537,376 COMP votes, of which the top 10 addresses accounted for 96.7% of the total votes. However, due to the high value of COMP itself and the circulating market value of close to US$300 million, large position holders lack the motivation to do evil, while the circulating market value of CREAM coin is less than US$6 million, and the community voice is weaker. Compared with COMP, its ability to resist risks is worse , It is also easier to be used by those who want to become a weapon against the market.
Everything is just a trading game
SBF has publicly expressed his negative views on yield farming. At the same time, he is not optimistic about DeFi based on ETH 1.0 because the non-scalability of the platform is fatal to the project. SBF believes that shorting certain coins is not malicious, but simply feels that the value is overestimated. When the market collapses, he will buy what he thinks is underestimated from panic sellers. Having worked for Jane Street, a proprietary trading company in the traditional financial industry, for three years, SBF looks like a typical Wall Street-born trader: calm and rational, stick to trading strategies, and free from market interference.
SBF also seems to be a supporter of Trump. The polling aggregation agency FiveThirtyEight’s election model shows that Trump’s probability of winning is about 16%. He believes that buying Trump at this point is the right decision. SBF once again regarded this as a trading game of buying low and selling high.
“Given that 2020 is too weird, this probability of winning seems to be underestimated,” he said.
