Google, amazon, yahoo and Microsoft all benefited greatly from the early 2000 tech crash in that they had a lot of cash and were able to hire alot of really good tech talent that was suddenly out of a job.
Looks like FTX and Binance are about to leave their competition in the dust in this crypto winter.
Coinbase seems to have thrown in the towel for now. I would have thought they would see this as an opportunity but their fiscal situation must be alot worse than they are letting on. Which is strange because I would have thought they were better capitalized that they are letting on.
We're watching as closely as we can to see if they have alot of bad loans outstanding to failing firms.
With Voyager about to go under, Celsius just hiring a firm to guide them through bankruptcy and several other minor firms already going under there will be no shortage of tech talent available to well run firms.
When we come out of this downturn in a year or two FTX and Binance are going to be even larger giants than they are now. With no real government oversite over those firms to limit their growth, the next crypto crash could be because one of those two gets into trouble.
Another dark horse candidate is Goldman Sachs, they are well capitalized. Look for them to start to buy up distressed crypto assets and go into the next bull market in(probably 2024) as a big crypto player for institutional clients, and possibly for retail under their Marcus brand.
For nearly half the aughts they weren’t even really competitors in the same market. It wasn’t until the latter half of the decade that Yahoo! even tried to be a search company competing with Google and Yahoo! had a definitive lead ahead of Google in mail, finance, etc for virtually all of the decade.
FTX and Binanace will win because they actually invested in infra and efficiency when building out their products during the good times. They'll reap outsized benefits during the downturn.
I skipped binance interview in the past when there was no crisis, their assignment:
Design and code a Content Management System (CMS) for Binance. The CMS would used to post articles for the public. The current Binance site supports up to 17 different languages. Each article would have some translations but not all articles have all of the 17 translations. Design and code a RESTful API for the CMS.
The user of the CMS would need to input the different translations for the same article. Design a user interface to facilitate this. We would only be looking at the functionalities of the user interface, so do not spend too much time on the design aspects.
Derive your own data model as deem fit. The preferred language for backend is Java and frontend is JavaScript though you are free to choose any other languages as well as frameworks.
Submit the code as a GitHub repository and make sure that the GitHub repository is public. Remember to add a README file for instructions on how to run the application and explanations (if any).
Yep , didnt even answer, I had similar interviews solving company problems but that one takes the lead, I still keep the email, hope someone from their team will read so they can re-calibrate their view
They get crazy entitled during bear markets. It happened to me with Square in 2011, they wanted like an app to prove my skills just to get an interview. Like a full-on mobile app just to prove how hard I wanted the job.
Thing is, let it be known, every homework you do for a company lowers your salary by 3%. Unless you charge, then it doesn't, it's weird like picking up money off the street. Just bad signaling, it's against your interest.
Wow. They really weren't trying to hide the fact that (1) They were actively building a CMS in-house at the time, and (2) They thought they did such a good job building said CMS, that they'd check your work vs their own no doubt stunning/transformative in-house work. XD
That's beyond despicable and should take this company of the list of companies to be hired by for any self respecting prospective employee. Utterly ridiculous.
Django would do this today in possibly even less work. It would be ugly, but it basically had the CRUD UI built. Just need some models and a simple user UI.
Coinbase way, way overhired and way overpaid for a weak senior leadership team. I’m not a fan personally of Brian Armstrong or Sam Bankman but the difference in leadership skill is night and day. Armstrong was in the right place at the right time following the Mt Gox collapse but he’s clearly in way over his head now, but he got his money so I doubt cares.
Do they need to hire lot of people? Or should they try to run it as lean profitable business? The big players are in multiple things, but I'm not entirely sure that really makes sense for everyone.
Will be actually see end of growing head counts for sake of growing them soon?
Founder of FTX has publicly said he thinks most tech companies have way too many staff (by a couple of order of magnitude I think he said?). FTX has something like 30 people, and that’s how he likes it.
Coinbase is probably exposed about as much to retail as Robinhood is, and judging by Robinhood's monthly trading volumes [1] which are down anywhere from 60-95% depending on your reference point, Coinbase revenues have probably dropped off a cliff.
Possibly they were stupid enough to get high on their own supply, and kept operating capital in cryptos instead of USD.
This is a classic mistake of banks. When allowed to do so, they think they can improve their returns by running trading desks. That's why we in the US used to have Glass-Stegall, which kept banks and brokerages separate. Because, before and after Glass-Stegall, banks got into trouble that way.
Nobody runs a pure crypto exchange that doesn't trade for their own account.
Crypto exchanges are depository institutions, asset custodians, brokers, lenders, market makers, and exchanges. All those customer assets, just waiting to be exploited.
Unclear. The whole crypto boom may have been an artifact of low interest rates.
The junk bond part ("staking", etc.) definitely was.
As I point out occasionally, most retail financial scams appeared in the 17th through 19th centuries, as newspapers made it possible to reach large numbers of suckers. There's not much innovation. Most of crypto is the same old scams, repackaged. Look up "bucket shop", "blind pool", "tulip mania", "Mississippi bubble", "Florida real estate scam", and "high yield investment program". Those alone cover most of crypto.
There have been overhyped tech booms many times in history, but most actually did something, such as build canals or railroads or electric utilities or networks. The crypto community has accomplished very little in the real world.
These booms have happened before, complete with distributed finance boom and bust cycle, exploitative rugpull projects, and community mania. They just get a little bit bigger each time.
They can only get bigger if you can reach a new population of suckers with each new cycle. But crypto is probably at the point where anyone who can operate a computer, has heard of it.
Plus, with how many regular people have lost a lot of money, and are still losing more, a major regulatory crackdown is just a matter of time now. And that will cripple most of the crypto ecosystem.
>"The junk bond part ("staking", etc.) definitely was."
Might you or someone else explain what staking is? Is this an overloaded term in crypto? I know that there is proof of stake that is used for consensus but I'm guessing this is not the same thing? Is staking a Defi offering?
"Staking" means locking your coins on a platform/chain for some period of time (like a year). So, Tera or Celsius offer 20% APY for locking your coins there for a year, then when everything tanks and they go bankrupt everyone who locked their coins there loses everything. It's a "junk bond" because the idea is that you only get paid at the end of the term, and at that point the bond is statistically unlikely to pay out.
Like most financial schemes, it really has nothing to do with the crypto, other than that it would be illegal to operate platforms like this with real money, since we created regulations decades ago to protect people from this.
Thanks these are helpful in understand that PoS the consensus enables the the financial instrument known as "staking."
Would the following be a correct summary then?
By holding more tokens you become a preferable verifier node because you hold more tokens. And the way you hold more tokens and burnish your reputation as a verifier is by borrowing those assets from the actual owners and then paying the asset owners double digit interest? Is this correct? The idea is that you will make enough in transaction fees on the network to payout something like 18% interest to asset owner and still make a profit?
The person who replied to you originally is confused.
"Staking" originally meant participating in a proof-of-stake consensus and you get rewarded by the network with the new blocks that are mined.
All the Terra / Luna / NFT / exchange "staking" was people latching onto DPoS to make their schemes sound more technologically sound. Its an overloaded term at this point thats nearing meaningless unless you are clear you mean actual proof-of-stake.
It is really not surprising that the term got overloaded when the underlying principle is the same: put money down, do nothing, then come back and your money is magically multiplied. It is as blatant a scam as they come, except the scam is built directly into the consensus protocol itself.
The principals aren’t the same. In DPoS, you literally do nothing other than lend your coins out. In PoS, you run and maintain a node that runs the rules of the network to secure it. If your node is down, you’ll leave rewards as punishment. If you run the wrong client or don’t upgrade, you’ll get slashed if any consensus rules change. You also have to pay for electricity, bandwidth, and have to have monitoring in place.
PoS is like running your own whitelabel SaaS offering.
Hm, I'm not sure I'd go that far. I'd use "staking" for anything that's done programatically as part of a smartcontract, regardless of whether you have to run a node yourself. For example, The Graph (GRT) where you attach your tokens to a node to strengthen its signal and share of the rewards.
And yes, I know, it's fighting an uphill battle to discourage the use of "staking" for lending out on a centralized platform. "Words drift in meaning, deal with it". But it's also important for people to be able to know what you mean, and there are pretty substantive differences between that kind of staking and "anything that earns a return on your coin" and it's helpful to have a separate word for it.
This is not accurate, but the problem is that staking got way overloaded.
Staking should mean partcipating in a proof-of-stake network by using your stake to participate in block validation or delegating to someone else. In most cases you don't need to lock anything and at no point do you hand control of your funds to someone else.
The problem is that many grifters then came to use "staking" to mean all sorts of different things with the only thing being in common is, get some rewards. But I've seen things like BlockFi get described as "staking" when really its just giving your money to control of someone else and earning interest on it.
He didnt. UST placed in Terra Anchor for the promised 20% was not staked or locked. You could withdraw at any time. Really, this site needs to stop choking on the crypto ignorance. This has been going on for more than 13 years now.
CDs are FDIC insured. If the bank goes under, you keep your funds (up to the insurance limit). Cryptocurrency accounts "staked" to a given exchange don't enjoy that benefit, as many people are now learning.
I'd also recommend anyone shop around for CD rates. Those are hardly representative of what you can get at, say, Ally. (2.75% APY on a 5 year)
It's a high risk junk bond with deceptive retail packaging to make it look like a safe bank certificate of deposit. The suckers are supposed to think it's a CD. As long as the underlying market goes up, it behaves like one. If the underlying market goes down...
It's a crappy bet, because the upside is limited while the downside can take you to 0.
It 'sounds like' any bond right, but compare the rates. One pays 20%, one pays 0.1%. One is 'junk', one would deserve as many As as Moody's has to offer.
(I don't think they actually rate them? Not from the US. But in some hand-wavy approximate way, they're as good as US gov bonds since they're similarly backed. (Actually why do you have both CDs & 'treasuries'? Monetary/fiscal separation sort of thing?))
I think you may have gotten lost in your communications.
You responded that you were surprised that something high risk / high reward was compared to a junk bond, and then compared it to a CD. It's obviously more like a junk bond than a CD, for exactly the two reasons you now mention.
> Similarly, when you stake your digital assets, you lock up the coins in order to participate in running the blockchain and maintaining its security. In exchange for that, you earn rewards calculated in percentage yields. These returns are typically much higher than any interest rate offered by banks.
> Enter Proof of Stake. The main idea is that participants can lock coins (their “stake”), and at particular intervals, the protocol randomly assigns the right to one of them to validate the next block.
The original meaning for "staking" is that, for PoS networks, you put some coins, say ETH, to run a network validator, who secure the network by producing valid blocks, and in return you get a profit in that same coin (the network prints coins at a fixed rate per year, say 10% ETH, to attract validators). The coins are needed to prevent sybil attacks (i.e. preventing someone to running infinite validators and attack the network). So if you own 1% coin you can only run 1% validator and won't be able to flood the network.
However running a validator is hard, requires custom servers and hardware, so people simply delegate them to another validator, who does the validation on their behalf and distributes the reward to its delegators. In essense, you earn 10% ETH simply by voting a validator. Note that this IS safe and in most cases, people do get their coins and profits back and it's very secure. You can't lose money in the sense that you won't lose ETH. There are ill-minded people to steal people's funds, but that's not the general case.
Since most people only cared about the profit part, the term "staking" has since changed meaning to become anything that requires you to put coins in and get coins back. Staking UST is one case: you lend UST to the protocol and withdraw UST at any time, and the protocol prints you UST at 20% APR. There are lending protocols, airdrops requiring you to stake something, providing liquidity to collect fees, etc. And for simplicity they all become "staking".
Note that while staking is secure, it doesn't change the argument about how ETH is just junk bonds. If they offer 3% return per year, it's essentially printed money and the currency's value would decline 3% per year as well. If they lock you in for a longer period (ETH staking locks you in indefinitely until The Merge goes live for half a year), you are kept from selling your ETH and these coins are already worthless once they are unlocked. Buying ETH for staking is essentially providing liquidity for people selling ETH so they can make a quick profit.
This is really helpful thanks. I had a couple of questions. You mentioned:
>"So if you own 1% coin you can only run 1% validator and won't be able to flood the network."
Is this the reason that companies are pay interest is because the more coins they hold means their validator percentage in the network and so their profits go up?
Also you mention:
>"However running a validator is hard, requires custom servers and hardware, ..."
I was under the impression that PoS meant there was no need for special/custom ASICs in the same way that PoW mining has. Is that not true? What types of custom servers and hardware is necessary for participating in PoS validation?
> Is this the reason that companies are pay interest is because the more coins they hold means their validator percentage in the network and so their profits go up?
That's about it. But the profits are usually a fixed percentage of your earnings which is the same for everyone holding the coin, so it's more like the central bank paying out interest for deposits, which does not actually increase currency value (you lose value by not depositing).
> I was under the impression that PoS meant there was no need for special/custom ASICs in the same way that PoW mining has. Is that not true? What types of custom servers and hardware is necessary for participating in PoS validation?
Usually no ASIC is necessary and in rare cases GPU can speed it up a bit. However, you often need decent amounts of RAM, CPU and disk to validate transaction validity and run smart contracts, since smart contracts handle a lot of state like balances of accounts and that has to be computed. So it takes the same amount of resources like a regular database would do.
> Most of crypto is the same old scams, repackaged. Look up "bucket shop"
A bucket shop doesn't appear to be a scam. You go to a bucket shop and purchase a share of stock, and the bucket shop assumes the obligation to deliver you that stock on demand, but it doesn't purchase the stock right away. (It's hoping that, because you're stupid, the price of the stock will drop.)
The reason it's hard to call this a scam is that a bucket shop selling you a share of stock is economically identical to an upstanding market participant and pillar of his community selling you a call option. Or, viewed another way, it's economically identical to the bucket shop selling you a short share of stock.
The difference is that the people selling the thing want you to lose. They're the counterparty. A real broker doesn't care. They just get a commission on the trade either way.
> The difference is that the people selling the thing want you to lose. They're the counterparty.
That is not a difference from either the call option model or the short sale model. It's true in all "three" cases.
Furthermore, if your intention as a rope vendor is specifically to sell someone enough to hang themselves with, you're not operating a scam as you sell them the rope.
What underhandedness? For the bucket shop to be doing something underhanded, they'd need to be able to intentionally shift the price of the stocks you buy.
Yeah I'm not sure maybe there is a better term. Profiting off your client's loss. Or minimally, using information from your client to place a bet for yourself
>The whole crypto boom may have been an artifact of low interest rates.
You mean it was an artifact of excessively high liquidity and high liquidity can only be explained by the fact that the interest rate is trapped at the zero lower bound as there is no market signal that tells people to reduce their degree of liquidity.
Coinbase is being very poorly led. They haven't innovated at all and they're confused as to who their target customers are. The brief mainstream retail rush has thrown them off.
The target customers for crypto are other investors, degens, and gamblers. Most of the money in crypto is house money, i.e. money that was made from existing crypto investments. Just see the transaction volume on OpenSea (decentralized ETH house money) vs CoinBase's NFT marketplace. Retail neither cares nor has the money for shitty jpegs.
FTX understands the target market. Which is why it has focused so aggressively on futures. You can short/long practically everything on FTX with leverage. That's the investor/degen/gambler class - the bulk of money in crypto.
Binance doesn't do anything extremely well, but whatever it does, it simply works. Withdrawals work, support is clumsy but works, perps work, spot trading works, even their awful chain, as full of scams as it might be, works.
Think about the landscape of exchanges globally. TSE, SiMex,Globex, ICE, NYSE, LIFFE LME, Eurex, etc etc etc.
If FTX is an exchange, then they make more money when volume is up and less money when it is down. Just like all exchanges.
If the holding company Alameda that owns FTX is a market maker, they make more money when volume is up, spreads are wide. They may or may not do well during herding events like crashes, but market makers don't like directional vol.
If any of these players are arbitrageurs, where do their arbs come from? Why do they persist? I think most of the edge comes from retail flow.
This is a trading business. What makes you think that any exchange has an edge that is unique in a downturn that makes it like Amazon or Microsoft? Neither of those companies run a trading exchange.
Why the romantic anthropomorpgic narrative surrounding trading exchanges? Historically it's a good but not amazing business. There is secular growth, but it tends to be highly constrained and it's a very competitive environment.
Does FTX have better infrastructure or risk management than ICE or CME? Or just better press at the moment.
You seems to know a lot about the exchanges. D you think coinmarketcap numbers are real [1]?
The parent comment was about FTX and Binance compared to the other crypto exchanges not to the exchanges in general.
FTX claims to be way more efficient than Coinbase - having only 25 engineers compared to thousands for coinbase. This could be secret of the surviving exchanges - efficiency.
Coin market cap volume numbers are known to be easy to manipulate, but exchanges like FTX and Coinbase do not likely engage in these kinds of manipulations as they don’t seek to legitimize themselves through nonexistent volume anymore. But the lesser known exchanges that appear on there are likely pumping their numbers.
I have heard Coingecko’s ranking eliminates some of the volume pumping tricks but have little to back up that claim: https://www.coingecko.com/en/exchanges
Binance is in all sorts of legal trouble and FTX has made investments in all sorts of sketchy things. Odds are quite high that either or both blow up before this is over.
That scenario assumes that crypto currencies as a whole will still be interesting by then.
I have doubts about real use cases being found and regulators are clamping down on it too. People should now also have realized that it's not a hedge against the market or inflation at all.
Good. There needs to be more of these layoffs in the crypto casino sector. Hopefully in the next coming years, all crypto firms should go bankrupt and disappear.
These exchanges and crypto companies need to stop encouraging customers to buy and gamble their savings and college funds into the crypto pyramid scheme.
I would not call it casino. Casinos go through regulated scrutiny to test the games probabilities are accurate so you play against math, crypto is a an unregulated market so you (probably) play against or benefit of market inefficiencies.
I had in mind physical casinos so I would say yes but testing also depends on each country regulations. If I recall properly (I worked in the testing industry long time ago and with slot machines) the problem with online games for my country at that time was that there was some confusion on which regulation to apply for them as games where not played where they were hosted.
At the end of a casino the chips can always be redeemed.
There is very little liquidity in crypto. And when one of the whales breaks rank and heads for the exit every other holder will be sitting on chips with some nominal value but absolutely no buyers.
Casinos are not just games where chips are exchanged between players and what is regulated is not how you play (casinos per se may do that, I don’t know) but that the game is fair and you can make informed decisions, ie in card games that all players have the same information which means the decks are not marked, contain a known distribution of cards,… That does not happen in inefficient markets.
> Good. There needs to be more of these layoffs in the crypto casino sector.
Incredibly apathetic and selfish to be happy about people losing their jobs and wish for even more. Doesn’t sound you really care about “gamblers”, you just want to be right. This is just sad.
The people losing their jobs have been actively harming our society for their own selfish ends without contributing anything of value. I have zero empathy for them, and if they all end up unemployed and bankrupt that would be a perfectly acceptable outcome.
It's hard to relate to this position, that sees no value in enabling people to take custody over their own money, in a form more useful than physical cash.
Peer-to-peer finance is what the crypto industry is enabling, and you really think people are worse off from being empowered in this way.
> The people losing their jobs have been actively harming our society for their own selfish ends without contributing anything of value. I have zero empathy for them, and if they all end up unemployed and bankrupt that would be a perfectly acceptable outcome.
No one says "Wall Street cashed out", they say "the market crashed".
The market gets inflated with borrowed money and the bills gets paid by retirement funds having record loses when the big ones run away with the money.
This goes in line with the same rule that 90% of these startups like this one will fail. As for crypto projects, the same is true, that 90% of them will also fail and like the survivors of the dotcom crash, only a few of them will also survive.
So the anti-crypto and pro-crypto maximalists are going to be both disappointed.
A single data point doesn’t give you any information about how much of the industry will fail. “Goes in line” —- yeah, because absolutely anything would fit.
That is assuming you have been paying attention to the recent crypto crash, which is affecting the majority of crypto-related companies and projects from DAOs to exchanges. So it is hardly a single data point.
I wonder if they will survive. They hired like crazy here in Vienna. Lots of good people which started to work there are now 2 years later at other companies.
I tried to sign up for their service 2 times. Both time it did not work. One time even after the success message after the video verification.
Still getting Newsletters which seems to get more and more irregular.
Well, we will see. Maybe cutting down will solve it for them in the long term.
Didn't they or someone on their behalf even brag a few days ago about the fact they weren't firing anyone and other crypto companies did? I'm pretty certain there was a LinkedIn post about it.
There is no real retail demand for crypto. Happens every bullrun. Retail comes in, gets a heady rush as their $5,000 becomes $20,000 (on paper) practically overnight. So they fomo in more and keep holding through the top before cashing out for less than their initial. 90% swear off crypto and never come back.
You can't have retail demand for something that's only meant to go up and do nothing else. There are no "normal" users buying NFTs because they love the art, or buying ETH because they want to use it to get overcollateralized loans on AAVE (when they can get undercollateralized loans for cheaper).
I can't understand how VCs wouldn't get something every crypto degen instinctively knows after a single bullrun.
It's hard not to see companies like these as immoral given the grift, waste, fraud, wash trading, and uselessness of the crypto space. I know some employees are true believers, but I personally find it sad to see so many engineers flock to the ponzis to try to get rich quick. There are so many better companies out there.
They cribbed a fair bit from coinbase. Some of the lines do result in a bit of an eye roll.
"We want to assure you these are one-time measures that we took to make sure Bitpanda keeps what it is and has been: a rock solid company and a great employer. "
I don't think the "great employer" definition in the normal world involves rescinding job offers etc, but it's fun to read the crypto speak.
Keep on being a "rock solid" company compared to those loser companies like AWS etc. I'd personally put crypto folks as far away from "rock solid" as possible!
Blockchain companies have been very active at hiring people for Rust positions. Getting to write actual production code is so much better experience than just studying books and tutorials that it doesn't even really compare. A month of that is easily worth more than a year of reading.
Even if those companies end up producing nothing of value (which is still not known), they will have given lots of people actual Rust experience which they can apply later on other projects.
why have companies started making blog posts about firing staff. isn't it an internal matter. are they trying to get ahead of the social media backlash, it seems these strategies are not a good idea.
if you need to layoff 20%, then do it, in a dignified way.
125 comments
[ 2.7 ms ] story [ 109 ms ] threadLooks like FTX and Binance are about to leave their competition in the dust in this crypto winter.
Coinbase seems to have thrown in the towel for now. I would have thought they would see this as an opportunity but their fiscal situation must be alot worse than they are letting on. Which is strange because I would have thought they were better capitalized that they are letting on.
We're watching as closely as we can to see if they have alot of bad loans outstanding to failing firms.
With Voyager about to go under, Celsius just hiring a firm to guide them through bankruptcy and several other minor firms already going under there will be no shortage of tech talent available to well run firms.
When we come out of this downturn in a year or two FTX and Binance are going to be even larger giants than they are now. With no real government oversite over those firms to limit their growth, the next crypto crash could be because one of those two gets into trouble.
Another dark horse candidate is Goldman Sachs, they are well capitalized. Look for them to start to buy up distressed crypto assets and go into the next bull market in(probably 2024) as a big crypto player for institutional clients, and possibly for retail under their Marcus brand.
Those two stagnated (at best) in the aughts. Google was taking Yahoo's lunch, and Microsoft had no web vision and was tied up in antitrust headaches.
For nearly half the aughts they weren’t even really competitors in the same market. It wasn’t until the latter half of the decade that Yahoo! even tried to be a search company competing with Google and Yahoo! had a definitive lead ahead of Google in mail, finance, etc for virtually all of the decade.
Design and code a Content Management System (CMS) for Binance. The CMS would used to post articles for the public. The current Binance site supports up to 17 different languages. Each article would have some translations but not all articles have all of the 17 translations. Design and code a RESTful API for the CMS.
The user of the CMS would need to input the different translations for the same article. Design a user interface to facilitate this. We would only be looking at the functionalities of the user interface, so do not spend too much time on the design aspects.
Derive your own data model as deem fit. The preferred language for backend is Java and frontend is JavaScript though you are free to choose any other languages as well as frameworks.
Submit the code as a GitHub repository and make sure that the GitHub repository is public. Remember to add a README file for instructions on how to run the application and explanations (if any).
Thing is, let it be known, every homework you do for a company lowers your salary by 3%. Unless you charge, then it doesn't, it's weird like picking up money off the street. Just bad signaling, it's against your interest.
thank you come again
interviewer: if you can explain what deadlocks are, I’ll hire you
me: hire me, and I’ll explain deadlocks
I think I could knock out a few 1999 style PHP scripts with inline HTML with an SQLite DB for fun and giggles in an afternoon.
It would do everything they ask for with minimum effort. I don't see how they could argue that you didn't 100% complete the task.
Things used to be so easy 20 years ago...
Will be actually see end of growing head counts for sake of growing them soon?
[1] https://s28.q4cdn.com/948876185/files/doc_downloads/2022/06/...
Source: know several of the largest market makers on the big retail exchanges.
I would be terrified too, if my business lost over 50% of it’s cash reserves. Or rather they still have the BTC, but it’s worth one third of peak
This is a classic mistake of banks. When allowed to do so, they think they can improve their returns by running trading desks. That's why we in the US used to have Glass-Stegall, which kept banks and brokerages separate. Because, before and after Glass-Stegall, banks got into trouble that way.
Nobody runs a pure crypto exchange that doesn't trade for their own account. Crypto exchanges are depository institutions, asset custodians, brokers, lenders, market makers, and exchanges. All those customer assets, just waiting to be exploited.
As I point out occasionally, most retail financial scams appeared in the 17th through 19th centuries, as newspapers made it possible to reach large numbers of suckers. There's not much innovation. Most of crypto is the same old scams, repackaged. Look up "bucket shop", "blind pool", "tulip mania", "Mississippi bubble", "Florida real estate scam", and "high yield investment program". Those alone cover most of crypto.
There have been overhyped tech booms many times in history, but most actually did something, such as build canals or railroads or electric utilities or networks. The crypto community has accomplished very little in the real world.
Plus, with how many regular people have lost a lot of money, and are still losing more, a major regulatory crackdown is just a matter of time now. And that will cripple most of the crypto ecosystem.
Might you or someone else explain what staking is? Is this an overloaded term in crypto? I know that there is proof of stake that is used for consensus but I'm guessing this is not the same thing? Is staking a Defi offering?
That's what they tell the suckers.
[1] https://hitbtc.com/blog/all-you-need-to-know-about-crypto-st...
Like most financial schemes, it really has nothing to do with the crypto, other than that it would be illegal to operate platforms like this with real money, since we created regulations decades ago to protect people from this.
Would the following be a correct summary then?
By holding more tokens you become a preferable verifier node because you hold more tokens. And the way you hold more tokens and burnish your reputation as a verifier is by borrowing those assets from the actual owners and then paying the asset owners double digit interest? Is this correct? The idea is that you will make enough in transaction fees on the network to payout something like 18% interest to asset owner and still make a profit?
If so this seems wildly circular.
"Staking" originally meant participating in a proof-of-stake consensus and you get rewarded by the network with the new blocks that are mined.
All the Terra / Luna / NFT / exchange "staking" was people latching onto DPoS to make their schemes sound more technologically sound. Its an overloaded term at this point thats nearing meaningless unless you are clear you mean actual proof-of-stake.
overloading technical jargon for marketing, just on its own, seems like a strong scam signal. or at least a signal to stay away
PoS is like running your own whitelabel SaaS offering.
And yes, I know, it's fighting an uphill battle to discourage the use of "staking" for lending out on a centralized platform. "Words drift in meaning, deal with it". But it's also important for people to be able to know what you mean, and there are pretty substantive differences between that kind of staking and "anything that earns a return on your coin" and it's helpful to have a separate word for it.
Staking should mean partcipating in a proof-of-stake network by using your stake to participate in block validation or delegating to someone else. In most cases you don't need to lock anything and at no point do you hand control of your funds to someone else.
The problem is that many grifters then came to use "staking" to mean all sorts of different things with the only thing being in common is, get some rewards. But I've seen things like BlockFi get described as "staking" when really its just giving your money to control of someone else and earning interest on it.
It sounds pretty much like a CD aka "Certificate of Deposit" which is a product sold by banks.
Is there an entire generation that doesn't know anyone who ever bought a CD from a bank?
These days they are a joke, but still shown on bank web pages.
Here is the list of rates from a regional bank near me:
I'd also recommend anyone shop around for CD rates. Those are hardly representative of what you can get at, say, Ally. (2.75% APY on a 5 year)
It's a crappy bet, because the upside is limited while the downside can take you to 0.
See treasurydirect.gov.
(I don't think they actually rate them? Not from the US. But in some hand-wavy approximate way, they're as good as US gov bonds since they're similarly backed. (Actually why do you have both CDs & 'treasuries'? Monetary/fiscal separation sort of thing?))
Yes, 0.10% is dramatically lower than 20% or whatever. That's my point.
And yes, FDIC insurance is a thing. That's also my point.
And yes, younger people almost certainly haven't ever owned a CD themselves, but that wasn't my (somewhat rhetorical) question.
You responded that you were surprised that something high risk / high reward was compared to a junk bond, and then compared it to a CD. It's obviously more like a junk bond than a CD, for exactly the two reasons you now mention.
https://www.coindesk.com/learn/crypto-staking-101-what-is-st...
> Similarly, when you stake your digital assets, you lock up the coins in order to participate in running the blockchain and maintaining its security. In exchange for that, you earn rewards calculated in percentage yields. These returns are typically much higher than any interest rate offered by banks.
https://www.fool.com/investing/stock-market/market-sectors/f...
> The unstaking process may not be immediate; with some cryptocurrencies, you're required to stake coins for a minimum amount of time.
https://academy.binance.com/en/articles/what-is-staking
> Enter Proof of Stake. The main idea is that participants can lock coins (their “stake”), and at particular intervals, the protocol randomly assigns the right to one of them to validate the next block.
However running a validator is hard, requires custom servers and hardware, so people simply delegate them to another validator, who does the validation on their behalf and distributes the reward to its delegators. In essense, you earn 10% ETH simply by voting a validator. Note that this IS safe and in most cases, people do get their coins and profits back and it's very secure. You can't lose money in the sense that you won't lose ETH. There are ill-minded people to steal people's funds, but that's not the general case.
Since most people only cared about the profit part, the term "staking" has since changed meaning to become anything that requires you to put coins in and get coins back. Staking UST is one case: you lend UST to the protocol and withdraw UST at any time, and the protocol prints you UST at 20% APR. There are lending protocols, airdrops requiring you to stake something, providing liquidity to collect fees, etc. And for simplicity they all become "staking".
Note that while staking is secure, it doesn't change the argument about how ETH is just junk bonds. If they offer 3% return per year, it's essentially printed money and the currency's value would decline 3% per year as well. If they lock you in for a longer period (ETH staking locks you in indefinitely until The Merge goes live for half a year), you are kept from selling your ETH and these coins are already worthless once they are unlocked. Buying ETH for staking is essentially providing liquidity for people selling ETH so they can make a quick profit.
>"So if you own 1% coin you can only run 1% validator and won't be able to flood the network."
Is this the reason that companies are pay interest is because the more coins they hold means their validator percentage in the network and so their profits go up?
Also you mention:
>"However running a validator is hard, requires custom servers and hardware, ..."
I was under the impression that PoS meant there was no need for special/custom ASICs in the same way that PoW mining has. Is that not true? What types of custom servers and hardware is necessary for participating in PoS validation?
That's about it. But the profits are usually a fixed percentage of your earnings which is the same for everyone holding the coin, so it's more like the central bank paying out interest for deposits, which does not actually increase currency value (you lose value by not depositing).
> I was under the impression that PoS meant there was no need for special/custom ASICs in the same way that PoW mining has. Is that not true? What types of custom servers and hardware is necessary for participating in PoS validation?
Usually no ASIC is necessary and in rare cases GPU can speed it up a bit. However, you often need decent amounts of RAM, CPU and disk to validate transaction validity and run smart contracts, since smart contracts handle a lot of state like balances of accounts and that has to be computed. So it takes the same amount of resources like a regular database would do.
https://archive.ph/41hMi#selection-3923.0-3923.13
Staking is roughly what he calls putting something in the box in that story
A bucket shop doesn't appear to be a scam. You go to a bucket shop and purchase a share of stock, and the bucket shop assumes the obligation to deliver you that stock on demand, but it doesn't purchase the stock right away. (It's hoping that, because you're stupid, the price of the stock will drop.)
The reason it's hard to call this a scam is that a bucket shop selling you a share of stock is economically identical to an upstanding market participant and pillar of his community selling you a call option. Or, viewed another way, it's economically identical to the bucket shop selling you a short share of stock.
That is not a difference from either the call option model or the short sale model. It's true in all "three" cases.
Furthermore, if your intention as a rope vendor is specifically to sell someone enough to hang themselves with, you're not operating a scam as you sell them the rope.
You mean it was an artifact of excessively high liquidity and high liquidity can only be explained by the fact that the interest rate is trapped at the zero lower bound as there is no market signal that tells people to reduce their degree of liquidity.
What makes you think they're interested at all?
perhaps they'd be interested in leveraging the funds of others to flip assets, for example?
That's a pretty big assumption right there.
The target customers for crypto are other investors, degens, and gamblers. Most of the money in crypto is house money, i.e. money that was made from existing crypto investments. Just see the transaction volume on OpenSea (decentralized ETH house money) vs CoinBase's NFT marketplace. Retail neither cares nor has the money for shitty jpegs.
FTX understands the target market. Which is why it has focused so aggressively on futures. You can short/long practically everything on FTX with leverage. That's the investor/degen/gambler class - the bulk of money in crypto.
Binance doesn't do anything extremely well, but whatever it does, it simply works. Withdrawals work, support is clumsy but works, perps work, spot trading works, even their awful chain, as full of scams as it might be, works.
Think about the landscape of exchanges globally. TSE, SiMex,Globex, ICE, NYSE, LIFFE LME, Eurex, etc etc etc.
If FTX is an exchange, then they make more money when volume is up and less money when it is down. Just like all exchanges.
If the holding company Alameda that owns FTX is a market maker, they make more money when volume is up, spreads are wide. They may or may not do well during herding events like crashes, but market makers don't like directional vol.
If any of these players are arbitrageurs, where do their arbs come from? Why do they persist? I think most of the edge comes from retail flow.
This is a trading business. What makes you think that any exchange has an edge that is unique in a downturn that makes it like Amazon or Microsoft? Neither of those companies run a trading exchange.
Why the romantic anthropomorpgic narrative surrounding trading exchanges? Historically it's a good but not amazing business. There is secular growth, but it tends to be highly constrained and it's a very competitive environment.
Does FTX have better infrastructure or risk management than ICE or CME? Or just better press at the moment.
The parent comment was about FTX and Binance compared to the other crypto exchanges not to the exchanges in general.
FTX claims to be way more efficient than Coinbase - having only 25 engineers compared to thousands for coinbase. This could be secret of the surviving exchanges - efficiency.
[1] https://coinmarketcap.com/rankings/exchanges/
I have heard Coingecko’s ranking eliminates some of the volume pumping tricks but have little to back up that claim: https://www.coingecko.com/en/exchanges
I have doubts about real use cases being found and regulators are clamping down on it too. People should now also have realized that it's not a hedge against the market or inflation at all.
These exchanges and crypto companies need to stop encouraging customers to buy and gamble their savings and college funds into the crypto pyramid scheme.
This needs to end.
I would not call it casino. Casinos go through regulated scrutiny to test the games probabilities are accurate so you play against math, crypto is a an unregulated market so you (probably) play against or benefit of market inefficiencies.
That's only for physical games/machines, right?
There is very little liquidity in crypto. And when one of the whales breaks rank and heads for the exit every other holder will be sitting on chips with some nominal value but absolutely no buyers.
Incredibly apathetic and selfish to be happy about people losing their jobs and wish for even more. Doesn’t sound you really care about “gamblers”, you just want to be right. This is just sad.
Peer-to-peer finance is what the crypto industry is enabling, and you really think people are worse off from being empowered in this way.
What's the difference to FAANG employees?
No one says "Wall Street cashed out", they say "the market crashed".
The market gets inflated with borrowed money and the bills gets paid by retirement funds having record loses when the big ones run away with the money.
It's the biggest ponzi of them all.
So the anti-crypto and pro-crypto maximalists are going to be both disappointed.
“This is good for bitcoin”
> “This is good for bitcoin”
And who said that?
I tried to sign up for their service 2 times. Both time it did not work. One time even after the success message after the video verification.
Still getting Newsletters which seems to get more and more irregular.
Well, we will see. Maybe cutting down will solve it for them in the long term.
You can't have retail demand for something that's only meant to go up and do nothing else. There are no "normal" users buying NFTs because they love the art, or buying ETH because they want to use it to get overcollateralized loans on AAVE (when they can get undercollateralized loans for cheaper).
I can't understand how VCs wouldn't get something every crypto degen instinctively knows after a single bullrun.
"We want to assure you these are one-time measures that we took to make sure Bitpanda keeps what it is and has been: a rock solid company and a great employer. "
I don't think the "great employer" definition in the normal world involves rescinding job offers etc, but it's fun to read the crypto speak.
Keep on being a "rock solid" company compared to those loser companies like AWS etc. I'd personally put crypto folks as far away from "rock solid" as possible!
Even if those companies end up producing nothing of value (which is still not known), they will have given lots of people actual Rust experience which they can apply later on other projects.
if you need to layoff 20%, then do it, in a dignified way.