Obviously. The only reason for them sending that tweet yesterday is if they were never seriously considering going through with the deal in the first place.
Why is this being downvoted, shorting the book of an entity you are supposed to be bailing out / in talks with has multiple historical precedents. Amaranth and JPM off the top of my head for the last time it happened.
This is crypto, there are plenty of retail 'to the moon' speculators that would be thrilled at the prospect of more sick gains. It's tulips all the way down.
FTT has thin liquidity and was already under significant selling pressure. It's highly unlikely Binance would have been able to build up a significant short position.
Is entirely fallacy/fantasy when people talks about shorting on crypto market.
You can't win shorting actual crashes in unregulated markets, the only way u win shorting in crypto is that you were lucky to guess what a whale/org was doing at the same time so pretty much a russian roulette
Marketmakers are not legit and all the movements are pretty much fabricated, its just not regulated and its obvious
we are all ignorants about the reality here, so we are all guessing
but when you have to guess stuff about the crypto market, you literally have to think the worst things or the best things and you will be right
my guess here is simple, CZ has liquidated everything that can be liquidated that doesnt make him look bad, hes deep in the very same business than FTX/Sam was, he doesnt need to look the balance sheet, chances are his balance sheets are similar or worse haha
So he probally liquidated longs if any, he probally did OTCs with other tokens/assets and just kept the FTT as a PR move to pretend he was a nice guy, anyways having an amount of $ "lost" by a token that was never worth anything is still 0 lost, he most likely got those tokens in exchange for other tokens worth nothing, or during ICOs stage so pretty much hes not losing any cash even tho you will read people saying how much he lost, remember all of that is nominal value, not real cash value at the end, the very same reason things are falling now.
If you have enough capital couldn’t you weather the artificial movements to be able to capture the natural downward movement. VTT is going to zero if VTX liquidated in bankruptcy.
> Is entirely fallacy/fantasy when people talks about shorting on crypto market.
What do you mean by this? I shorted FTT the second I saw the tweet, and then I shorted the entire cryptocurrency market. I successfully made money, so how could it be a fantasy?
You are right, but we are talking about binance shorting big amounts of tokens, not you shorting some amount in their own game
Tell me who at the same level of insider info, gonna OTC borrow you millions of FTT for you to short, when most likely that person/entity owning millions of FTT is already trying to protect their value?
You have to remember that when you short and you bet for price going down, the other side is betting for price going up or at least for the price to stay at the same levels, the person borrowing you has to be constantly doing DD to be sure that its the right moment to borrow the asset, and its pretty obvious that someone holding big amounts of FTT was/is very aware of whats comming
if I was an OTC shorter and had millions of FTT and you see Binance CEO comming to you to short, I inmediatly said no and cashed out those FTT instead of shorting, cause clearly at those levels there is certainty of what they are doing.
I only shorted FTT at first. Then I shorted BTC and BNB instead when I realized this was going to crash the market. For some reason BNB was massively overbought yesterday. Binance hype or something. Almost reached 400 USD. I shorted it at the top and watched it melt down to < 300 USD.
God I wish I could be this lucky every single time.
It works, until it doesn't. When volume drops, it's possible to harm lots of people who were short like this by pumping to force liquidation and then handling the liquidation and dumping (taking money from every side). It happened during the Luna/Terra crisis. Shorting LUNA was high risk because there were at least some players who burned others frequently on the path down.
Work at a trading firm and we saw the entire thing play out, but we're algorithmic so we weren't set up to take advantage.
Though if you're a small player, there's a lot of opportunity here. Some times, the difference between the price for liquidation and the price you can get somewhere else is high. We saw one dude make a quick $300k through a flash loan. The market isn't fully efficient yet, so this opportunity was available for 10 min before someone took it.
> there were at least some players who burned others frequently on the path down
I don't know. If there's a risk of getting liquidated during one of those minor reactionary pumps, the position is probably overleveraged to begin with. Also, do people not configure a stop loss?
Market places knows where is your stop loss... You play again them.
It should not be, but it's a scam and unregulated.
I made the painfull experience of it with a future on DJIA in 2009, and it was a regulated market place (CBOT, i think)... I was long because I supposed a reversal of the bear market. I put a stop loss at 8000$ or something. Price went just 1 tick (0.01$) under my stop loss then went up.
It happens market place members (big players or market makers ; you pay to be a market place member which give you some advantages over regular traders) have full visibility of market orders book, but not retail traders. So they have access to your stop loss order. So then can put pressure on prices whatever the direction to force you to close your trade until orders book on one side at a price level is empty and the price can only reverse course.
It's not just FTT/FTX, though. They're probably taking down others with them. Looking at the books gives you an idea of who the "others" are and how screwed they are.
SBF was the “model citizen” to USA regulators. It’s hilarious how some USA loved this known ponzi schemer while actively fighting legitimate projects like LBRY.
Why would they even consider taking them over? They killed a competitor by declaring them as insolvent. The damage has been done. The user funds SBF siphoned out of FTX aren't coming back and doubt CZ is going to refund them out of pocket IF they take them over. The tech behind FTX is probably the same or worse than what Binance has. Customer acquisition happens anyway as the people still wanting to stay active in crypto will probably go to Binance.
This reminds me of 2008, when companies were trying to get "rescued", such as Lehman, but Lehman couldn't make a compelling argument why they were worth acquiring, once the accounting books were opened.
Speculation, but consider that plausible scenario that SBF went nuclear and then CZ retaliated in what will turn into crypto mutually assured destruction.
This would (probably) be a mistake on CZ's part. Taking on FTX's customers would undoubtedly bring him more goodwill than letting its customers go down with the ship.
I mean, unless the whole thing is FUBARed, in which case, he should probably get out of crypto entirely before the whole thing crashes. But I tend to lean on the optimist side of things. :)
We (the public) don't yet know how bad it is. CEO of Coinbase, Brian Armstrong said he was also not interested in an acquisition after a small amount of DD. He said we will likely find out how bad it is eventually.
If we had one for binance, it would show a ridiculous amount of tether and other coins which they probably own a majority of, meaning their balance sheet is similarly comprised of assets they can't actually price or expect to be able to sell at market value
And surely the buck stops with the Tether Foundation, who stand ready to cash Binance out, and they won't need to dump a bunch of risky assets and possibly not net enough to meet Binance's needs
Edit: Looks like the parent commenter was referring to Binance's balance sheet, which might be what you were asking about. The balance sheet I linked is FTX+Alameda.
Why? Maybe it's a different subset of crypto users who did not want to go with binance in the first place, and are not likely to stay in binance for whatever reasons. And it's not like binance is running out of customers
I'm not sure they have a choice. Binance is leveraged to the max with tether already; they likely can't afford to pay FTX real-world currency for the purchase. They'd have to offer tether or other vaporcoins as payment, at which point FTX might as well just keep its vaporcoins instead
Interesting to see how heavily Sam Bankman-Fried dontated in the recent midterm elections in the USA. He might run out of runway before those investments pay off.
Elon: I'm backlogged with a mountain of critical work matters. ls this urgent?
Michael: Wants 1-Sb. Serious about partner w/you. Same security you own
Michael: Not urgent unless you want him to fly tomorrow. He has a window tomorrow then he's wed-Friday booked
Michael: Could do $5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works it could get us $5bn equity in an hour
Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network.
Elon: ["disliked" "Could do $5bn ..."]
Elon: So long as I don't have to have a laborious blockchain debate
Elon: Strange that Orlando declined
Elon: Please let him know that I would like to talk and understand why he declined
Elon: Does Sam actually have $38 liquid?
Michael: I think Sam has it yes. He actually said up to 10 at one point but in writing he said up to 5. He's into you. And he specifically said the blockchain piece is only if you liked it and not gonna push it. Orlando referred Sams interest to us and will be texting you to speak to say why he (Orlando) declined. We agree orlando needs to call you and explain given everything he said to us and you. Will make that happen We can push Sam to next week but I do believe you will like him. Ultra Genius and doer builder like your formula. Built FTX from scratch after MIT physics. Second to Bloomberg in donations to Biden campaign.
The only likely outcome I can see is binance taking on just a part of the rumoured $6bn hole. For example covering deposits up to $100k (or whatever number)
Earns goodwill and users while the size of the bill is smaller.
Not sure how it would work from a legal standpoint but unfortunately 6 billion is too much (and I had a majority of my net worth in FTX as a trader)
agreed - I think there's a combo of schadenfreude and "I told you so" vibes from HN, where people have been generally skeptical throughout cryptocurrency's rise in popular mindshare.
I get the same feeling and shudder whenever HN has a new thread about password mangement systems. Most of the suggestions are super fragile and so many people give bad advice that will eventually result in collossal catastrophic data loss.
> I had a majority of my net worth in FTX as a trader
As a trader myself, this lesson is part of your risk management. I have multiple accounts with amounts that I wouldn't cry if they went to zero. I trade them together, and if AMP decides they hate me because I am too tall, it doesn't change my ability to trade until that issue is resolved.
OP seems to be level-headed and rational, I'm pretty sure he'll be able to take the advice well. And the commenter you're replying to is sharing his thoughts in a non-judgmental way as well.
They allow what is known as "day trading" margins on futures which is usually some small fraction of exchange margin. They have survived for a long time, doesn't mean they won't go under, but they have no qualms about exiting your position if you are going to threaten their risk.
When SBF tweet that "FTX is fine. Assets are fine" that must have been warning enough. Exactly what LUNA and Celsius said. Can't make a warning more clear.
They had the best API offering so that’s where I started with small funds. Ramped it up to a great significant amount. Didn’t see any early signs that I should withdraw. They’ve raised billions, they’re making millions daily from fees, CEO is looking to donate a billion dollars to politicians etc.
I truly underestimated human greed where making 7 figures of profit A DAY is not enough and you still gamble with user funds.
Luckily I’m still young enough and don’t have a family and I am confident I can rebuild but man, it definitely stings.
> I truly underestimated human greed where making 7 figures of profit A DAY is not enough and you still gamble with user funds.
This is the mind boggling part to me and many others like you. How do you mess up this bad when you were on top of the world and a billionare before age 30? Was it really not enough?
Not sure which exchanges are sane anymore these days, you can rule out pretty much anything with it's own token as being too high risk, including Binance. Coinbase went too big too fast and we saw extreme greed with them going public. Kraken seem cautious overall, taking fewer risks and doing things the right way?
FWIW, the only exchanges allowed to do business with NY residents are (were?) Coinbase and Gemini. Perhaps worth looking at what the barrier to doing business is there. As other exchanges go toes up, it makes me think whatever it was might have been more useful than the kneejerk "ugh, probably some stupid government paperwork" one might first be tempted toward.
My personal crackpot theory is a lot of these people become addicted to the gamble, so following a simple sure thing plan is actually a huge turn off for them. I definitely think you see this in Elon's recent behavior, where even if he ultimately took the same strategic actions, just a tiny bit of restraint in the execution would save him vast sums of money and headache.
> Didn't see any early signs that I should withdraw...
- Double Tops btc in november 2021.
- Interest rates at record lows worldwide.
- Early signs of inflation > Rumors of fed raising interest rates & rumors of quantitative tightening.
- End of covid checks and government bailouts.
I suggest, at the very least, "Psychology of Finance" by Lars Tvede and "History of Financial Speculation" by kindleberger if you want to continue your journey in investing.
I also suggest you reading Financial Times and especially its comment section which is often more insightfull than articles themself... WSJ optional, but its comments section is trash (politicaly and economically very biased). > google bypass firewall.
I also suggest you to disconnect completelly from "assets" built and backed by hashed numbers (once you read "History of Financial Speculation", it will become clear).
Ah, the problem of shorting. Something goes down 20%, you make money. Something goes down 100%, you are theoretically supposed to make a lot of money, but instead your counterparty blows up and you lose everything.
But if there were, no one would get away with fractional reserves (at least anywhere near the reserve requirements banks that deal with dollars have). A huge reason why the FDIC works is that the fed can always bail them out in the worst case (see also: 2008). Can't do that with crypto for obvious reasons.
This regulation is only necessary because these exchanges are actually banks in disguise. They're leveraging customer deposits and taking on the risk of fractional reserve banking with none of the backstops to protect them.
Cryptocurrencies were meant to be used in a decentralized manner. These centralized pseudobanks are everything that's wrong with this space and I hope they do get regulated.
I have to admit that I like Erik Voorhees' opinion stated here, https://open.spotify.com/episode/5a0pw6MQCOOGxjSrYTPrGj, which is don't use an opaque centralized exchange but use DeFi which is transparent as it's all code that's readily available.
That may be his opinion now that the market has gone to crap, but a year ago he was telling me that Bitcoin had a 1-15% yield (presumably via exactly that sort of opaque, centralized exchange, although he was coy when I brought up counterparty risk). https://twitter.com/ErikVoorhees/status/1466541326510428160
Bitcoin is hard to wedge into DeFi, so the yields he was talking about were probably on centralized exchanges. He was likely even referring to Celsius, which has since popped. What has changed since then is DeFi tools like Thorchain single sided vault deposits that let people earn yield on Bitcoin without giving up custody. Unsurprisingly Erik has been one of the most vocal proponents of Thorchain itself.
For a really quick summary, Thorchain provides Uniswap style liquidity pools such as BTC/RUNE that allow people to do one shot trades that can be routed across major blockchains, and liquidity providers collect fees on every trade. Typically liquidity providers are also exposed to RUNE due to the nature of how XYK liquidity works. These new vaults are special because they lack RUNE exposure, but they are also only allowed to make up something like 10% of the liquidity pool, so deposits are limited.
I've been incredibly vocal about how anything promising >10% yields is a scam. It's the reason I built ponzi.finance (which never got popular, but was fun while it lasted). Yields greater than 10% are always either temporary, or straight up fraud. I'd still tend to agree with Erik though that your claim that you can't earn yield on BTC was incorrect, though the counter-party risk at the time was not ideal. Counter-party risk is, of course completely unavoidable in legacy finance systems, and the overhead costs to properly mitigate it are (IMO) unsustainable in a world with easily accessible DeFi tooling.
Counter-party risk is what makes lending useful. The lender gives up control of the resources so that the borrower can use them. This is where the risk arises from. Defi has invented a new form of lending, without counter-party risk. It's "interesting" indeed but not very useful.
>presumably via exactly that sort of opaque, centralized exchange
Obviously Erik did not mean via centralized exchanges. You can lend your Bitcoin on countless decentralized protocols for those yields- even risklessly with flash loans via a dApp like Aave. With non-risk-free lending you can assess and knowingly accept your desired level of risk via fully auditable open ledgers.
If I lend Bitcoin on a decentralized protocol, who has the private key to the wallet I transfer the Bitcoin to? At some point I'm still trusting a centralized bridge, right?
You still hold the keys and can withdraw at any time. That's the point if non-custodial DeFi.
If you withdraw more than your interest and in some other crypto than your collateral then your loan now has leverage. During that particular withdraw transaction you will have signed some logic which can automatically liquidate your lent crypto if the amount you withdrew (minus interest) becomes worth less than your collateral.
Until that pre-signed liquidation transaction executes you are fully in control of the balance and keys.
The difference in fees and throughput of a DEX and something like FTX or Binance (or even Coinbase / Kraken) is so enormous that there isn't a difference.
Normal exchanges don't go bust all the time, it's not rocket science.
True. But getting FDIC coverage is a privilege which certain entities have earned as a result of compliance with an extensive regulatory apparatus whose goal is the stability of the financial system.
Crypto entities haven't earned that privilege yet, and are quite commonly openly antagonistic to any regulation at all.
We really don't need taxpayer money insuring speculative crypto operations. It's also bad for crypto in the long run, as it makes it more dependent on centralized, govt-backed intermediaries. Decentralized trust-less/minimized exchanges are the ultimate goal, but they're hard to do. Removing incentive to continue innovating on that front is harmful to crypto in the long run.
Unless Binance does this as a unilateral act of goodwill, it would be difficult for them to acquire FTX in a way that pays out to customers while stiffing lenders and shareholders.
Those credits would become liabilities. By taking them on, Binance would go from solvent to insolvent, using the strict definition of "assets < liabilities". Goodwill alone won't bring the money back.
You can stiff shareholders. They know the risk. They are getting near zero in all scenarios including buyout and liquidation. Buyout they may get some cents on the dollar and liquidation they get zero.
They will immediately be sued by shareholders. So you can stiff them and then play with them in court and see if that's cheaper. all for what? taking billions in someone else's debt? Whats the upside?
zero percent of some other insolvent company's liabilities? That's the right amount of someone else's liabilities to volunteer to take. Again what's the upside of taking an insolvent exchange when you already are the default competition to that exchange? Why pay money to fund the competitor's failure?
if binance assumes $6b in liabilities for no gain they'll be acting against their shareholders best interest and be on the way to bankruptcy anyways.
No one here can say what the upside of assuming all those liabilities is. Aside from 'goodwill' and 'the entire crypto market will crash', what actual reason is there for binance to buy an insolvent exchange?
This is why they're only trying to buy non-US operations. Binance is a fraud too; they invented the "I can use my exchange to create infinite long leverage" business model of apparently every crypto exchange.
Binance has never used user deposits for investing and they are leading the industry in transparent proof of funds with their open source proof of reserves protocol.
I am concerned about their near new monopoly. But alleging that Binance is involved in these money printing shenanigans is simply baseless.
> I am concerned about their near new monopoly. But alleging that Binance is involved in these money printing shenanigans is simply baseless.
Can I ask why you are concerned? That they start charging more fees? Isn't crypto decentralized where you don't need to use anyone and it doesn't matter where you live? I don't know a lot about how all this works but isn't the point of crypto that you are divorced from any sort of authority?
The question is if binance has the $$. They're doing the same exact thing FTX did, but using tether instead. They truly might not have the money to plug that hole.
My guess is that binance just wants to take down a competitor. They publicly started the FTX bank run by announcing they were going to dump FTT, after all.
From what I read, CZ liquidated his holdings of FTX's primary currency, which crashed its value. If that's the case, the "value" was due to scarcity. This "money" isn't gold-backed; it didn't "go" anywhere. It was a balloon. It deflated.
There was no real money to begin with. If I create 1,000 tokens out of thin air and sell one to a friend for $1,000, I don't suddenly have $999,000 in net worth despite what crypto people try to claim.
They pumped the coins on the way up - Google willybot - which sucked retail money in. The smart exchange fraudsters cashed out on the way up. The uber-greedy exchange fraudsters held on thinking they could get more $$ if the price goes up, only to see that the price didn't go up, causing balance sheet holes which result in their demise a la ftx
Probably short term high yield bonds. You’ll need to assume more risk to get that extra 1-2%. CD and treasury is 0 risk so if you want more that you need to assume risk premium.
You don't think he sold his shares in some of the investment rounds? Adam Neumann of WeWork is still billionaire even though WeWork went bust. These scams won't stop till someone is prosecuted. SBF stated that VTX didn't trade customer assets and that VTX was just a custodian, he committed textbook wire fraud.
Please don't post like this to HN. You may not owe billionaires or former billionaires better, but you owe this community better if you're participating in it.
I'm just a fly on the wall with all the crypto drama but i thought Binance bailing out FTX was mainly to protect Binance and not just good will. I guess Binance figures they can survive without them.
yeah didn't they precipitate the crash by posting that they were doing thing similar to Luna, and then once the thing is crashing they say they'll buy it, and now they might not even buy it, I'm sure there's a lot of shit going on lol
More than that. Their first move was cutting trading fees, which made FTT worthless (it was useful before for traders to use to reduce their trading fees but with free trading on Binance that became worthless). After Binance made FTT worthless, they then started to sell theirs off (knowing that it's worthless because it's a race to low/free fees). A bank run would have been inevitable anyway as large traders would rationally sell their FTT and move over to Binance for free trading (they pay zero fees and can pocket the money they can get from their FTT). CZ's tweet just accelerated things.
I think cz basically has sbf trapped. I don't even think anyone else can come and save them even if they wanted to cause binance has so much ftt. The moment whoever leaked to coindesk that Alameda was propped up entirely by ftt they were screwed
Binance is almost certainly facing the same situation as FTX, just without the bank run. They're leveraged to the teeth with tether, which they similarly treat as a crypto leverage flywheel.
Binance just has first mover advantage; as a result of inventing this "my coin can just be printed forever" crypto exchange model, they have more use and $$ which gives them a better cushion. But it's still only a cushion.
As far as everyone knew FTX was doing fine until a few days ago. Binance is inevitably going to follow a similar path. If you're using a currency/holding as leverage that can go to $0 overnight, you're far from in a good position.
Ok I’m looking for a word or idiom where mismanaged businesses without money fail, no matter how big they are or how many other businesses that failure will pull down
Machiavellian is such an odd word. People use it to mean mendacious, cunning, self-serving...but Machiavelli himself spent his later years in political exile.
His seminal work reads like a groveling apology masquerading as advice to the politicians who had banished him.
IMO, the word works fine for describing someone who gambled on their own dubious advice and lost. Even moreso if the loss stems from a cyclical event, like the boom/bust nature of financial institutions which let the Medicis buy their way to political power in the 1400s.
A winter for sure, but likely shorter than 5 assuming overall economy isn't going to be stuck in a depression. Crypto winters have been getting shorter and shorter thanks to increased awareness and increased participation.
1) Big assumption there about the economy not getting stuck in a depression. We're still raising interest rates. It's just the beginning.
2) Crypto winters have become shorter? Sure. But have also become more extreme, with deeper and more sudden losses.
Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset.
>Big assumption there about the economy not getting stuck in a depression.
The political cost of being in a depression is far too severe for those in power to not prevent it. They are armed with far more tools and knowledge today than 1929. This will be merely yet another recession in a long history of human society oscillations.
>Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset.
I do agree with that, but it's a result of crypto being played by the same people who played tech stocks and fair weather assets. The OG evangelists who saw it represent the antithesis of the current world order have pretty much disappeared as crypto picked up attention from VCs.
>> Big assumption there about the economy not getting stuck in a depression. We're still raising interest rates. It's just the beginning.
On the contrary, the assumption seems to be on your part. You say "it's just the beginning" but the Fed has already been signaling that they will slow down and then cease the interest rate increases over the next several months.
Question from someone who hasn't been involved in crypto since baby was born in 2021:
We all know that this can happen to centralized exchanges and using a DEX will protect your assets (the ones that don't go to $0 on their own like LUNA and FTT).
In the past, trading was always much more expensive due to the blockchain overhead compared to trading on a CEX, not to mention liquidity problems with smaller alts and DEXs.
Is this still the case? Do folks day trade using DEXs for small amounts or are they still limited to longer-term trading due to the overhead?
DEX volume seems to be around 10-20% of CEX volume. But CEX is easier to overstate as it's cheap, sometimes commission-less. While DEX volume always carries a cost.
DEX market share as a volume was 25% - 33% of spot market during the peak. It might have taken a hit since Terra went down, though.
For some trading pair likes ETH/USD it is actually cheaper to trade on DEXes (Uniswap v3) where you get 0.05% fee as opposite to Coinbase that charges you 0.6%.
The events like FTX should prod the markets more towards DEXes. Also now there are futures DEXes available like dYdX, Perp.fi and others making it possible for more professinal trades to utilise DEXes.
> Is this still the case? Do folks day trade using DEXs for small amounts or are they still limited to longer-term trading due to the overhead?
I'd like an answer to this too.
I've been dollar cost averaging into BTC and ETH since the prices are low. But at the same time every exchange I see has fees that eat a large percentage. I know Coinbase allows you lower fees if you're trading big money each month, but I'm not doing that.
blockspace is plentiful and on every chain that isn't Ethereum mainnet, small amounts are traded, a lot of financial activity occurs on Solana at extremely high volume - with the predictable consensus, security and uptime compromises necessary to do that
it also occurs on Ethereum Layer2's and other EVMs
Generally DEX will be more expensive. However big part of DEXes costs, which are gas fees, are a flat fee, so if you move large amounts of money it's fairly cheap as a percentage.
DEXes do not have to be expensive at all. This is just a side effect of most people building the wrong stuff on the wrong "blockchain".
It seem quite obvious to me that a DEX should be somewhere where there are cheap and fast transactions.
> It seem quite obvious to me that a DEX should be somewhere where there are cheap and fast transactions.
Interesting, I would have thought that Centralized exchanges would be cheaper and faster.
Cheaper because there are no block chain transaction fees. So assuming a DEX and CEX can charge the same fee structure, then CEX's should win as there is no exchange fee added to each transaction.
On chains like ETH that matters alot if you trade alot.
And same for speed. On a CEX a trade is a database update, on a DEX its a blockchain update. Hard to see how the later can be as fast as the former.
Why should a centralized exchange be cheaper? There is always a middlemen who removes value from the system.
>...then CEX's should win as there is no exchange fee added to each transaction.
The other way around, the DEX should win as there is no fee at all.
If you could make a decentral Ebay there would be no Ebay to take a part of your profit.
The problem with transaction fees in many blochchains is that they actually replaced the middlemen with a decentralized middlemen(s) (the miners/stakes/node operators etc.) Now you have a system operated by people who want high fees and user who want low fees.
They operators cant really collude because they compete but they know low fees would hurt them all so they basically form an oligopoly without even talking with each other.
Ideal the system should be operated by the user so they would all want fees to be low.
I dont know if any such system exists but I know the XRPL solved the problem by burning the fees so node operator have no incentive for high fees. This results in a typical Tx cost of less than $0.0001 USD. Any offer on the DEX is just a special transaction and does not cost anything extra.
The fee is only a negative incentive so people dont spam transaction.
>And same for speed. On a CEX a trade is a database update, on a DEX its a blockchain update. Hard to see how the later can be as fast as the former.
This is true a CEX will definitely be faster with current tech and I dont know if that will ever change but for manual trading this is not really a problem. XRPL DEX executes orders about every 3-4 seconds and the consensus mechanism does not allow front-running.
> The problem with transaction fees in many blochchains is that they actually replaced the middlemen with a decentralized middlemen(s) (the miners/stakes/node operators etc.) Now you have a system operated by people who want high fees and user who want low fees. They operators cant really collude because they compete but they know low fees would hurt them all so they basically form an oligopoly without even talking with each other.
Trustless distributed consensus is expensive - running chain validation isn't free, and there's a tradeoff where the cheaper you make it the easier it becomes to attack. That's why this stuff ends up costing more than a traditional middleman who can use a cheaper datastore and consenus mechanism.
Consensus is actually very very cheap if its not done with PoW or similar consensus "tech".
Distribution isn't cheap because obviously 2 identical servers cost twice as much as one. But this comparison isn't actually applicable to real world use. A centralized system that wants to have high uptime and reliability does need multiple server too. Most centralized system do not reach the kind of reliability "blockchains" can have because from a cost-benefit point of view it just does not make sense. 99.999% uptime or about 5.5 minutes downtime per year is very expensive and very few public system come anywhere close to this.
>...there's a tradeoff where the cheaper you make it the easier it becomes to attack
That is actually a pseudo-math-security coming form the early days of Bitcoin.
Yes, if you double the number of nodes the system is arguably more secure (if the nodes are actually operated by different entities) and it costs twice as much to run BUT there is no point to endlessly increase the number of nodes. Less nodes but strategically placed around the world operated by different entities is way way more efficient and cost way less than the blind "more is better" approach.
Some quick back-of-the-envelope calculation:
1 node hardware + energy and maintenance cost per year $100k USD.
50 such severs distributed all over the world.
This system would therefore cost about 5 million per year.
Sounds like a lot but assume there are 1 million transactions per day that would mean 1 Tx cost only $0.0137.
Obviously more Tx/d would reduce the price per Tx because operation cost cost does not grow at the same rate.
Give $0.0137 USD to the operators for each Tx sound like a good idea but most system also give the operators the power to change that price, which is comically stupid.
The reason Tx fees on some blockchains are order of magnitudes higher, is because of bad design, completely pointless levels of redundancy, and most importantly because the operators do make huge profits.
Its only logical that they would double the fee if that reduced the number of Tx by less than 50%. They dont care if you cant use the system anymore because the fees are too high for you they only care about the sum of all fees.
Imagine HN but every comment would cost money and the operator would want to make the maximum profit possible.
You could plot the average number of comment at a given cost and find the price that leads to the maximum profit.
One thing is for sure, comments would not be cheap.
> Cheaper because there are no block chain transaction fees. So assuming a DEX and CEX can charge the same fee structure, then CEX's should win as there is no exchange fee added to each transaction.
Sorry I meant block chain transaction fee, not exchange fee, I mistyped the second instance.
Have a look at https://news.ycombinator.com/item?id=33536736
There are ofc other solutions where L1 is cheap, fast and secure, Ethereum is just really not the right tech for a DEX.
You can trade on the XRPL DEX[1] (The oldest DEX) essentially for free* since it went online. The DEX works like a central limit order book which limits the way you can trade. There are also liquidity problems for many currency pairs as well as counter-party risk if you trade/hold IOUs with a counterpart like for example Gatehub USD stable coins (Counter-party here would be Gatehub so if they go bust Gatehub USD is likely going to be stable at zero).
For a more advanced use of the XRPL DEX there is Sologenic[2] which is build on top of the XRPL DEX.
So due diligence showed how big a hole FTX is in. No surprise. As I said yesterday, about 50% of announce M&A deals fall through. This deal looked unlikely to succeed. If FTX was out of cash but had a lot of money tied up in things that are slow to sell, like factories or real estate, a merger would make sense. But this is crypto. No big tangible assets. If FTX is well into negative territory, there's no hope.
Next stop for FTX is bankruptcy.
Does FTX.us have any exposure to FTX.intl? They're not supposed to. But do they?
The SEC and CFTC are now investigating to find out.[1] Bloomberg: "US financial regulators are investigating whether beleaguered crypto-exchange FTX.com properly handled customer funds, as well as its relationship with other parts of Sam Bankman-Fried’s crypto empire..." In other crypto collapses, we've seen "assets" that were actually loans to affiliated parties. Loans that became worthless.
At FTX's web site, "https://ftx.com/intl", there is no mention of any problems. Typical.
How can DD find a hole within a day of announcing? It seems too fast. To me, I assume it's CZ getting FTX to explode and then be the firm everyone comes to without having to acquire them.
Edit: Fair enough, thanks for the input repliers! I thought DD was a much slower event to prepare this information and get legal stuff set up with NDAs etc..
We'll see, but I think you can ask for some topline numbers and evaluate if it's even worth digging deeper. I'm sure this is not about accounting for a million, or two, or even a hundred.
"So, step one, let's see your top-level balance sheet, you know, assets and liabilities."
"Sure, we have a notional $1 billion in a combination of junk bonds that have already crashed to a market value of $25 million and other cryptocurrencies worth another nominally $15 million as long as we never try to actually sell them, and we have $1.4 billion in concrete dollar liabilities."
Numbers completely made up, just to be clear.
You can investigate that until you're blue in your face and apply all the nuance in the world to it, that's never going to make any sense.
Also, I'd say Binance is well aware of the message the speed is sending. I don't think that's a mistake. This sort of signalling in "the metadata" of a message happens all the time. You can decide whether or not you believe it.
A billion dollar assets/liabilities mismatch? I'd bet that's quite easy to find.
Honestly, with all the market info. that Binance has on their hands, I'm sure they already knew where to look at, LOL. They were just having fun with SBF.
Maybe that was Option A, while Option B was "spend a couple billion dollars fixing the mess these kids made while still seeing 30% of our Crypto assets disappear ...". They chose A.
They're also now the only big player standing in the game, they're having fun already.
> How can DD find a hole within a day of announcing? It seems too fast.
CZ: “Can I see your balance sheet? Oh, it says here you have $10B in assets and $16B in liabilities. Welp, good luck finding a buyer, I withdraw my LOI to purchase FTX”
It's still shocking because aside from anything else, CZ must know that FTX dying is going to be massive blow to the whole industry. Like Lehman and Bear Stern's but with no Fed or Treasury bailout.
Practically every crypto organisation has been planning on offering some kind of proof of how good its reserves are, real soon now, right up until it went bankrupt.
The main discussion was at https://news.ycombinator.com/item?id=33533088 but since the bloomberg.com article has more background, I think we can merge those comments hither. Thanks!
445 comments
[ 3.6 ms ] story [ 323 ms ] threadIs entirely fallacy/fantasy when people talks about shorting on crypto market.
You can't win shorting actual crashes in unregulated markets, the only way u win shorting in crypto is that you were lucky to guess what a whale/org was doing at the same time so pretty much a russian roulette
Marketmakers are not legit and all the movements are pretty much fabricated, its just not regulated and its obvious
but when you have to guess stuff about the crypto market, you literally have to think the worst things or the best things and you will be right
my guess here is simple, CZ has liquidated everything that can be liquidated that doesnt make him look bad, hes deep in the very same business than FTX/Sam was, he doesnt need to look the balance sheet, chances are his balance sheets are similar or worse haha
So he probally liquidated longs if any, he probally did OTCs with other tokens/assets and just kept the FTT as a PR move to pretend he was a nice guy, anyways having an amount of $ "lost" by a token that was never worth anything is still 0 lost, he most likely got those tokens in exchange for other tokens worth nothing, or during ICOs stage so pretty much hes not losing any cash even tho you will read people saying how much he lost, remember all of that is nominal value, not real cash value at the end, the very same reason things are falling now.
> Is entirely fallacy/fantasy when people talks about shorting on crypto market.
What do you mean by this? I shorted FTT the second I saw the tweet, and then I shorted the entire cryptocurrency market. I successfully made money, so how could it be a fantasy?
Tell me who at the same level of insider info, gonna OTC borrow you millions of FTT for you to short, when most likely that person/entity owning millions of FTT is already trying to protect their value?
You have to remember that when you short and you bet for price going down, the other side is betting for price going up or at least for the price to stay at the same levels, the person borrowing you has to be constantly doing DD to be sure that its the right moment to borrow the asset, and its pretty obvious that someone holding big amounts of FTT was/is very aware of whats comming
if I was an OTC shorter and had millions of FTT and you see Binance CEO comming to you to short, I inmediatly said no and cashed out those FTT instead of shorting, cause clearly at those levels there is certainty of what they are doing.
God I wish I could be this lucky every single time.
Work at a trading firm and we saw the entire thing play out, but we're algorithmic so we weren't set up to take advantage.
Though if you're a small player, there's a lot of opportunity here. Some times, the difference between the price for liquidation and the price you can get somewhere else is high. We saw one dude make a quick $300k through a flash loan. The market isn't fully efficient yet, so this opportunity was available for 10 min before someone took it.
> there were at least some players who burned others frequently on the path down
I don't know. If there's a risk of getting liquidated during one of those minor reactionary pumps, the position is probably overleveraged to begin with. Also, do people not configure a stop loss?
It should not be, but it's a scam and unregulated.
I made the painfull experience of it with a future on DJIA in 2009, and it was a regulated market place (CBOT, i think)... I was long because I supposed a reversal of the bear market. I put a stop loss at 8000$ or something. Price went just 1 tick (0.01$) under my stop loss then went up.
It happens market place members (big players or market makers ; you pay to be a market place member which give you some advantages over regular traders) have full visibility of market orders book, but not retail traders. So they have access to your stop loss order. So then can put pressure on prices whatever the direction to force you to close your trade until orders book on one side at a price level is empty and the price can only reverse course.
He very much wasn't. Probes had been ongoing for months [1].
[1] https://www.bloomberg.com/news/articles/2022-11-09/us-probes...
This reminds me of 2008, when companies were trying to get "rescued", such as Lehman, but Lehman couldn't make a compelling argument why they were worth acquiring, once the accounting books were opened.
They are the biggest exchange now, they gotta look like they care and tried to help so they can attract all the ones who need a new home
You still dont get crypto dinamics, is not about the tech, is about how much money you can extract from people trusting you
So far it has cost them a couple of tweets.
Binance or CZ paid never paid face cash value for any those tokens, simple as that.
And most important, he hasn't purchase FTX. So it was just tweets and have your PR team contact major crypto news sites
When you are the biggest shop at the fair you wanna keep the festival going as well.
Worded like that you make it sound like that's a lie.
CZ didn't declare them insolvent. He just made the fact public.
Binance was the little boy.
”The survival is not a zero sum games. For banks to survive it is beneficial to other banks to survive as well.”
Sounds like liabilities exceeded assets
Source: https://twitter.com/cobie/status/1590384255091499008
Could be fake.
Edit: Looks like the parent commenter was referring to Binance's balance sheet, which might be what you were asking about. The balance sheet I linked is FTX+Alameda.
https://www.washingtonpost.com/politics/interactive/2022/top...
Michael: Sam Bankman Fried is why I'm calling https://twitter.com/sbf_ftx/status/1514588820641128452 https://www.vox.com/platform/amp/recode/2021/3/20/22335209/s... https://ftx.us
Elon: ??
Elon: I'm backlogged with a mountain of critical work matters. ls this urgent?
Michael: Wants 1-Sb. Serious about partner w/you. Same security you own
Michael: Not urgent unless you want him to fly tomorrow. He has a window tomorrow then he's wed-Friday booked
Michael: Could do $5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works it could get us $5bn equity in an hour
Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network.
Elon: ["disliked" "Could do $5bn ..."]
Elon: So long as I don't have to have a laborious blockchain debate
Elon: Strange that Orlando declined
Elon: Please let him know that I would like to talk and understand why he declined
Elon: Does Sam actually have $38 liquid?
Michael: I think Sam has it yes. He actually said up to 10 at one point but in writing he said up to 5. He's into you. And he specifically said the blockchain piece is only if you liked it and not gonna push it. Orlando referred Sams interest to us and will be texting you to speak to say why he (Orlando) declined. We agree orlando needs to call you and explain given everything he said to us and you. Will make that happen We can push Sam to next week but I do believe you will like him. Ultra Genius and doer builder like your formula. Built FTX from scratch after MIT physics. Second to Bloomberg in donations to Biden campaign.
https://danluu.com/elon-twitter-texts/#62
Earns goodwill and users while the size of the bill is smaller.
Not sure how it would work from a legal standpoint but unfortunately 6 billion is too much (and I had a majority of my net worth in FTX as a trader)
As a trader myself, this lesson is part of your risk management. I have multiple accounts with amounts that I wouldn't cry if they went to zero. I trade them together, and if AMP decides they hate me because I am too tall, it doesn't change my ability to trade until that issue is resolved.
Edit: flagged??? huh...
I truly underestimated human greed where making 7 figures of profit A DAY is not enough and you still gamble with user funds.
Luckily I’m still young enough and don’t have a family and I am confident I can rebuild but man, it definitely stings.
Good luck.
This is the mind boggling part to me and many others like you. How do you mess up this bad when you were on top of the world and a billionare before age 30? Was it really not enough?
Not sure which exchanges are sane anymore these days, you can rule out pretty much anything with it's own token as being too high risk, including Binance. Coinbase went too big too fast and we saw extreme greed with them going public. Kraken seem cautious overall, taking fewer risks and doing things the right way?
Hard to say for sure.
I also suggest you reading Financial Times and especially its comment section which is often more insightfull than articles themself... WSJ optional, but its comments section is trash (politicaly and economically very biased). > google bypass firewall.
I also suggest you to disconnect completelly from "assets" built and backed by hashed numbers (once you read "History of Financial Speculation", it will become clear).
Cryptocurrencies were meant to be used in a decentralized manner. These centralized pseudobanks are everything that's wrong with this space and I hope they do get regulated.
For a really quick summary, Thorchain provides Uniswap style liquidity pools such as BTC/RUNE that allow people to do one shot trades that can be routed across major blockchains, and liquidity providers collect fees on every trade. Typically liquidity providers are also exposed to RUNE due to the nature of how XYK liquidity works. These new vaults are special because they lack RUNE exposure, but they are also only allowed to make up something like 10% of the liquidity pool, so deposits are limited.
I've been incredibly vocal about how anything promising >10% yields is a scam. It's the reason I built ponzi.finance (which never got popular, but was fun while it lasted). Yields greater than 10% are always either temporary, or straight up fraud. I'd still tend to agree with Erik though that your claim that you can't earn yield on BTC was incorrect, though the counter-party risk at the time was not ideal. Counter-party risk is, of course completely unavoidable in legacy finance systems, and the overhead costs to properly mitigate it are (IMO) unsustainable in a world with easily accessible DeFi tooling.
Obviously Erik did not mean via centralized exchanges. You can lend your Bitcoin on countless decentralized protocols for those yields- even risklessly with flash loans via a dApp like Aave. With non-risk-free lending you can assess and knowingly accept your desired level of risk via fully auditable open ledgers.
If you withdraw more than your interest and in some other crypto than your collateral then your loan now has leverage. During that particular withdraw transaction you will have signed some logic which can automatically liquidate your lent crypto if the amount you withdrew (minus interest) becomes worth less than your collateral.
Until that pre-signed liquidation transaction executes you are fully in control of the balance and keys.
Normal exchanges don't go bust all the time, it's not rocket science.
Crypto entities haven't earned that privilege yet, and are quite commonly openly antagonistic to any regulation at all.
Unless Binance does this as a unilateral act of goodwill, it would be difficult for them to acquire FTX in a way that pays out to customers while stiffing lenders and shareholders.
gift humans credits on new exchange.
if binance assumes $6b in liabilities for no gain they'll be acting against their shareholders best interest and be on the way to bankruptcy anyways.
No one here can say what the upside of assuming all those liabilities is. Aside from 'goodwill' and 'the entire crypto market will crash', what actual reason is there for binance to buy an insolvent exchange?
There is a reason why no one is acquiring ponzi schemes.
I am concerned about their near new monopoly. But alleging that Binance is involved in these money printing shenanigans is simply baseless.
I’d be concerned if the “last man standing”[0] wasn’t the most responsible one.
You’d think we, collectively as a society, learned our lesson from the Wild Cat banking days but, nope, apparently not.
[0] I do find it funny you have to use quotes around a common saying because someone will say “how do you know they identify as male?”
Can I ask why you are concerned? That they start charging more fees? Isn't crypto decentralized where you don't need to use anyone and it doesn't matter where you live? I don't know a lot about how all this works but isn't the point of crypto that you are divorced from any sort of authority?
My guess is that binance just wants to take down a competitor. They publicly started the FTX bank run by announcing they were going to dump FTT, after all.
Binance has its own dollar based stablecoin, BUSD.
They may be exterritorial to the US. So was Silk Road.
The reason partial deposit insurance works in commercial banks is that the ground rules are set from the start.
Where do you think it went?
They pumped the coins on the way up - Google willybot - which sucked retail money in. The smart exchange fraudsters cashed out on the way up. The uber-greedy exchange fraudsters held on thinking they could get more $$ if the price goes up, only to see that the price didn't go up, causing balance sheet holes which result in their demise a la ftx
Not as fun admittedly as gambling, but commas are commas. Wealth is sticky is this comment’s thesis.
[1]: https://www.cnbc.com/2022/05/13/robinhood-shares-jump-after-...
https://www.schwab.com/cd-rates-test
https://www.bloomberg.com/news/articles/2022-11-09/us-probes...
https://news.ycombinator.com/newsguidelines.html
I fully expect CZ to say that the hole was too big and that customers are now suffering due to FTXs recklessness
It might have won over some volume but it's not like FTXs volume dropped to zero overnight because of it
Binance just has first mover advantage; as a result of inventing this "my coin can just be printed forever" crypto exchange model, they have more use and $$ which gives them a better cushion. But it's still only a cushion.
Just pure Machiavellian outcomes
Leaving only more resilient ones in their wake
Let me know if you know a word for that
His seminal work reads like a groveling apology masquerading as advice to the politicians who had banished him.
IMO, the word works fine for describing someone who gambled on their own dubious advice and lost. Even moreso if the loss stems from a cyclical event, like the boom/bust nature of financial institutions which let the Medicis buy their way to political power in the 1400s.
Bailouts are good when a private company does it (with money slurped up from sovereign wealth funds and pension plans)
/s
Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset.
The political cost of being in a depression is far too severe for those in power to not prevent it. They are armed with far more tools and knowledge today than 1929. This will be merely yet another recession in a long history of human society oscillations.
>Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset.
I do agree with that, but it's a result of crypto being played by the same people who played tech stocks and fair weather assets. The OG evangelists who saw it represent the antithesis of the current world order have pretty much disappeared as crypto picked up attention from VCs.
On the contrary, the assumption seems to be on your part. You say "it's just the beginning" but the Fed has already been signaling that they will slow down and then cease the interest rate increases over the next several months.
We all know that this can happen to centralized exchanges and using a DEX will protect your assets (the ones that don't go to $0 on their own like LUNA and FTT).
In the past, trading was always much more expensive due to the blockchain overhead compared to trading on a CEX, not to mention liquidity problems with smaller alts and DEXs.
Is this still the case? Do folks day trade using DEXs for small amounts or are they still limited to longer-term trading due to the overhead?
DEX volume seems to be around 10-20% of CEX volume. But CEX is easier to overstate as it's cheap, sometimes commission-less. While DEX volume always carries a cost.
For some trading pair likes ETH/USD it is actually cheaper to trade on DEXes (Uniswap v3) where you get 0.05% fee as opposite to Coinbase that charges you 0.6%.
The events like FTX should prod the markets more towards DEXes. Also now there are futures DEXes available like dYdX, Perp.fi and others making it possible for more professinal trades to utilise DEXes.
I think the only synthetic, or fractionally backed stables left are Ohm and Frax. They do not have any significant market share.
Most volume is in
- USDT/USDC pairs
- ETH pairs
- BNB pairs
I run a website that tracks this stuff:
https://tradingstrategy.ai/trading-view/exchanges
I'd like an answer to this too.
I've been dollar cost averaging into BTC and ETH since the prices are low. But at the same time every exchange I see has fees that eat a large percentage. I know Coinbase allows you lower fees if you're trading big money each month, but I'm not doing that.
it also occurs on Ethereum Layer2's and other EVMs
Interesting, I would have thought that Centralized exchanges would be cheaper and faster.
Cheaper because there are no block chain transaction fees. So assuming a DEX and CEX can charge the same fee structure, then CEX's should win as there is no exchange fee added to each transaction.
On chains like ETH that matters alot if you trade alot.
And same for speed. On a CEX a trade is a database update, on a DEX its a blockchain update. Hard to see how the later can be as fast as the former.
>...then CEX's should win as there is no exchange fee added to each transaction.
The other way around, the DEX should win as there is no fee at all. If you could make a decentral Ebay there would be no Ebay to take a part of your profit.
The problem with transaction fees in many blochchains is that they actually replaced the middlemen with a decentralized middlemen(s) (the miners/stakes/node operators etc.) Now you have a system operated by people who want high fees and user who want low fees. They operators cant really collude because they compete but they know low fees would hurt them all so they basically form an oligopoly without even talking with each other.
Ideal the system should be operated by the user so they would all want fees to be low. I dont know if any such system exists but I know the XRPL solved the problem by burning the fees so node operator have no incentive for high fees. This results in a typical Tx cost of less than $0.0001 USD. Any offer on the DEX is just a special transaction and does not cost anything extra. The fee is only a negative incentive so people dont spam transaction.
>And same for speed. On a CEX a trade is a database update, on a DEX its a blockchain update. Hard to see how the later can be as fast as the former.
This is true a CEX will definitely be faster with current tech and I dont know if that will ever change but for manual trading this is not really a problem. XRPL DEX executes orders about every 3-4 seconds and the consensus mechanism does not allow front-running.
Trustless distributed consensus is expensive - running chain validation isn't free, and there's a tradeoff where the cheaper you make it the easier it becomes to attack. That's why this stuff ends up costing more than a traditional middleman who can use a cheaper datastore and consenus mechanism.
Consensus is actually very very cheap if its not done with PoW or similar consensus "tech". Distribution isn't cheap because obviously 2 identical servers cost twice as much as one. But this comparison isn't actually applicable to real world use. A centralized system that wants to have high uptime and reliability does need multiple server too. Most centralized system do not reach the kind of reliability "blockchains" can have because from a cost-benefit point of view it just does not make sense. 99.999% uptime or about 5.5 minutes downtime per year is very expensive and very few public system come anywhere close to this.
>...there's a tradeoff where the cheaper you make it the easier it becomes to attack
That is actually a pseudo-math-security coming form the early days of Bitcoin. Yes, if you double the number of nodes the system is arguably more secure (if the nodes are actually operated by different entities) and it costs twice as much to run BUT there is no point to endlessly increase the number of nodes. Less nodes but strategically placed around the world operated by different entities is way way more efficient and cost way less than the blind "more is better" approach.
Some quick back-of-the-envelope calculation:
1 node hardware + energy and maintenance cost per year $100k USD. 50 such severs distributed all over the world.
This system would therefore cost about 5 million per year. Sounds like a lot but assume there are 1 million transactions per day that would mean 1 Tx cost only $0.0137. Obviously more Tx/d would reduce the price per Tx because operation cost cost does not grow at the same rate.
Give $0.0137 USD to the operators for each Tx sound like a good idea but most system also give the operators the power to change that price, which is comically stupid.
The reason Tx fees on some blockchains are order of magnitudes higher, is because of bad design, completely pointless levels of redundancy, and most importantly because the operators do make huge profits.
Its only logical that they would double the fee if that reduced the number of Tx by less than 50%. They dont care if you cant use the system anymore because the fees are too high for you they only care about the sum of all fees.
Imagine HN but every comment would cost money and the operator would want to make the maximum profit possible. You could plot the average number of comment at a given cost and find the price that leads to the maximum profit. One thing is for sure, comments would not be cheap.
Sorry I meant block chain transaction fee, not exchange fee, I mistyped the second instance.
For a more advanced use of the XRPL DEX there is Sologenic[2] which is build on top of the XRPL DEX.
[1] https://xrpl.org/decentralized-exchange.html [2] https://sologenic.org/trade
*Free as in no one earns money from your usage. There is a tiny fee burnt to prevent spam for each offer/transaction. A typical fee is under $0.0001.
Even leveraged trades are very efficient on a decentralized platform like GMX.
Next stop for FTX is bankruptcy.
Does FTX.us have any exposure to FTX.intl? They're not supposed to. But do they? The SEC and CFTC are now investigating to find out.[1] Bloomberg: "US financial regulators are investigating whether beleaguered crypto-exchange FTX.com properly handled customer funds, as well as its relationship with other parts of Sam Bankman-Fried’s crypto empire..." In other crypto collapses, we've seen "assets" that were actually loans to affiliated parties. Loans that became worthless.
At FTX's web site, "https://ftx.com/intl", there is no mention of any problems. Typical.
[1] https://www.bloomberg.com/news/articles/2022-11-09/us-probes...
Edit: Fair enough, thanks for the input repliers! I thought DD was a much slower event to prepare this information and get legal stuff set up with NDAs etc..
"Sure, we have a notional $1 billion in a combination of junk bonds that have already crashed to a market value of $25 million and other cryptocurrencies worth another nominally $15 million as long as we never try to actually sell them, and we have $1.4 billion in concrete dollar liabilities."
Numbers completely made up, just to be clear.
You can investigate that until you're blue in your face and apply all the nuance in the world to it, that's never going to make any sense.
Also, I'd say Binance is well aware of the message the speed is sending. I don't think that's a mistake. This sort of signalling in "the metadata" of a message happens all the time. You can decide whether or not you believe it.
Honestly, with all the market info. that Binance has on their hands, I'm sure they already knew where to look at, LOL. They were just having fun with SBF.
They're also now the only big player standing in the game, they're having fun already.
It would take minutes to hours to figure out the state of things at FTX.
CZ: “Can I see your balance sheet? Oh, it says here you have $10B in assets and $16B in liabilities. Welp, good luck finding a buyer, I withdraw my LOI to purchase FTX”
They were insolvent way before the crash.
At least 80% of the (lets charitably call it a) market is now concentrated in one place.
A rising tide lifts all boats, but a very public sinking ship makes people reconsider boat ownership.
I'd guess the geniuses at Alameda made sure to accomplish that already.
---
1: https://twitter.com/cz_binance/status/1590055819416330240?s=...
But even if they do produce that, it can only show the asset side if the balance sheet.
Quite a lot of financial failures are a result of off-balance-sheet liabilities.
There's a previous submission from a different source: https://news.ycombinator.com/item?id=33535015