Conversation

Replying to

3) What is the core financial transaction behind yield farming? Well, basically: new projects drop most or all of their tokens on DeFi users in return for valuation and TVL. Are those justified?

SBF

@SBF_FTX

Sep 13, 2020

4) A lot for this will come down to what you think DeFi should be worth. For now, I'm going to make the following arbitrary assumption: that ftx.com/trade/DEFI-PERP is "fair". DEFI-PERP is currently basically made up of the largest DeFi projects pre-yield-farming.

ftx.com

FTX

Cryptocurrency Derivatives Exchange

SBF

@SBF_FTX

Sep 13, 2020

5) So, the projects in DEFI-PERP are worth about $200m-$2b right now. I think that optimistically, vegetables all together are worth about as much as the rest of DeFi -- so maybe like $6b or so.

SBF

@SBF_FTX

Sep 13, 2020

6) That means that giving away all the yield farming coins can generate at most that amount of valuation, and that amount of transaction costs. So how much is it in fact generating?

SBF

@SBF_FTX

Sep 13, 2020

7) Well a few of the valuations make no sense, and I don't really know who's buying them. If you remove those, things actually aren't that crazy. YFI is at $1b, some of COMP/BAL/SNX/LEND comes from this, and then a collection of tokens around a few hundred million.

SBF

@SBF_FTX

Sep 13, 2020

8) OK, and how about the transaction costs? Well people are spending about $100m per month on gas. In addition people are locking up about $10b of capital; if you use 20%/year as the baseline Crypto cost, that's another $1b or so of expenses.

SBF

@SBF_FTX

Sep 13, 2020

9) So put it all together and you get.... ....well, you know, $6b or so. I'm gonna be honest, I wasn't expecting that, at all.

SBF

@SBF_FTX

Sep 13, 2020

10) Now I ignored some coins from the calculation, intentionally; and I ignored the opportunity cost of peoples' time. But, like, ok, so I'm still surprised. I thought food tokens were obviously a bubble. Now I'm not so sure.

SBF

@SBF_FTX

Sep 13, 2020

11) This is also obviously ignoring the difference between different coins. Some have obvious utility!

@compoundfinance

@AaveAave

@BalancerLabs

, etc. are important products people use even ignoring farming;

@CreamdotFinance

@SushiSwap

, etc. are forks on useful products.

12)

is a weird case -- right now it's mostly just about farming, but it's also the king of farming, the meta-farming coin, and so it kinda makes sense that it should get a decent piece of that pie.

SBF

@SBF_FTX

13) So, TL;DR: obviously food tokens are a ridiculous bubble, it was clear to me from the beginning. But also maybe it's not and maybe I was wrong about that?

1:30 PM · Sep 13, 2020Twitter Web App

Replying to

14) Obviously some will still crash, and some will founder, and some will fuck up magnificently, but if even a few get to where they're trying to go, that could make up for the rest.

Replying to

and

puede subir o puede bajar o puede lateralizar o puede desaparecer...

Replying to

and

No, you're wrong now. It's obviously a bubble. Idk why many fail to understand that something can be valuable but valued for the wrong reasons, making its appreciation a bubble, at least for now. That's for every defi project, in a way that make food tokens look relatively ok.