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SBF
@SBF_FTX
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@SBF_FTX
8) It doesn't really help to have a prime broker right now. In trad finance, exchanges don't liquidate, clearing firms do. But in crypto, exchanges control the risk engines. So everything has to get their blessing.
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SBF
@SBF_FTX
9) crypto-native clearing don't work unless exchanges trust their calculations -- and in turn other exchanges. The borrow/lending desks are already repo markets -- but so are the spot margin pools on major exchanges. This isn't anything new, the devil's in the details.
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SBF
@SBF_FTX
10) and moreso, *net capital* is what matters here. Until people can borrow against illiquid assets or equity those don't help. Lower on-chain confirmations help! But only if each exchange respects them. And anyway they're just a shittier version of using Solana stablecoins.
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SBF
@SBF_FTX
11) And still, you're gated by exchanges releasing and processing withdrawals -- when things go to shit, all systems do, not just blockchains. And true PBs either need exchanges to let them open omnibus accounts.
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SBF
@SBF_FTX
12) Sure they could give credit against cold storage -- but then why bother with the cold storage in the first place? (Answer: yet another form of transmining.) Ok, so what's the *actual* answer here?
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SBF
@SBF_FTX
13) I think it's one of the following: (i) DeFi (ii) very well capitalized MMs (iii) borrowing against equity or illiquid assets (iv) exchanges working together (v) faster chains
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SBF
@SBF_FTX
14) Alright so on to the second section: DeFi. Agree that AMMs are great for new listings. Only sorta agree about best-ex requiring DeFi: that's only true because of farming. When DeFi runs out of value to airdrop, the liquidity dries up.
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SBF
@SBF_FTX
15) Disagree on UX. I agree there are advantages to it -- but net it's still way worse than CeFi. (Though this might change!) But then to the last point -- DeFi cross-margin. That point is correct. And it's fucking huge.
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SBF
@SBF_FTX
16) I think what really drilled this into me was: (a) cTokens as collateral on FTX (e.g. cUSDT): double dipping. (b) Compound/Aave + Uni/Sushi --> native margin trading
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