Conversation

SBF

@SBF_FTX

·

Feb 20, 2021

1) One note on valuations: Lots of projects have "yield" or "inflation" or something like that. Does that mean that you'll lose to holding them?

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SBF

@SBF_FTX

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Feb 20, 2021

2) It depends! Well, really, it depends on the market. Sometimes everything goes up. Sometimes everything goes down.

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SBF

@SBF_FTX

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Feb 20, 2021

3) But another important point: Let's say there's 10%/year inflation. Do those new tokens go to: a) the old token holders b) some other group

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SBF

@SBF_FTX

4) For instance, BTC has inflation. It's the bad kind! The new BTC goes to miners, inflating away holders. But, of course, BTC's inflation is capped, and it converges to a fixed supply, so this isn't so bad.

6:54 PM · Feb 20, 2021·Twitter Web App

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SBF

@SBF_FTX

·

Feb 20, 2021

Replying to

@SBF_FTX

5) SOL's inflation is the good kind: you get it for staking, which anyone can do. So holding and staking SOL isn't bad because of inflation; price might decrease but your holdings will increase. Lots of PoS chains work this way.

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SBF

@SBF_FTX

·

Feb 20, 2021

6) The _really_ bad kind is one where: a) there's continuous inflation b) the inflation doesn't go to the token holders So e.g. yield farms with unbounded inflation that give new tokens to farms.

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SBF

@SBF_FTX

·

Feb 20, 2021

7) But wait -- even some of those are ok! Because if you need to have the token to farm the token, then it rewards token holders. So yield farms on the token giving the yield are ok. But yield farms on unrelated pairs are scary! That cases the bad inflation.

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