Conversation

SBF
@SBF_FTX
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
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
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.
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SBF
@SBF_FTX
Replying to
@SBF_FTX
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
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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Mutian Zhai
@MutianZhai
Replying to
@SBF_FTX
and
@SBF_Alameda
Not so good for holders in countries that tax staking returns as they prefer more dilution since you can’t deduct a significant amount of capital losses against ordinary income. Not so bad for node operators that can deduct their operational costs.
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