Market Update for Week 2022-04-25

Published: 2022-05-02

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All of the round data referenced below can be downloaded from here. The data is part of a project that downloads round data periodically and uploads the csv.

Founder of FTX comments on yield farming

Sam Bankman-Fried, founder of FTX (a crypto exchange) has been doing the interview circuit. One of his interviews was Bloomberg and co-hosted by Matt Levine, a financial journalist I can't recommend highly enough. Bankman-Fried is an interesting character. He's only 30 years old and made a ton of money arbing bitcoin, then started FTX in 2019. He's now worth $24 billion and not exactly a household name, even in crypto circles. Here's a good profile on him.

FTX is the 3rd largest spot exchange in the world (behind Binance and Coinbase). with a 24 hour volume of over $1 billion. Despite that FTX has only around 300 employees compared to around 3,700 for Coinbase (expected to double this year) and 3,000 for Binance. FTX also has some innovative products that allow for leveraged lending and borrowing (long and short), although they're not available in the US (thanks regulators!)

Anyway, here's an interesting exchange Bankman-Fried had on the podcast. He describes yield farming as a kind of magic black box, and frankly pretty much like a ponzi scheme:

At no point did any of this require any sort of like economic case, it’s just like other people put money in the box. And so I'm going to too, and then it's more valuable. So they're gonna put more money in, and at no point in the cycle, did it seem to like, describe any sort of like economic purpose?

Yield farming to me is interesting. You take a token that generates no value, and pay someone for holding that token. So you're basically just diluting the value. And if the price doesn't go down, you're taking new money off people flooding into the token to pay off existing holders, which is pretty much the definition of a ponzi scheme.

There is no economic purpose. But that's not to say there can't be an economic purpose. Take for instance CAKE token. It's a shitcoin with a stupid yield just like any other shitcoin. But PancakeSwap uses proceeds from the CAKE lottery to buy some tokens, exerting some downward pressure on the supply of the token. So you can think of it like financing a lottery.

But it's not really that. On the net if PancakeSwap could make more money just operating the lottery in BNB and keeping their cut, they would. But they're propping up this shitcoin so presumably they're making more money off the coin. And the coin is still inflationary. Where the hell do you think this 60% yield is coming from?

Yield farming doesn't pass the sniff test to me. It's the crypto equivalent version of a perpetual motion machine. You care create a new token, pay people (in that token) for buying and holding the token, and somehow this token creates value. And you can play games with it. For instance suppose I create 1 million tokens but only float 10,000 (1% of the tokens). Suppose I find friends to buy the 10,000 tokens at $1 each ($1 million market cap with only $10k). Now I pay the people who hold it 50% a year to hold it. Real people see it, think this is a great return, and bid up the price. I can then cash out my share, re-coup my 10k invested and wait for the whole thing to collapse.

Like I said, no amount of hand-waving can make this work. You cannot create a yielding token without some economic justification as to how it's going to generate this yield. Anyway, there's more to the interview regarding algorithmic stable coins and institutional crypto demand that I may go over the next few weeks.


Volumes have been pretty much all over the place. Strong start of the week, dip mid week and then up again.

Winners and Losers

Placeaccountgames playedwonwon USDWinnings Even MoneyAverage bet size
10x028f19acaad75af376f1937932647ce505fbc2c3 10 43.93 16695.0 1.12 5.5
20x2f9bac0277b07acf49c9df50aeef81d9faf80e73 136 33.76 12829.0 24.48 0.85
30x60ba64838b65d9ae6aa8be2285dc94b1c35ee2d5 44 30.68 11659.0 18.12 1.88
40xcb524544d84b08d8f681f59033033f45b1e25c78 2 28.78 10938.0 1.69 18.66
50x9b6b62ef7970896158d3e13f518ddbe4eb2a5c49 1042 24.52 9318.0 44.92 0.33
60xd2fe91e0975155a97bacd85f79091161f77be893 27 24.51 9315.0 11.8 1.27
70x9738f06d83a4f6508bef48f68620478651e98084 535 24.29 9229.0 1.4 4.59
80x2165666c9aac1516fcebd445e311d99f3ef9911e 501 22.52 8556.0 23.12 0.3
90x0ff6701480b43d3fdd1846078a7dcfa38dc9fa00 54 22.25 8455.0 8.08 1.58
100x3644d5bb8fdf6219adac7ef11eea8193a5305642 125 21.24 8073.0 10.5 0.87

I would love to know the story here:

Very odd betting pattern. Only makes 10 bets, ranging from 0.0011 to 30 BNB. I thought maybe he was doing the martingale strategy where he ups his bet if he loses but I don't think that's it. he sort of did that with 65644 to 65648 but the pattern doesn't fit elsewhere. Anyway, his history shows he cashed out into a Binance hot wallet (smart) and doesn't have much of history besides these rounds.

#4 won big with two successful bets! He must know something, lets look at his entire history:

Womp, womp. He had two good rounds and now he's just about even in the games. And good for him. I know how tough it is to be down, but that's what happens when you throw down 30 BNB in a given round. My rule of thumb is that if you can make X in a short period of time, you can also lose at least that much. For instance, if you made 10 BNB in a week, you should budget (and even anticipate) losing more than 10 BNB in a given week. If you're not comfortable with that, you should regularly pull some money out and put it to the side. But it looks like our friend cashed out, which is smart.

Let's look at the losers

Placefromgames playedwonwon USDWinnings Even MoneyAverage bet size
10xfde4203197ef30efec283dd52e4530f109de3c1d 144 -147.48 -56,041.0 -33.98 4.89
20x63844d978799754de7d4e7401e9950ad70f62405 547 -85.83 -32,615.0 -22.69 2.13
30xad483dc8c4482eafdbebbc98ea66a89e461cfbd9 927 -84.19 -31,993.0 -61.67 1.47
40xabf2717bf3b6e591e7158c9587ce8fff133c968e 239 -59.75 -22,706.0 -7.12 2.43
50x657237e0e449db860eff6c7ba3731b54ec611c1d 16 -50.71 -19,271.0 -6.62 9.83
60x127e73c1df0c5e74b9b6824ec6037d5d93c39a43 611 -45.74 -17,381.0 -51.06 0.89
70xad95919929685d0d250885e2b9ad951ac7060bf7 13 -44.15 -16,777.0 -2.06 14.48
80x571b504b3b5341e378cc4b7ce56ee6c975cef8b4 11 -34.43 -13,082.0 -5.47 4.02
90x4fd664871b94b9d237b778c190d702f21df9dbe3 96 -31.33 -11,906.0 -11.67 1.39
100x09db5474fefe1414b4987bdb92f58c2318436fcd 127 -26.01 -9,886.0 -20.9 0.85

Another 100+ loser! He's new money and has never played before. He's cashed out what remains into a rather active account. No idea what he's doing, looks like day trading shitcoins with PancakeSwap? That world is unknown to me...

Otherwise mostly algo bots, which is not too surprising given the overall trend of algo bots getting reckt. But we love our algo bots because at BSC Predict we love our losers.

As always, feel free to reach out with questions or comments or want my to highlight anything different on my weekly market recaps. If you like what you read and want to subscribe to receive an email when a new post is published, click here.

Good luck and bet responsibly!