Market Update for Week 2022-08-15

Published: 2022-08-22

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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.

FTX and Tornado Cash

Tornado Cash was a decentralized crypto tumbler. The idea is that you can send in tokens, and the service will mix them with other tokens and send them to another address. The idea is to obfuscate where the tokens came from. A simplified example is account A and B send in $50 each, and the tumbler takes that $100, gives $50 to accounts C and D. Did the money from account C come from A or B? Impossible to tell since tokens are fungible.

Earlier this month US Treasury blacklisted Tornado Cash, making it illegal to use or operate. In addition, a suspected Tornado Cash developer was arrested in Amsterdam.

It's pretty wild to think someone working on technology could be arrested. I'm of the mindset that code is speech, so censoring code or arresting someone for his or her involvement in the project is a violation of free speech. Sure the service was used for nefarious purposes, but so is encryption. Are you going to start arresting cryptographers?

Anyway, this whole thing leads to some thorny issues that exchanges will have to grapple with. And of course Sam Bank-Friedman is leading the way over at FTX:

Note that Aztec Connect is separate from Tornado Cash. Tornado Cash has an explicit goal of obfuscating funding sources, while Aztec is a privacy-focused zk-rollup-based protocol, not explicitly sanctioned by the US government. However I doubt Sam cares much.

I'm always conflicted what to think about Sam. On one hand, he's constantly delivering product and his exchange is one of the most ambitious and leanest exchanges. Sam is the person shaping the business side of crypto most. But some of his moves baffle me. From his bizarre PR moves that put him in Vogue next to supermodels he hired, to essentially admitting staking and most shitcoins are scams.

I think most of Sam's moves can be rooted in his belief in effective altruism and utilitarianism. He fancies himself a Bill Gates type. He wants to make as much money as possible and use it to... save the world? I don't know, he hasn't been specific. But his net worth went from essentially a few million to 20 billion (#60 in Forbes billionaires) in just a few years (FTX started in 2019). That kind of wealth creation in such a short period of time is probably unprecedented. In comparison, Facebook started in 2003 and Zuck made billionaires list in 2013 with $13bn net worth.

So Sam wants a lot of money. Does he care about crypto? Probably not. He just picked a very effective vessel to make a shit ton of money. Does he care about privacy? The utilitarian case for privacy is pretty weak. I mean, if snooping on everyone can prevent just one bad thing, surely that's a win, right? He's just a (rich) nerd. And God help us when he transitions to his gifting phase. I'm fine if billionaires want to use their money on dumb shit or tax avoidance. But I really don't think we need more rich nerds trying to help society.

Anyway, one fun outcome of all of this is that people are sending money to well known addresses through tumblers. You can't "reject" money sent to you, and most of the enforcement of these bans will be automated. So the idea is to taint nearly every account, especially the people that are proponents of these policies. Anyway, it would be a shame if Sam's personal accounts have been found to have interacted with these nefarious, illegal services ;-)


Volumes continue their downward slide with 24-hour trailing pool size dipping below 20 BNB for the first time in a long time.

Long term trend is even worse

There were a few times where the pool sizes dipped this low in late 2021, but this was when the games went down a lot (red lines are outages). So the games would have gone down for 6-12 hours so a lot of the bots were offline. By the time they came back, it took a little while for volumes to pick back up but they did.

It doesn't look good for the games. The dropping volumes is a bit of a death spiral. Less volume means worse odds, means the smart money lowers bets or stop playing. Note that any successful strategy is profitable only at a certain bet size. Think about it on the extremes. If you were the only player with 100% certainty, you would lose every round after 3% house fee (you'd be just paying yourself back minus 3%). Now suppose there's someone else that bets 3% of your bet, you'd take that 3% but it would go to the house! So you'd be at best break even. And go from there. Obviously there isn't one player, but your net-win rate isn't 100% either! So smaller pool size means your strategy can become unprofitable, or you'll have to scale back the bet size, leading to even lower pool size.

I'm not here to dunk on PS. I think they did a lot of good things and I like that they're stuff is more or less open source. I think they made a lot of mistake though, the big one is pushing their shit coin. 90% yield doesn't mean shit if the price drops 20% a month. Every decision they make is pushing that shit coin and they neglected the games despite it being a cash cow.

I reached out to PS in the past, but they never responded. But I'm willing to help. So PS employee lurker, feel free to email me at and I'll share my thoughts. Because if this continues there will be no games by the end of the year. There's also a break even for PS as well in terms of executing the contract and maintaining the games. And then what would I do with all my free time?

Winners and Losers

Note that these are winners and losers from the last 3 weeks.

Placeaccountgames playedwonwon USDWinnings Even MoneyAverage bet size
1 0x35abce4a85781236ae47fc978a6f1365576b7bb7 856 43.07 8,958.0 31.76 0.49
2 0x9c06822aef2660ec9a74a91eb479f829074ffaa7 653 27.69 5,761.0 69.0 0.49
3 0x4437950da24c967f66a5258fe126bd36ecf11768 71 26.36 5,482.0 11.85 3.65
4 0xfd7846f77e41bbdae1bce61b2bb361ee04216cb7 12 24.23 5,039.0 1.68 4.08
5 0x3e5126c8dd68db20246e51bc31cb087a28003d2e 223 21.81 4,536.0 5.3 3.87
6 0x888a3902b6edf7030eff99203c26468454329feb 64 19.04 3,961.0 5.92 3.76
7 0x88002b9a0b8bfb632ad7abce29541c619f4439ed 127 18.57 3,862.0 10.51 1.27
8 0xdc3da200c5bbc21ac6661a15443beac95a2f4a67 662 17.88 3,720.0 40.99 0.38
9 0xf1f6edb9d418ebb4b69d1cf417a619fb6088713d 283 16.94 3,523.0 -6.99 0.9
100xe4cb3bfc192407f6fe246ebc4322923ad5cbe0d2 127 16.64 3,461.0 61.87 0.28

Our top dog had a good week, but on a longer time frame, you can see he's been playing a while. Out of 2.6k games he's won 46 BNB, and almost all of the at from this week. So chalk it up to a lucky week, but I wish him the best. Same is true for our #2 with 2.9k games under his belt. The bet size is reasonable but this is the kind of marginal player that is at risk as pool sizes dry up.

Placefromgames playedwonwon USDWinnings Even MoneyAverage bet size
10xbfd40a00038939fb57c3dbf499ef354ff7badc0b 268 -86.2 -17,929.0 -14.39 2.48
20x9a6b4cd49fad073fdf566f82a4858e8713555ea4 157 -61.37 -12,765.0 -2.96 0.89
30xd7681dfd2fbb06500c057802d6030fc772f7a8e3 114 -61.36 -12,763.0 -21.57 4.34
40xd820b68e7c4e822692a805567f4b57e832730533 808 -56.0 -11,648.0 -17.29 1.81
50x7f9f833f28ae5f5afa7a9714c9958cde3ec6f7aa 263 -54.96 -11,431.0 -42.27 1.29
60x75eb3737964d057852f01804a697af7983a7174a 510 -54.33 -11,301.0 -3.84 4.39
70xe9f971a510747118eaffb1bf78411eace3102a31 498 -47.82 -9,946.0 -24.56 2.78
80x89bb80b57a27fd30f00b47071c8344d9fca781e9 121 -44.84 -9,327.0 7.09 4.92
90x90d8010cedc389a0b3fb5553dfb392533f34dbdd 95 -43.32 -9,010.0 -17.81 1.07
100xad483dc8c4482eafdbebbc98ea66a89e461cfbd9 694 -34.81 -7,241.0 -9.98 0.87

Losers are more or less constant. You'll always see someone betting big and losing, but what's their bankroll like? Long term it's not great to rely on these whales losing big to fund the games.

Anyway, sending love to the 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!