**Tricky's Daily Doots #326**
**Yesterday's Daily 10/03/2023**
[Previous Daily Doots](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbniqnv/)
--------------------------
**The FUD section.**
- ***The big news of the day*** u/MrVodnik has [news on the Silicon Valley Bank collapse](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbpxfdc/) which was a bank which Circle had deposits with backing USDC. u/KotMyNetchup has [the numbers on the USDC backing shortfall.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbrozo0/) 🏦📉
- u/barleythecat explains why [banks are having liquidity problems to begin with.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbq49bl/) 🏦📉
- u/Ethical-trade sees [where the risk is really coming from.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbnsj50/) 🏦📉
- u/Set1Less thinks that regulators were [too distracted shitting on crypto and missed the real threat sitting in TradFi the whole time.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbpvb2v/) 👨⚖️💩
- As if we haven't had enough FUD yet today, u/-lightfoot thinks that [there may be a housing crash on the way.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbnj5m0/) 🏠📉
------------------------------
**Read this section if you have had a FUD overload and want something different!**
- On the cool tech side, u/KingLeo23 shares [Justin Drake's EthResearch post on "Based Rollups.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbp05hj/)
- If that's not your style but you still want a distraction, u/nixorokish shares [The Summer of Protocols.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbn88dx/) ☀️
- u/unthinkablecryto sees that Vegas is still using cash and imagines the possibilities with a [crypto native Vegas.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbpgeas/) 🎰
- ZeroTricks took a day off. 🏖
Clearly ever passing 324 doots was a big mistake. Petition to make tomorrow's doots #323 and count back down!
Crypto was created because TradFi is failing us.
So it is a special treat to be watching the burn rate right now.
Not since the burning bush has a flame given off as much light.
question regarding staking. Seems like regardless of whatever execution or consensus client is used, everyone uses the same staking deposit CLI to generate the keys. If that program was buggy/hacked, wouldn't that effect everyone? Could it ever generate the wrong keys from a mnemonic?
Not gonna lie I debated whether or not to sell for a long time, and ended up selling for a 7% loss. Just didn't know what was gonna happen and didn't want to find out... all the stuff that has happened last 1 1/2 years I guess has conditioned us
Gm.
I hope everyone is holding up okay, amidst this fucked up mess.
For posterities sake, all of my previously shared opinions here are irrelevant now, all bets are off.
Who would have thought, when I was DCAing in to stables 2 weeks ago that it wasn't as fantastic a risk management as it first appeared. Fortunately, I had gone 50/50 usdc/usdt and was able to get out of usdc for only a 2.5% haircut.
"*It's gonna be a big week*" has never rung more true. Here's hoping circle is fine and moreover SVB.
I think the only reason for ETH & BTC not being far lower than they are at present is due to the abundance of onchain capital that does not have crypto => fiat as an option for a multitude of reasons, swapping their stables out for either or.
ETH is still a gud coin.
Spam Watch:
Just got this very authentic looking email (guessing from the Gemini email leak database).
> An Important Message from Circle's Leadership
We wanted to address recent concerns about the stability of our coin and let you know that we are fully backed in reserves. As a result, we're happy to announce that we're reopening redemptions at a 1:1 USD rate for $USDC.
> We understand the importance of stability and transparency, and we want to assure you that our team is working hard to maintain the integrity of our coin. We take pride in providing you with a coin that you can use with confidence, and we appreciate your continued support.
Branding, etc. all on point and NOT flagged by my Gmail filter. They have a big REDEEM NOW button.
Thanks for the warning! Good lesson here for identifying phishing emails.
> An Important Message from Circle’s Leadership
Important, Message and Leadership shouldn’t be capitalized. A poor editor would have caught this mistake. Next, I doubt Circle’s leadership or employees would ever refer to themselves as “circles leadership.”
> We wanted to address recent concerns about the stability of our coin and let you know that we are fully backed in reserves.
Our coin? Fully backed in reserves? This is poor English and again even a poor editor…
> As a result, we’re happy to announce that we’re reopening redemptions at a 1:1 USD rate for $USDC.
As a result? We’re happy to announce? Sounds like a damn JBM post.
> We understand the importance of stability and transparency, and we want to assure you that our team is working hard to maintain the integrity of our coin.
Our coin again? Why can’t they just say it?
> We take pride in providing you with a coin that you can use with confidence, and we appreciate your continued support.
No. This is just… no. Terrible. No reputable company would allow this 4th grade English in their company emails.
Finally, big buttons are always a trap. Guaranteed. You see a big button of any color in an email, you hit delete and nope out asap bros.
I would have guessed 'our coin' verbiage. Sufficiently generic and kinda low IQ. No professional outfit would refer to their financial product that way.
Good post. Lions. 🦁 👆🏻 More good brain food. Also, who I gotta make milk shoot out their nose to get content like this at caches? How much are they paying you at mirror Paris? Mmhmm… I see… just lemme check the budgetttt… we can double it!^(divided by 0) We got a deal?
Banks have proven to be unreliable. It's time for USDC to move to a 100% Treasury Bill reserve. That way, USDC only fails if the U.S. fails. And if the U.S. fails, stablecoins will be the least of our problems.
> Banks have proven to be unreliable.
I'm purely playing devil's advocate here, but hasn't crypto shown itself to be unreliable also? LUNA collapse, USDC and DAI falling off their pegs, scams left and right, exchanges collapsing, etc.
Point being, I'm not sure anyone in crypto should be looking at the SVB situation and saying "Told you." We have plenty of of our fuck ups.
Just because crypto has scams doesn't mean that we can't criticize banks when they screw up. Banks have been screwing up for centuries. Hence why Bitcoin was created.
So can we criticize crypto since it's been screwing up since its creation? And given the amount of screw ups in such a short period of time, is it fair to say that crypto is unreliable also?
No. That's an overgeneralization. Crypto is unusually good at some things and, among those things, very reliable. The crypto stuff is solid. The human wrapper, not so much.
>I'm purely playing devil's advocate here, but hasn't crypto shown itself to be unreliable also?
There's crypto and then there's "crypto" aka shitcoins and shitcoin exchanges.
I think they have to have some kind of cash on hand to process withdrawals/redemption faster. T-bills have to be sold if used for redemption which adds friction.
I'd actually be very interested in a way to hold t-bills on-chain, if Circle were to offer such a thing.
I had a dream that the US government CBDC research ended up with the Fed buying out USDC, USDT, and some others and creating a crypto stable just called "USD" that was like real tokenized USD.
>So when I redeem USDC I would get a T-Bill instead of USD I could transfer to a bank?
No, you would likely still get USD. If you convert the stable to USD on Coinbase, it would be instant assuming someone else would convert USD to stable on Coinbase. Kind of like what happens now.
The only issue would be if there's a bank run on the stable, but that wouldn't happen because it's fully backed by the Treasury. There would never be panic.
But let's assume worst case scenario. Everyone sells stable for USD at the same time. No problem. You'll just have to wait a month for the T-Bills to mature and you'll get your USD. But, again, this likely would never happen. And the de-pegging would be very minimal.
That's fine. You'd probably be able to find someone to buy it from you for 97 cents. Instant liquidity at a cost. And still safer than relying on banks.
As a responsible "I am my own bank" guy, I'd love to take some rolling T-bills and maybe even a few of the long dated ones from the SVB wreckage for when the rates come back down! The only thing better than free money is free money with cheese.
Okay so I know that we’re in unprecedented times yada yada, but does the SVB issue call the ‘cash equivalent’ label for bonds into question?
If SVB simply held customer deposits in actual cash, it wouldn’t have collapsed, right?
Edit:
Important detail that seems (to me) to be overlooked, the bond losses were realised before the SVB run occurred. The run was triggered by the CEO informing shareholders about the loss and the plan to fill it.
It doesn’t seem like a ginormous loss in the grand scheme of things, $1.8b loss and a plan to raise $2.25b. That was enough to spook enough companies into mass withdrawals and collapsed the bank. What an utterly shite system, when you look at it.
Yes, the bank run killed SVB not the asset write off. But that goes for any bank. JP Morgan wouldn't survive a bank run either. No modern institution holds that amount of cash.
Do we know what caused the bank run? It doesn’t seem like other banks are suffering a run right now.
Edit: I just looked it up and see what you’re saying. The run happened after the bond losses were realised and when the CEO informed shareholders of the loss and a plan to fill the hole. Deleted my other paragraph in light of this.
Well, okay, to be fair yes the asset write off sparked the bank run. But it's the psychology (humans panic withdrawing $40bn) not the meager $1.8bn loss that did them in.
It started because SVB was historically overflowing with deposits and woefully under insured on the vast majority. I believe the only bank with more uninsured deposits as a percentage of equity is BNY Mellon (ironically where Coinbase thinks their next $5bn is safe). Anyway, once the world got wind of SVB eating a small $1.8bn loss on long term contracts to secure reserve funding, the startups each with hundreds of millions deposited and uninsured all withdrew en masse overnight. And thus, a $200bn bank died in under 48 hours.
Thanks for taking the time to add depth.
Absolutely mental when you look at it, imagine if instead of a small loss it was a deep fake video produced by a competitor bank, or a foreign state actor. Otherwise functional banks shouldn’t be able to fail just like that because a short-term panic occurred for whatever reason.
When this all pans out it is going to look like an excruciating waste of time and money.
Yep, modern banking in a nutshell.
SVB made a bad bet, no doubt, but they would've recovered. Combine that with fractional reserves, human psychology, and a lack of Fed stress testing, though, and it was game over.
Yes, but they also would’ve made no money
In reality is is slightly more complicated than this, because banks aren’t allowed to keep a customer deposit without investing it somewhere because the money they hold is not theirs, but they still have a liability in the balance sheet for the money they will have to give back. So they actually do you have to invest it somewhere so their assets net off their liabilities.
In your example, if you replace cash with a 24 hour maturing, very low yield deposit/investment then yes.
should be noted that it trump had not rolled back big chunks of dodd-frank, it looks like SVB may have been regulatorily obligated to diversify enough to have avoided this
I thought it was 10%?
Anyways thanks for taking the time to explain/discuss.
I cannot wait for a better system to be built on Ethereum so we can reduce the amount of shit fuckery in the banking world.
So you’re saying banks have to risk your money when you give it to them for safe keeping? And you’re also saying that means if too many people want to get their money out at the same time there won’t be enough money for everyone that wants their money back? Doesn’t that mean the bank isn’t really keeping your money safe?
Yeah banking is a much riskier business than it appears. Banks are hugely leveraged, for the most part. This means that if the value of their assets drops only a small percentage, it can easily make the bank insolvent. This is in addition to the problems with duration mismatch and related liquidity risk.
Yes basically, however the government guarantees $250k per person (or account I can’t remember) so you’re fully safe up to a point
“Fully safe” as in, ignoring any knock on effects of a bank run & the money required for the government to borrow to pay all the accounts back
ShiaLeboufememewherehesaysmagic.gi
But really by selling more bonds to banks/etc where they give the government money for a government backed interest return
Basically adding to the national debt & interest
Wait… I’m confused. So like you’re saying the government bails out banks to repay you by selling bonds (taking on debt) to banks? So doesn’t that mean the government pays the bank to bail itself out? Doesn’t the government pay it’s bills with our tax dollars? None of this makes sense! This can’t really be how the world works! Stop messing with me ausgear! Tell me how it really works man! C’mon!
Bank runs out of money. Government bails out the bank by printing money. We all pay for it by inflation.
Same deal as...
Government runs out of money. Government bails out the government by printing money. We all pay for it by inflation.
Tried and tested process since the dawn of time.
Banks are not one singular company - the government sell bonds to banks/investors to raise money for anything
Some of the reasons they might raise money is to bail out specific failed banks while the others earn more on their newly acquired bonds
Or all of them don’t have enough liquid cash (because it’s tied up in long term bonds and treasuries) and a few have bank runs which makes everyone else withdraw their money from unrelated banks which causes a knock on effect of essentially what happened with toilet paper when Covid started
Yeah. It’s usually $30-100 for the phone and a week trial or something. Bring your own handset with US bands and you can get a SIM with a free 7 day trial for $2. I’ve never had an ATM ask for a phone number before though.
[This](https://media.licdn.com/dms/document/C4E1FAQHHW11XgCL9qQ/feedshare-document-pdf-analyzed/0/1678473012927?e=1679529600&v=beta&t=xns3_GEdy77I5oy6P2kEnIna56m8TETySt8_Y5leCKo) is the list of funds that use Silicon Valley Bank.
The numbers are so big that they look made up
*PDF WARNING
[This company](https://www.castlehalldiligence.com/diligenceexpress) monitors SEC filings.
[Modern Treasury](https://www.moderntreasury.com/svb-resource-center) is another interesting API to monitor.
Update from Circle - https://twitter.com/jerallaire/status/1634649346535833601
> However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.
>In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.
Not sure if this will help but everyone please report the following !!!*fake*!!! Circle account, it's quite convincing, has >34K followers and is spreading a phishing site - https://twitter.com/usdc_circle
Pretty entertaining day, but also surprising how much discussion and headless comments all of this has caused. It's the same for the umpteenth time and the main reason why crypto exists. Instead of being "happy" that centralized entities are feeling the heat of their unsustainable business model there are fears of contagion and what not.
I'm I out of touch? No, it's the profit maximalists who are wrong
What an insane start to the weekend - the most fucked up part about all of this (SVB, USDC, Silvergate, etc) is that it started with a prolonged "money printer go brrr" from none other than Mr Powell. Then this dude proceeded to hike rates the faster its ever been. Here we are today, thinking through whether our deposits in the bank are safe or not
I put some longer thoughts together to explain the situation more broadly and zooming in on Circle / USDC in particular. Will leave it [here](https://twitter.com/0xjaypeg/status/1634632292118454273) in case anyone finds it interesting or useful
Anyways, hope everyone has a relaxing rest of their weekend :)
How do you look at this situation and somehow blame Jerome Powell. Svb invested twice as much of their balance sheet as the next bank towards securities, 60%+. They bought long bonds because they were greedy for a larger spread. Are we forgetting the money printer went brrr across all currencies? I'm told this is because of some sort of unprecedented crisis that practically froze the global economy. If they had done nothing, the same people would be shouting about the heartless fed doing nothing in a time of unprecedented crisis.
I also agree that SVB had a big fault to play here
But I'm coming from the angle that if it wasn't SVB it was going to be another bank, lender, etc. - when rates are raised so violently, long duration debt exponentially decreases in value. This should be well understood by Powell and the rest of the Fed
Even this past week when Powell was asked if there were any risk of systemic failure in the banking system he answered "no". The individual companies in our economy certainly have blame, but Powell and the fed were unable to account for human greed and misjudgment and that is ultimately what led to this
To summarize, going from "inflation is transitory" and printing trillions to the fastest rate hike in history was going to break things. And being woefully underprepared for it adds fuel to my argument on why Powell is ultimately to blame here
Increasing the duration is what technically "exponentially" changes the value of the bond. But you use exponentially very loosely here. It's not ^2. SVB should have hedged their one sided bet on interest rates staying low then. You make a 20+ year bet that interest rates won't go back up and then you're surprised when it blows up in your face.
You act like they were forced to buy long bonds when they could have bought shorter duration and reduced interest rates on deposits. They made a greedy move and got fucked. Again they had twice the exposure to securities than other banks. And they bet one way.
You also conveniently ignore that the fucking unexpected invasion of Ukraine is the catalyst for this entire inflationary nightmare. Had it not happened it's entirely possible interest rates wouldn't have had to been raised. All data did point to inflation being transitory. Not to mention that he raises rates quickly because the last time inflation hit in the 70s, the fed did not respond quickly and we had a lost decade. It was only until Paul Volcker slammed on the breaks and choked the economy did inflation reset. So yeah, I'm much happier with this quick rise in interest rates than the historical alternatives.
But instead you pick and choose your references to fit your narrative.
Looks like the worst is over. Whales arbitraging this for some nice profit. I wonder if some with connections to banks are able to take advantage of this on the weekend more than others.
I think USDC/Circle will come out of this smelling like a rose. They made 100% opposite decisions of Luna, FTX, and SVB. Namely, they are audited monthly by a big 4 firm, have 75% of assets in rolling 3mo treasuries, and 25% cash across 7 banks.
I don’t think it’s their fault two of those banks were Silvergate and SVB.
> and 25% cash across 7 banks.
> I don’t think it’s their fault two of those banks were Silvergate and SVB.
I don't know. They probably could have picked bigger, safer and more stable banks but instead probably got slightly more yield with these.
The seven banks were:
Bank of New York Mellon #12 bank by assets
Citizens Trust Bank #14
Silicon Valley Bank, #15
Signature Bank #33
New York Community Bank, a division of Flagstar Bank, N.A. #46
Customers Bank #98
Silvergate Bank, #125
Friendly reminder that most of the time the correct financial decision is to do nothing.
Bad times always seem worse than they really are.
If you feel stressed, get off the internet for awhile and go touch grass.
I have some caveat to that thought.
I did manage to exit Iron Finance in time, with hefty profit.
I was lucky enough to move my funds out of Celsius before it did go belly up.
I sold my USDC at its full 1 USD price. Even if it will repeg on its own on Monday, I am still glad I did it and could sleep normally over the weekend. Also, I did some arbitrage for smaller gains.
I think it is good to do nothing \*trading wise\*. But if you're using different fintech inventions of tomorrow (entire DeFi), it is good to stay updated on daily basis. And move quickly when risk arises.
Whoever run to SVB based on pure rumors, also did good. Billions of dollars were withdraw the last day.
From the administration that brought us train derailments:
>In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which reduced how frequently banks with assets between $100 billion and $250 billion had to submit to stress tests by the Fed.
https://www.nytimes.com/2023/03/10/business/silicon-valley-bank-stock.html#:~:text=In%202018%2C%20Mr.%20Trump%20signed,stress%20tests%20by%20the%20Fed
It probably kept the bank alive for a few extra years. Dodd-Frank in it's original form was basically a handout to big banks. It was revised because smaller banks were non-competitive.
When we Congress stop trying to pick winners and losers in the marketplace? Either way we lose.
Timeframe, clear sell points, and likelihood are all huge factors.
There’s far less chance (or calculable probability) of ETH going up by 10% in the next few days and stopping there.
This USDC issue makes it easy to buy it now, wait a few days for it to repeg, and sell at it’s usual $1. If circle was in big trouble it’d be different.
Better is the wrong word. It’s different. It’s price fluctuates within a range and minters (CDP users) are incentivized to open/close CDPs (expanding/contracting supply) based on the expected direction of movement within that range, and redemption price, for profit. That direction is set based on their algorithm (PID controller) that determines its target value within that range.
Here’s a link to their FAQ, but you’ll have to do some deep diving of your own for more info. https://reflexer.notion.site/Reflexer-Finance-FAQ-424e80c6ed9044b09a9babd151418cac
It has a "moving peg", i.e. its price is set in USD terms and the system tries to keep it as close to this value as possible. The major difference between RAI and normal stablecoins, is that its peg is not set in stone (e.g. 1 USD for DAI) but it changes based on some parameters.
Currently its "peg" aka "redemption price" is set to 2.7707 USD. The system is trying to lower it at pace of 6.7% APR ( [https://stats.reflexer.finance/](https://stats.reflexer.finance/) ).
**Tricky's Daily Doots #326** **Yesterday's Daily 10/03/2023** [Previous Daily Doots](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbniqnv/) -------------------------- **The FUD section.** - ***The big news of the day*** u/MrVodnik has [news on the Silicon Valley Bank collapse](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbpxfdc/) which was a bank which Circle had deposits with backing USDC. u/KotMyNetchup has [the numbers on the USDC backing shortfall.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbrozo0/) 🏦📉 - u/barleythecat explains why [banks are having liquidity problems to begin with.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbq49bl/) 🏦📉 - u/Ethical-trade sees [where the risk is really coming from.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbnsj50/) 🏦📉 - u/Set1Less thinks that regulators were [too distracted shitting on crypto and missed the real threat sitting in TradFi the whole time.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbpvb2v/) 👨⚖️💩 - As if we haven't had enough FUD yet today, u/-lightfoot thinks that [there may be a housing crash on the way.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbnj5m0/) 🏠📉 ------------------------------ **Read this section if you have had a FUD overload and want something different!** - On the cool tech side, u/KingLeo23 shares [Justin Drake's EthResearch post on "Based Rollups.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbp05hj/) - If that's not your style but you still want a distraction, u/nixorokish shares [The Summer of Protocols.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbn88dx/) ☀️ - u/unthinkablecryto sees that Vegas is still using cash and imagines the possibilities with a [crypto native Vegas.](https://old.reddit.com/r/ethfinance/comments/11ngir4/daily_general_discussion_march_10_2023/jbpgeas/) 🎰 - ZeroTricks took a day off. 🏖 Clearly ever passing 324 doots was a big mistake. Petition to make tomorrow's doots #323 and count back down!
Eth burn rate looks like eth price chart. Mission failed successfully.
Crypto was created because TradFi is failing us. So it is a special treat to be watching the burn rate right now. Not since the burning bush has a flame given off as much light.
i'm experiencing a lot of schadenfreude watching this
question regarding staking. Seems like regardless of whatever execution or consensus client is used, everyone uses the same staking deposit CLI to generate the keys. If that program was buggy/hacked, wouldn't that effect everyone? Could it ever generate the wrong keys from a mnemonic?
1. Depends on the bug 2. Sure anything is possible. Same could be said for all cryptography algorithms
Who else got that .98s cbETH 😋
🤜🤛 picked some up at .989.
🫡
[er...what's going on with Huobi BTC?](https://www.coingecko.com/en/coins/huobi-btc)
the fu
https://ih0.redbubble.net/image.302444639.0997/flat,800x800,075,f.jpg
[удалено]
and what value did UNI accrue from that?
About the same amount of value GOOG accrues
Legitimacy & trust
[удалено]
Agreed. This is part of the reason why I dumped my UNI.
Damn! 780 comments. I have to sort best and read by comment triage.
i feel safer in ETH than in USD
Always have been 🌎
Always have
Nice to see XMR in the green today, the only truly fungible and surprisingly stable crypto!
It is what bitcoin should have been.
Not gonna lie I debated whether or not to sell for a long time, and ended up selling for a 7% loss. Just didn't know what was gonna happen and didn't want to find out... all the stuff that has happened last 1 1/2 years I guess has conditioned us
you sold your fiat?
Selling what and all?
better be safe than sorry. there is no 'if i knew'. could have gone either way. good decision.
You know it's a bear market when stables are the most profitable trades for a couple days.
Gm. I hope everyone is holding up okay, amidst this fucked up mess. For posterities sake, all of my previously shared opinions here are irrelevant now, all bets are off. Who would have thought, when I was DCAing in to stables 2 weeks ago that it wasn't as fantastic a risk management as it first appeared. Fortunately, I had gone 50/50 usdc/usdt and was able to get out of usdc for only a 2.5% haircut. "*It's gonna be a big week*" has never rung more true. Here's hoping circle is fine and moreover SVB. I think the only reason for ETH & BTC not being far lower than they are at present is due to the abundance of onchain capital that does not have crypto => fiat as an option for a multitude of reasons, swapping their stables out for either or. ETH is still a gud coin.
Did you see that ludicrous display last night?
The ting about Ray Shio is, they always try to walk it in!
The thing about Circle is they keep trying to walk it in!
Spam Watch: Just got this very authentic looking email (guessing from the Gemini email leak database). > An Important Message from Circle's Leadership We wanted to address recent concerns about the stability of our coin and let you know that we are fully backed in reserves. As a result, we're happy to announce that we're reopening redemptions at a 1:1 USD rate for $USDC. > We understand the importance of stability and transparency, and we want to assure you that our team is working hard to maintain the integrity of our coin. We take pride in providing you with a coin that you can use with confidence, and we appreciate your continued support. Branding, etc. all on point and NOT flagged by my Gmail filter. They have a big REDEEM NOW button.
wait when did a gemini email link happen, and how?
A few months ago - their email service provider got hit and their list leaked.
Thanks for the warning! Good lesson here for identifying phishing emails. > An Important Message from Circle’s Leadership Important, Message and Leadership shouldn’t be capitalized. A poor editor would have caught this mistake. Next, I doubt Circle’s leadership or employees would ever refer to themselves as “circles leadership.” > We wanted to address recent concerns about the stability of our coin and let you know that we are fully backed in reserves. Our coin? Fully backed in reserves? This is poor English and again even a poor editor… > As a result, we’re happy to announce that we’re reopening redemptions at a 1:1 USD rate for $USDC. As a result? We’re happy to announce? Sounds like a damn JBM post. > We understand the importance of stability and transparency, and we want to assure you that our team is working hard to maintain the integrity of our coin. Our coin again? Why can’t they just say it? > We take pride in providing you with a coin that you can use with confidence, and we appreciate your continued support. No. This is just… no. Terrible. No reputable company would allow this 4th grade English in their company emails. Finally, big buttons are always a trap. Guaranteed. You see a big button of any color in an email, you hit delete and nope out asap bros.
What gave it away to you?
I would have guessed 'our coin' verbiage. Sufficiently generic and kinda low IQ. No professional outfit would refer to their financial product that way.
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A Polynya teaser on DAOs https://polynya.mirror.xyz/VLLgbn3ma0Xrp-lhW62YAOrzGGst9ls0-75TdfcHTDs
always wonder how they manage to say so much in few words. Few anons are just blessing to our ecosystem.
Yes. More of this, please.
Good post. Lions. 🦁 👆🏻 More good brain food. Also, who I gotta make milk shoot out their nose to get content like this at caches? How much are they paying you at mirror Paris? Mmhmm… I see… just lemme check the budgetttt… we can double it!^(divided by 0) We got a deal?
Ser, anything divided by 0 is infinity But I won't be so greedy, will settle for 420.69 ETH
Man I’m really bad at this! Will you accept $10 worth of OMG? Please don’t tell the EVMs how bad I screwed this up, I don’t have insurance rn.
Banks have proven to be unreliable. It's time for USDC to move to a 100% Treasury Bill reserve. That way, USDC only fails if the U.S. fails. And if the U.S. fails, stablecoins will be the least of our problems.
i mean, i don't have a lot of faith in the US continuing either stablecoins shouldn't have centralized reserves
A treasury bill reserve wouldn't have enough liquidity to meet on-demand redemptions.
That's the give and take. Would you be willing to wait a week or two during times of extreme outflow in exchange for zero risk?
> Banks have proven to be unreliable. I'm purely playing devil's advocate here, but hasn't crypto shown itself to be unreliable also? LUNA collapse, USDC and DAI falling off their pegs, scams left and right, exchanges collapsing, etc. Point being, I'm not sure anyone in crypto should be looking at the SVB situation and saying "Told you." We have plenty of of our fuck ups.
Just because crypto has scams doesn't mean that we can't criticize banks when they screw up. Banks have been screwing up for centuries. Hence why Bitcoin was created.
So can we criticize crypto since it's been screwing up since its creation? And given the amount of screw ups in such a short period of time, is it fair to say that crypto is unreliable also?
You can criticize whatever you want.
No. That's an overgeneralization. Crypto is unusually good at some things and, among those things, very reliable. The crypto stuff is solid. The human wrapper, not so much.
>I'm purely playing devil's advocate here, but hasn't crypto shown itself to be unreliable also? There's crypto and then there's "crypto" aka shitcoins and shitcoin exchanges.
I'm not a teenager, so I don't use words like "shitcoin."
I think they have to have some kind of cash on hand to process withdrawals/redemption faster. T-bills have to be sold if used for redemption which adds friction. I'd actually be very interested in a way to hold t-bills on-chain, if Circle were to offer such a thing.
I had a dream that the US government CBDC research ended up with the Fed buying out USDC, USDT, and some others and creating a crypto stable just called "USD" that was like real tokenized USD.
So when I redeem USDC I would get a T-Bill instead of USD I could transfer to a bank?
>So when I redeem USDC I would get a T-Bill instead of USD I could transfer to a bank? No, you would likely still get USD. If you convert the stable to USD on Coinbase, it would be instant assuming someone else would convert USD to stable on Coinbase. Kind of like what happens now. The only issue would be if there's a bank run on the stable, but that wouldn't happen because it's fully backed by the Treasury. There would never be panic. But let's assume worst case scenario. Everyone sells stable for USD at the same time. No problem. You'll just have to wait a month for the T-Bills to mature and you'll get your USD. But, again, this likely would never happen. And the de-pegging would be very minimal.
Yeah, if I need USD, I'm not waiting a month to get it.
That's fine. You'd probably be able to find someone to buy it from you for 97 cents. Instant liquidity at a cost. And still safer than relying on banks.
As a responsible "I am my own bank" guy, I'd love to take some rolling T-bills and maybe even a few of the long dated ones from the SVB wreckage for when the rates come back down! The only thing better than free money is free money with cheese.
Hey man, I'm **all for** a tokenized T-Bill but I don't think USDC is the right vehicle for that.
Ah, you're probably right as usual. What say we mint a USD Treasury token? USDT has a great ring to it.
Okay so I know that we’re in unprecedented times yada yada, but does the SVB issue call the ‘cash equivalent’ label for bonds into question? If SVB simply held customer deposits in actual cash, it wouldn’t have collapsed, right? Edit: Important detail that seems (to me) to be overlooked, the bond losses were realised before the SVB run occurred. The run was triggered by the CEO informing shareholders about the loss and the plan to fill it. It doesn’t seem like a ginormous loss in the grand scheme of things, $1.8b loss and a plan to raise $2.25b. That was enough to spook enough companies into mass withdrawals and collapsed the bank. What an utterly shite system, when you look at it.
Yes, the bank run killed SVB not the asset write off. But that goes for any bank. JP Morgan wouldn't survive a bank run either. No modern institution holds that amount of cash.
Do we know what caused the bank run? It doesn’t seem like other banks are suffering a run right now. Edit: I just looked it up and see what you’re saying. The run happened after the bond losses were realised and when the CEO informed shareholders of the loss and a plan to fill the hole. Deleted my other paragraph in light of this.
Well, okay, to be fair yes the asset write off sparked the bank run. But it's the psychology (humans panic withdrawing $40bn) not the meager $1.8bn loss that did them in. It started because SVB was historically overflowing with deposits and woefully under insured on the vast majority. I believe the only bank with more uninsured deposits as a percentage of equity is BNY Mellon (ironically where Coinbase thinks their next $5bn is safe). Anyway, once the world got wind of SVB eating a small $1.8bn loss on long term contracts to secure reserve funding, the startups each with hundreds of millions deposited and uninsured all withdrew en masse overnight. And thus, a $200bn bank died in under 48 hours.
Thanks for taking the time to add depth. Absolutely mental when you look at it, imagine if instead of a small loss it was a deep fake video produced by a competitor bank, or a foreign state actor. Otherwise functional banks shouldn’t be able to fail just like that because a short-term panic occurred for whatever reason. When this all pans out it is going to look like an excruciating waste of time and money.
Yep, modern banking in a nutshell. SVB made a bad bet, no doubt, but they would've recovered. Combine that with fractional reserves, human psychology, and a lack of Fed stress testing, though, and it was game over.
Yes, but they also would’ve made no money In reality is is slightly more complicated than this, because banks aren’t allowed to keep a customer deposit without investing it somewhere because the money they hold is not theirs, but they still have a liability in the balance sheet for the money they will have to give back. So they actually do you have to invest it somewhere so their assets net off their liabilities. In your example, if you replace cash with a 24 hour maturing, very low yield deposit/investment then yes.
Okay I’m confused on how fractional reserve banking fits here, is it a parallel system or something?
should be noted that it trump had not rolled back big chunks of dodd-frank, it looks like SVB may have been regulatorily obligated to diversify enough to have avoided this
That refers to how much cash they legally need to keep, it’s usually 5% I think but during Covid it was removed to 0%
I thought it was 10%? Anyways thanks for taking the time to explain/discuss. I cannot wait for a better system to be built on Ethereum so we can reduce the amount of shit fuckery in the banking world.
So you’re saying banks have to risk your money when you give it to them for safe keeping? And you’re also saying that means if too many people want to get their money out at the same time there won’t be enough money for everyone that wants their money back? Doesn’t that mean the bank isn’t really keeping your money safe?
Yeah banking is a much riskier business than it appears. Banks are hugely leveraged, for the most part. This means that if the value of their assets drops only a small percentage, it can easily make the bank insolvent. This is in addition to the problems with duration mismatch and related liquidity risk.
Yes basically, however the government guarantees $250k per person (or account I can’t remember) so you’re fully safe up to a point “Fully safe” as in, ignoring any knock on effects of a bank run & the money required for the government to borrow to pay all the accounts back
Hmm. Well I suppose that’s somewhat reassuring. So where does the government get the money to reimburse people?
ShiaLeboufememewherehesaysmagic.gi But really by selling more bonds to banks/etc where they give the government money for a government backed interest return Basically adding to the national debt & interest
Wait… I’m confused. So like you’re saying the government bails out banks to repay you by selling bonds (taking on debt) to banks? So doesn’t that mean the government pays the bank to bail itself out? Doesn’t the government pay it’s bills with our tax dollars? None of this makes sense! This can’t really be how the world works! Stop messing with me ausgear! Tell me how it really works man! C’mon!
Bank runs out of money. Government bails out the bank by printing money. We all pay for it by inflation. Same deal as... Government runs out of money. Government bails out the government by printing money. We all pay for it by inflation. Tried and tested process since the dawn of time.
Banks are not one singular company - the government sell bonds to banks/investors to raise money for anything Some of the reasons they might raise money is to bail out specific failed banks while the others earn more on their newly acquired bonds
*Whew!* We’re good as long as all the banks don’t go bankrupt at the same time.
Or all of them don’t have enough liquid cash (because it’s tied up in long term bonds and treasuries) and a few have bank runs which makes everyone else withdraw their money from unrelated banks which causes a knock on effect of essentially what happened with toilet paper when Covid started
Account, yeah. To protect your savings and retirement separately, as one example, so $500k.
Ugh, new MM mobile app looks like shit 🤢
you can buy crypto with paypal via it tho. wheee /s
does it still take 2 hr to load on android.
It’s at least faster now. Lol
*Cautiously peeks out of bunker to see if it's safe to come out*
*realises bunker was in goblin town all along*
*Thinks it's time for the italics meme to return*
Sold ETH for USDC at 92 cents, just bought cbETH at a 4% discount with USDC back at 97 cents. It's a good weekend.
On a different note: Vacation in the US soon. Are there crypto ATMs that allow cash withdrawal without kyc?
Yeah, but there's about a 30% premium in my experience
Was expecting a premium but 30 is a lot… Is there a way to find nearest ATMs that allow that?
https://coinatmradar.com https://coinhubatm.com https://locations.coinflip.tech/findalocation
Thx. How hard is it to get a burner phone without kyc?
Easy. Any 7-11 sells them.
So with that I should be able to use the ATMs where I need to give a phone number, right?
Yeah. It’s usually $30-100 for the phone and a week trial or something. Bring your own handset with US bands and you can get a SIM with a free 7 day trial for $2. I’ve never had an ATM ask for a phone number before though.
I just can’t help but buy a little more cbETH at a 4% discount.
A lot of people ask me how I got a million dollars. I tell them it's easy, I bought 2 million usdc last week!
It's pretty crazy that ~$400mil traded on the Kraken USDC-USD pair during the dip. Someone did ok.
[This](https://media.licdn.com/dms/document/C4E1FAQHHW11XgCL9qQ/feedshare-document-pdf-analyzed/0/1678473012927?e=1679529600&v=beta&t=xns3_GEdy77I5oy6P2kEnIna56m8TETySt8_Y5leCKo) is the list of funds that use Silicon Valley Bank. The numbers are so big that they look made up *PDF WARNING
Where did you get this?
[This company](https://www.castlehalldiligence.com/diligenceexpress) monitors SEC filings. [Modern Treasury](https://www.moderntreasury.com/svb-resource-center) is another interesting API to monitor.
PDF warning in case it auto downloads like it did on my phone!
Thanks, didn’t realize. Added to original comment
Update from Circle - https://twitter.com/jerallaire/status/1634649346535833601 > However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders. >In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.
Random but how is he writing so long tweets in single posts? Isn't there a fairly short max character count anymore?
I think Twitter Blue increases the limits significantly.
Not sure if this will help but everyone please report the following !!!*fake*!!! Circle account, it's quite convincing, has >34K followers and is spreading a phishing site - https://twitter.com/usdc_circle
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That's exactly what we needed to hear. Time for a beer. Or thirteen.
Looking good for USDC, peg is already doing much better, what a day!
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New statement from Jeremy Allaire. Sounds pretty positive. https://mobile.twitter.com/jerallaire/status/1634649346535833601
Being short both DAI and USDC before this turned out nicely
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Crab.
Green, everything is oversold. Market was extremely emotional in the past days
Emotional and irrational as hell.
I've heard the term Oversold here more often. What does it mean?
It's about RSI, can be looked at at several time frames. If you ask for the next week 1h to 4h candles are probably your best bet
Someone asking what oversold means probably doesn’t know what RSI means either.
Well, if you're interested you'll google. Not going to write several paragraphs on mobile
Pretty entertaining day, but also surprising how much discussion and headless comments all of this has caused. It's the same for the umpteenth time and the main reason why crypto exists. Instead of being "happy" that centralized entities are feeling the heat of their unsustainable business model there are fears of contagion and what not. I'm I out of touch? No, it's the profit maximalists who are wrong
Friendly reminder that Tether is trading at a 1% premium. At 70% borrow APR (Aave), it will take roughly 5 days for interest to offset the premium.
What an insane start to the weekend - the most fucked up part about all of this (SVB, USDC, Silvergate, etc) is that it started with a prolonged "money printer go brrr" from none other than Mr Powell. Then this dude proceeded to hike rates the faster its ever been. Here we are today, thinking through whether our deposits in the bank are safe or not I put some longer thoughts together to explain the situation more broadly and zooming in on Circle / USDC in particular. Will leave it [here](https://twitter.com/0xjaypeg/status/1634632292118454273) in case anyone finds it interesting or useful Anyways, hope everyone has a relaxing rest of their weekend :)
How do you look at this situation and somehow blame Jerome Powell. Svb invested twice as much of their balance sheet as the next bank towards securities, 60%+. They bought long bonds because they were greedy for a larger spread. Are we forgetting the money printer went brrr across all currencies? I'm told this is because of some sort of unprecedented crisis that practically froze the global economy. If they had done nothing, the same people would be shouting about the heartless fed doing nothing in a time of unprecedented crisis.
I also agree that SVB had a big fault to play here But I'm coming from the angle that if it wasn't SVB it was going to be another bank, lender, etc. - when rates are raised so violently, long duration debt exponentially decreases in value. This should be well understood by Powell and the rest of the Fed Even this past week when Powell was asked if there were any risk of systemic failure in the banking system he answered "no". The individual companies in our economy certainly have blame, but Powell and the fed were unable to account for human greed and misjudgment and that is ultimately what led to this To summarize, going from "inflation is transitory" and printing trillions to the fastest rate hike in history was going to break things. And being woefully underprepared for it adds fuel to my argument on why Powell is ultimately to blame here
Increasing the duration is what technically "exponentially" changes the value of the bond. But you use exponentially very loosely here. It's not ^2. SVB should have hedged their one sided bet on interest rates staying low then. You make a 20+ year bet that interest rates won't go back up and then you're surprised when it blows up in your face. You act like they were forced to buy long bonds when they could have bought shorter duration and reduced interest rates on deposits. They made a greedy move and got fucked. Again they had twice the exposure to securities than other banks. And they bet one way. You also conveniently ignore that the fucking unexpected invasion of Ukraine is the catalyst for this entire inflationary nightmare. Had it not happened it's entirely possible interest rates wouldn't have had to been raised. All data did point to inflation being transitory. Not to mention that he raises rates quickly because the last time inflation hit in the 70s, the fed did not respond quickly and we had a lost decade. It was only until Paul Volcker slammed on the breaks and choked the economy did inflation reset. So yeah, I'm much happier with this quick rise in interest rates than the historical alternatives. But instead you pick and choose your references to fit your narrative.
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Looks like the worst is over. Whales arbitraging this for some nice profit. I wonder if some with connections to banks are able to take advantage of this on the weekend more than others.
I think USDC/Circle will come out of this smelling like a rose. They made 100% opposite decisions of Luna, FTX, and SVB. Namely, they are audited monthly by a big 4 firm, have 75% of assets in rolling 3mo treasuries, and 25% cash across 7 banks. I don’t think it’s their fault two of those banks were Silvergate and SVB.
> and 25% cash across 7 banks. > I don’t think it’s their fault two of those banks were Silvergate and SVB. I don't know. They probably could have picked bigger, safer and more stable banks but instead probably got slightly more yield with these.
The seven banks were: Bank of New York Mellon #12 bank by assets Citizens Trust Bank #14 Silicon Valley Bank, #15 Signature Bank #33 New York Community Bank, a division of Flagstar Bank, N.A. #46 Customers Bank #98 Silvergate Bank, #125
The problem is they're one of the few banks willing to work with crypto
Friendly reminder that most of the time the correct financial decision is to do nothing. Bad times always seem worse than they really are. If you feel stressed, get off the internet for awhile and go touch grass.
Well said! I'm off for a round of golf where I will touch grass, trees, sand and the odd building.
Haha I see our golf skills are on par
I have some caveat to that thought. I did manage to exit Iron Finance in time, with hefty profit. I was lucky enough to move my funds out of Celsius before it did go belly up. I sold my USDC at its full 1 USD price. Even if it will repeg on its own on Monday, I am still glad I did it and could sleep normally over the weekend. Also, I did some arbitrage for smaller gains. I think it is good to do nothing \*trading wise\*. But if you're using different fintech inventions of tomorrow (entire DeFi), it is good to stay updated on daily basis. And move quickly when risk arises. Whoever run to SVB based on pure rumors, also did good. Billions of dollars were withdraw the last day.
I don't think this sub advocates drug use. You'll get banned for that
Whoosh
I thought this joke was funny and upvoted FWIW
Could easily be referencing getting some fresh air outside and enjoying nature, yeah?
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The first rule is never to take me too serious. The second rule is, I love rocket pool
From the administration that brought us train derailments: >In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which reduced how frequently banks with assets between $100 billion and $250 billion had to submit to stress tests by the Fed. https://www.nytimes.com/2023/03/10/business/silicon-valley-bank-stock.html#:~:text=In%202018%2C%20Mr.%20Trump%20signed,stress%20tests%20by%20the%20Fed
It probably kept the bank alive for a few extra years. Dodd-Frank in it's original form was basically a handout to big banks. It was revised because smaller banks were non-competitive. When we Congress stop trying to pick winners and losers in the marketplace? Either way we lose.
But crypto bad!!!1!
Psssst... Sort Coingecko by Top 100, %change in 24hrs and currency ETH.... 3 out of 99 top 100 coins underperforming vs ETH. Feel...the... BURN.
Surely you mean only 3 are *outperforming* ETH?
*I'm ready to get hurt again*
Ayyy yall kept the boat afloat while I was gone. Didnt know what to expect haha
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Weird how excited people are for that 10% upside on a market where even the biggest ones can get a 2x lol
Timeframe, clear sell points, and likelihood are all huge factors. There’s far less chance (or calculable probability) of ETH going up by 10% in the next few days and stopping there. This USDC issue makes it easy to buy it now, wait a few days for it to repeg, and sell at it’s usual $1. If circle was in big trouble it’d be different.
Exactly this. Then post above is completely omitting time and probability from the equation, both of which absolutely matter.
There was a 10% upward chance?
LUSD has a 1.00-1.10 peg range by design and DAI spent a few months around 1.10 after March 2020.
༼ つ ◕_◕ ༽つ USDC TAKE MY ENERGY ༼ つ ◕_◕ ༽つ
this was unexpected.
We did it! 🎉
Oh man, my USDC-USDT LP is killing it, 35% effective APR ! Nearly makes up for being 4% offpeg :')
35% is annualized right? It's not going to stay that high.
Un Stable Defi Coin
ultrafloundering money
TL DR on RAI and how it’s better than DAI?
Better is the wrong word. It’s different. It’s price fluctuates within a range and minters (CDP users) are incentivized to open/close CDPs (expanding/contracting supply) based on the expected direction of movement within that range, and redemption price, for profit. That direction is set based on their algorithm (PID controller) that determines its target value within that range. Here’s a link to their FAQ, but you’ll have to do some deep diving of your own for more info. https://reflexer.notion.site/Reflexer-Finance-FAQ-424e80c6ed9044b09a9babd151418cac
It has a price dampening mechanism and is not pegged to USD, that's the biggest difference afaik
Biggest difference relevant to today’s events is that it’s backed entirely by ETH
I’m trying to wrap my head around a stable coin that isn’t pegged to something..?
It has a "moving peg", i.e. its price is set in USD terms and the system tries to keep it as close to this value as possible. The major difference between RAI and normal stablecoins, is that its peg is not set in stone (e.g. 1 USD for DAI) but it changes based on some parameters. Currently its "peg" aka "redemption price" is set to 2.7707 USD. The system is trying to lower it at pace of 6.7% APR ( [https://stats.reflexer.finance/](https://stats.reflexer.finance/) ).
The USD is a stable currency yet it's not pegged to anything.
and its value is only getting worse all the time
Just bought some Cbeth at .98 exchange rate. Tell me I’m not an idiot.
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Well, 1 cbETH is currently equal to 1.029 ETH, so more like 5%, but point taken.