DeFi100 team steal $32m, post abusive message to victims on homepage(web.archive.org)
web.archive.org
DeFi100 team steal $32m, post abusive message to victims on homepage
http://web.archive.org/web/20210522030957/https://defi100.org/
43 comments
I mean, there are funds who are putting billions of dollars into defi strategies.
Yields at the moment are crushed, but during the hayday you could make insane money.
Almost all crypto trading firms have some sort of defi yield farming presence, and many tradfi firms were thinking about entering the space. Whether they still will and if yields will recover is still an open question.
There are definitely some dapps that are pretty solid imo: uniswap, aave, maker, curve, and alchemix to name a few.
Whether it's all a scam is a good question, but from my perspective it doesn't really matter. The goal is to make money by being smarter than everyone else.
I don't think I'm making the world a better place or really helping anyone besides myself/firm, but that's okay.
Some people think finance is perverse because it attracts tons of top talent and utilizes their skills for a dubious purpose. While this may be true, it's also true of many other industries as well: most notably, big tech. Ultimately, people rarely make employment decisions by thinking of how many people they can help.
Yields at the moment are crushed, but during the hayday you could make insane money.
Almost all crypto trading firms have some sort of defi yield farming presence, and many tradfi firms were thinking about entering the space. Whether they still will and if yields will recover is still an open question.
There are definitely some dapps that are pretty solid imo: uniswap, aave, maker, curve, and alchemix to name a few.
Whether it's all a scam is a good question, but from my perspective it doesn't really matter. The goal is to make money by being smarter than everyone else.
I don't think I'm making the world a better place or really helping anyone besides myself/firm, but that's okay.
Some people think finance is perverse because it attracts tons of top talent and utilizes their skills for a dubious purpose. While this may be true, it's also true of many other industries as well: most notably, big tech. Ultimately, people rarely make employment decisions by thinking of how many people they can help.
I just googled each of the apps you mentioned. They all seem to be things to make money off of cryptocurrency. That's the only thing the decentralized apps seem to be able to do, lending, staking, swapping, new tokens, etc. However, if you think cryptocurrency is useless, and I pretty much do, then creating new forms of it also seems pretty useless.
It all seems very zero sum. No value is getting created. It's just musical chairs with money, people putting money in and hoping to pull more money out. Problem being, since no value is created, it won't be possible for everyone to take out more money than they've put in. For every dollar gained there is one lost.
As far as doing something like for a job - I wouldn't do it. There's a saying like "Better to be a live jackal than a dead lion, but a live lion is better still and usually easier." In other words, I think if you have the mental equipment to make money in crypto you could probably also make money in an industry that isn't a ponzi scheme depriving the gullible of their savings and the benefit of choosing to do that is that you wouldn't put your own money at risk by interacting with shady exchanges and characters.
It all seems very zero sum. No value is getting created. It's just musical chairs with money, people putting money in and hoping to pull more money out. Problem being, since no value is created, it won't be possible for everyone to take out more money than they've put in. For every dollar gained there is one lost.
As far as doing something like for a job - I wouldn't do it. There's a saying like "Better to be a live jackal than a dead lion, but a live lion is better still and usually easier." In other words, I think if you have the mental equipment to make money in crypto you could probably also make money in an industry that isn't a ponzi scheme depriving the gullible of their savings and the benefit of choosing to do that is that you wouldn't put your own money at risk by interacting with shady exchanges and characters.
> It all seems very zero sum. No value is getting created.
I think you might be underestimating the amount of resources that the traditional system uses to manage borrowing, lending, insurance, establishing ownership, transferring large sums, settling disputes, etc.
The adoption of cryptocurrency and smart contracts would replace a lot of the financial industry with tiny smart bits of code. That is the value being created.
Considering that traditional finance has a long history of predatory practices, anything that decreases their influence is a good thing to me.
I think you might be underestimating the amount of resources that the traditional system uses to manage borrowing, lending, insurance, establishing ownership, transferring large sums, settling disputes, etc.
The adoption of cryptocurrency and smart contracts would replace a lot of the financial industry with tiny smart bits of code. That is the value being created.
Considering that traditional finance has a long history of predatory practices, anything that decreases their influence is a good thing to me.
It's possible I'm missing something, because the reality of cryptocurrency as I understand it seems bizarre. To my knowledge all of the borrowing/lending/ownership stuff is about making speculative bets. i.e. It is of the form "You can lend some crypto and get some return so other people can borrow some crypto and take some positions short or long on the rising/declining prices of different currencies or currency pairs.
This kind of thing isn't really valuable lending or borrowing in my view. It's just part of the musical chairs gambling game that is the larger cryptocurrency ecosystem. It's also not possible (that I know of) for cryptocurrency to supplant our current lending/borrowing system. If I want to borrow 100k to refit the kitchen in my restaurant, can I do that with cryptocurrency? I haven't seen the defi solutions for business loans in other words, just the defi solutions for "I want to 100x the risk/reward when I buy bitcoin calls expiring next week."
This kind of thing isn't really valuable lending or borrowing in my view. It's just part of the musical chairs gambling game that is the larger cryptocurrency ecosystem. It's also not possible (that I know of) for cryptocurrency to supplant our current lending/borrowing system. If I want to borrow 100k to refit the kitchen in my restaurant, can I do that with cryptocurrency? I haven't seen the defi solutions for business loans in other words, just the defi solutions for "I want to 100x the risk/reward when I buy bitcoin calls expiring next week."
>>I haven't seen the defi solutions for business loans in other words
It's possible, but only in a round about manner at the moment. To get a regular business loan typically you need to have collateral security, normally that is some combination of property, plant, equipment or financial instruments like shares.
Crypto loans (see AAVE) can only presently be secured by crypto collateral. That's not necessarily a bad thing - it keeps things simple and offchain (ie tangible) collateral can be financialised easily enough with existing tradfi tools. In a round about way if you wanted to get a business loan via crypto at a better rate than your bank, you would borrow from your bank in $ (lets say 2%), swap $'s into something like USDC, deposit it at 7% on chain and then borrow something like Ethereum against it at 3%, you now have positive carry on your loan (4%) and a pile of Ethereum (if you so want).
If you want to deal exclusively in offchain assets as collateral for onchain loans, nobody yet has bridged that gap, its a huge opportunity for sure. UBS I note is experimenting in the space.
https://www.finews.asia/finance/34488-ubs-tokenization-block...
It's possible, but only in a round about manner at the moment. To get a regular business loan typically you need to have collateral security, normally that is some combination of property, plant, equipment or financial instruments like shares.
Crypto loans (see AAVE) can only presently be secured by crypto collateral. That's not necessarily a bad thing - it keeps things simple and offchain (ie tangible) collateral can be financialised easily enough with existing tradfi tools. In a round about way if you wanted to get a business loan via crypto at a better rate than your bank, you would borrow from your bank in $ (lets say 2%), swap $'s into something like USDC, deposit it at 7% on chain and then borrow something like Ethereum against it at 3%, you now have positive carry on your loan (4%) and a pile of Ethereum (if you so want).
If you want to deal exclusively in offchain assets as collateral for onchain loans, nobody yet has bridged that gap, its a huge opportunity for sure. UBS I note is experimenting in the space.
https://www.finews.asia/finance/34488-ubs-tokenization-block...
This kind of lending is probably the precursor to normal business loans. It's proving the concept on a global scale.
I don't think it's proving the concept. The hard parts about lending are figuring out what is a good risk, what the rates should be, handling repossession, negotiating terms, dealing with laws, all that stuff. Cryptocurrency lending isn't doing any of the hard part of lending and it also doesn't seem to have any advantage over the existing system for doing the hard stuff. Meaning: in the cryptocurrency future, how will it be easier for a restaurant to use their business as collateral to take cash to do upgrades?
> what is a good risk, what the rates should be, handling repossession, negotiating terms, dealing with laws, all that stuff
These are the problems being worked on in defi right now and why people are so excited about it.
> in the cryptocurrency future, how will it be easier for a restaurant to use their business as collateral to take cash to do upgrades?
In the idealized future, the restaurant would have their complete transaction history available on-chain for lending contracts to use. Then, instead of a banker making a decision if the restaurant deserves the loan, an algorithm can make that determination and instantly grant the loan. Such a contract might use data points like amount of restaurant supplies purchased, number of customers, average sale price, demographics of the location, all of which would be on-chain and available to a contract.
This is good because it removes bias and discrimination that currently exists in the traditional system, increases the speed at which your restaurant owner can access their capital, and decreases the overall cost of doing the transaction because humans don't need to be involved.
These are the problems being worked on in defi right now and why people are so excited about it.
> in the cryptocurrency future, how will it be easier for a restaurant to use their business as collateral to take cash to do upgrades?
In the idealized future, the restaurant would have their complete transaction history available on-chain for lending contracts to use. Then, instead of a banker making a decision if the restaurant deserves the loan, an algorithm can make that determination and instantly grant the loan. Such a contract might use data points like amount of restaurant supplies purchased, number of customers, average sale price, demographics of the location, all of which would be on-chain and available to a contract.
This is good because it removes bias and discrimination that currently exists in the traditional system, increases the speed at which your restaurant owner can access their capital, and decreases the overall cost of doing the transaction because humans don't need to be involved.
If the goal is to automate loans then why do we need cryptocurrency? Couldn't we automate loans using business data in the current world of centralized finance?
The benefit you're suggesting, that all the restaurant's transactions would be on the blockchain and so lenders could automatically evaluate the risk, is at odds with my understanding that bitcoin has high transaction costs and slow speeds and it is therefore unlikely that all of a restaurant's patrons would ever be paying with on-chain transactions. Maybe they could pay with something like a Coinbase credit card, and Coinbase could make transaction histories available to lenders - but I have to imagine something like that exists in current finance with our current credit card companies.
The benefit you're suggesting, that all the restaurant's transactions would be on the blockchain and so lenders could automatically evaluate the risk, is at odds with my understanding that bitcoin has high transaction costs and slow speeds and it is therefore unlikely that all of a restaurant's patrons would ever be paying with on-chain transactions. Maybe they could pay with something like a Coinbase credit card, and Coinbase could make transaction histories available to lenders - but I have to imagine something like that exists in current finance with our current credit card companies.
Obviously bitcoin wouldn't be used for this kind of operation. Again, we're at proof of concept stage. The reason Blockchain would be preferred over traditional finance for proving transactions is because traditional finance would have difficultly integrating disparate systems and potential for histories to be manipulated. If everything is on-chain and verifiable then it makes this process a lot easier.
Right now it’s not very easy to loan money from an entity that doesn’t have a domestic presence. Defi could make some financial products more accessible to countries that don’t have that infrastructure yet.
There is no way countries will allow these sort of cute workarounds to local regulations in finance.
> This is good because it removes bias and discrimination that currently exists in the traditional system
Just because code makes the decisions doesn't mean that there is no bias and discrimination built into the code. This will eventually create bigger problems down the road due to the massive scale this can be deployed at when compared to a banker having to make the final call.
Just because code makes the decisions doesn't mean that there is no bias and discrimination built into the code. This will eventually create bigger problems down the road due to the massive scale this can be deployed at when compared to a banker having to make the final call.
> If I want to borrow 100k to refit the kitchen in my restaurant, can I do that with cryptocurrency
If you have a large crypto portfolio (which many do) to use as collateral, you absolutely can do this.
If you have a large crypto portfolio (which many do) to use as collateral, you absolutely can do this.
> Considering that traditional finance has a long history of predatory practices, anything that decreases their influence is a good thing to me.
Why should we trade onymous and regulated predators for anonymous and unregulated predators? If State Street said, everyone who invested in DIA is a sucker, and we're taking their money, they would be prosecuted. These scammer's claim that they will not face consequences is plausible.
Ethereum has been described as a "dark forest" where, if you make the slightest mistake, your money becomes "miner extractable value" and is no longer yours. When I buy stock, my order goes to HFTs who wring every ten-thousandth of a penny out of it they can - ten-thousandths of a penny that are rightfully mine - but my order gets filled. Market structure is destiny, and Ethereum's market structure enshrines frontrunning.
Let's say we start a bank where people can apply for mortgages, and a decentralized network of investors bid on those mortgages. Those investors take on-chain data and feed it through machine learning and whatnot to determine the creditworthiness of the borrowers.
I believe such a system would create decentralized, anonymous, unregulated redlining. The ML algorithms would observe that certain neighborhoods have lower incomes, or that other MLs are bidding higher interest rates for certain borrowers.
I think the biggest misconception cryptocurrency advocates have is that things like trust and equity are problems with technical solutions. They aren't; they are social problems that demand social solutions. That means creating regulations to codify and proliferate (what we desire to be) cultural norms. That means centralization, so that there are people who can be held to account.
ETA: And perhaps the second biggest misconception is that "Finance 2.0" is not just a recapitulation of "Finance 1.0", sans the hard-won restraints on it's abuses and excesses. If you don't believe that these abuses are effectively managed - that should only give you more pause.
Why should we trade onymous and regulated predators for anonymous and unregulated predators? If State Street said, everyone who invested in DIA is a sucker, and we're taking their money, they would be prosecuted. These scammer's claim that they will not face consequences is plausible.
Ethereum has been described as a "dark forest" where, if you make the slightest mistake, your money becomes "miner extractable value" and is no longer yours. When I buy stock, my order goes to HFTs who wring every ten-thousandth of a penny out of it they can - ten-thousandths of a penny that are rightfully mine - but my order gets filled. Market structure is destiny, and Ethereum's market structure enshrines frontrunning.
Let's say we start a bank where people can apply for mortgages, and a decentralized network of investors bid on those mortgages. Those investors take on-chain data and feed it through machine learning and whatnot to determine the creditworthiness of the borrowers.
I believe such a system would create decentralized, anonymous, unregulated redlining. The ML algorithms would observe that certain neighborhoods have lower incomes, or that other MLs are bidding higher interest rates for certain borrowers.
I think the biggest misconception cryptocurrency advocates have is that things like trust and equity are problems with technical solutions. They aren't; they are social problems that demand social solutions. That means creating regulations to codify and proliferate (what we desire to be) cultural norms. That means centralization, so that there are people who can be held to account.
ETA: And perhaps the second biggest misconception is that "Finance 2.0" is not just a recapitulation of "Finance 1.0", sans the hard-won restraints on it's abuses and excesses. If you don't believe that these abuses are effectively managed - that should only give you more pause.
Interacting with shady exchanges and characters, and the gullible getting fleeced, are pros not cons. They help cultivate the sense of I’m making money by being smarter than everyone else. Gives you a sense of nearby danger that helps fuel the feeling of accomplishment.
How does Maker for example not create any value? They’ve built a decentralized USD-pegged token, how is that not worth something?
Maker is just an index fund of centralized USD-pegged tokens: USDC and Tether.
Selling an index fund with only two relevant components, which your customers could have bought directly, does not add value.
Selling an index fund with only two relevant components, which your customers could have bought directly, does not add value.
I don't think Maker is index fund. How?
You can think whatever you like, but in times of crisis all that matters is collateral. MakerDAO is collateralized by Tether and USDC.
They use array of tokens as their collateralized assets. I don't think they even include the tokens you mentioned.
> No value is getting created. It's just musical chairs with money
Well, money launderers do this monetary musical chairs thing too. The launderers' customers pay them pretty hefty fees, so clearly they percieve some value being created (or at least provided) there.
Kinda like when Sotheby's launders drug money at their art auctions. Except now instead of art we have "NFTs".
Well, money launderers do this monetary musical chairs thing too. The launderers' customers pay them pretty hefty fees, so clearly they percieve some value being created (or at least provided) there.
Kinda like when Sotheby's launders drug money at their art auctions. Except now instead of art we have "NFTs".
How is uniswap making money off others?
You may not be making employment decisions based on the number of people you help, but projecting into other people that other don't either doesn't actually absolve you of the hurt you cause others. It may help you sleep at night but you're lying to yourself if you really believe that. Most jobs lie somewhere in the spectrum between school teacher vs murderer for hire/military and you have to determine where any given job sits along that spectrum, and where in that spectrum you're comfortable sitting. That the job's value to humanity is coming up means you understand it's questionable. DeFi circumvents money laundering laws, almost by design (if not by design, running proper KYC is simply extra expense that a businesses don't want to pay for), so the work literally helps fund terrorism (eg Iran, North Korea). You can disagree with the US government's stance on the matter, but don't pretend that enabling those regimes is the same as implementing ad tech at a FANG.
A large number of hedge funds and smart money financial institutions for one.
And some fortune 500 companies for two.
And some fortune 500 companies for two.
Doesn't mean shit. I was there in the late 90s when everyone was investing in tech companies that no longer exist. It was madness. Champagne every day.
The question was who. Not what are they drinking.
ILO are an interesting idea:
https://medium.com/avalancheavax/initial-litigation-offering...
https://medium.com/avalancheavax/initial-litigation-offering...
Speculators aka gamblers.
The hype is that there's lots of money to be made. I've put a significant amount in, banking on finding a greater fool. I have absolutely no faith in the long-term viability of any of the cryptocurrencies, but that won't matter once I sell my coins. Or who knows, maybe I will end up the greatest fool here and just have a worthless number on my screen. It's all a gamble.
Watch Warren Buffett and Charlie Munger mock cryptocurrency at the 2021 Berkshire Hathaway annual meeting:
https://old.reddit.com/r/brkb/comments/n3c78z/im_alright_on_...
https://old.reddit.com/r/brkb/comments/n3c78z/im_alright_on_...
https://twitter.com/RipplePandaXRP/status/139611282045492429... has a copy of a deleted Reddit post about it.
They’ve since said their website was hacked.
> The website was hacked yesterday and the message was shown by the hackers. It has been taken down.
https://twitter.com/defi100/status/1396361647149633537?s=21
> The website was hacked yesterday and the message was shown by the hackers. It has been taken down.
https://twitter.com/defi100/status/1396361647149633537?s=21
Is there a chance authorities could track down the scammers? I’m not familiar enough with this space to understand but I’ve seen that people making anonymous Bitcoin payments can be tracked down. What makes this different?
there's a chance, but whose jurisdiction is it, and who is responsible for investigating the fraud?
Good question. This occurred on the Binance Smart Chain. Binance gets rather boxy about determining its own jurisdiction and has offices in several different countries, but the activities on the chain itself are supposedly permissionless and Binance will claim they have no control over it.
Unfortunately, $32M is probably not enough to warrant an investigation.
This kind of stuff is a shame, because there's a lot of ethical and innovative applications in DeFi, like Uniswap, Aave, Compound, and Yearn. There's also index tokens managed via the Set Protocol that have been running for years with no issues. BSC is a fork of Ethereum and the main appeal is lower transaction fees (at the cost of centralization). From my perspective, BSC tends to be forks of Ethereum based projects deployed by devs that have little idea how they work. I look at many projects on BSC as being little better than a casino game.
Unfortunately, $32M is probably not enough to warrant an investigation.
This kind of stuff is a shame, because there's a lot of ethical and innovative applications in DeFi, like Uniswap, Aave, Compound, and Yearn. There's also index tokens managed via the Set Protocol that have been running for years with no issues. BSC is a fork of Ethereum and the main appeal is lower transaction fees (at the cost of centralization). From my perspective, BSC tends to be forks of Ethereum based projects deployed by devs that have little idea how they work. I look at many projects on BSC as being little better than a casino game.
> I look at many projects on BSC as being little better than a casino game.
Heck, a nontrivial number of applications running on BSC are literally casino games. It's somewhat popular as a way of implementing (unregulated and probably illegal) online gaming.
Heck, a nontrivial number of applications running on BSC are literally casino games. It's somewhat popular as a way of implementing (unregulated and probably illegal) online gaming.
I honestly don't get the cryptocurrency hype. None of the coins I've seen actually seem to work. They are slow, expensive to transfer, carry huge risks if you use them incorrectly. I've never seen a "dapp" that was at all good. The whole ecosystem seems to be scammers, pump and dump, and criminals. Who would put meaningful amounts of money into stuff like this?