SamRed

CryptoHodler since 2017, Software Engineer

[Watcher.Guru @WatcherGuru]

JUST IN: 🇺🇸 President Trump says interest rate should be lowered.

[vitalik.eth @VitalikButerin]

Recently I have been starting to worry about the state of prediction markets, in their current form. They have achieved a certain level of success: market volume is high enough to make meaningful bets and have a full-time job as a trader, and they often prove useful as a supplement to other forms of news media. But also, they seem to be over-converging to an unhealthy product market fit: embracing short-term cryptocurrency price bets, sports betting, and other similar things that have dopamine value but not any kind of long-term fulfillment or societal information value. My guess is that teams feel motivated to capitulate to these things because they bring in large revenue during a bear market where people are desperate - an understandable motive, but one that leads to corposlop.

I have been thinking about how we can help get prediction markets out of this rut. My current view is that we should try harder to push them into a totally different use case: hedging, in a very generalized sense (TLDR: we're gonna replace fiat currency)

Prediction markets have two types of actors: (i) "smart traders" who provide information to the market, and earn money, and necessarily (ii) some kind of actor who loses money.

But who would be willing to lose money and keep coming back? There are basically three answers to this question:

1. "Naive traders": people with dumb opinions who bet on totally wrong things
2. "Info buyers": people who set up money-losing automated market makers, to motivate people to trade on markets to help the info buyer learn information they do not know.
3. "Hedgers": people who are -EV in a linear sense, but who use the market as insurance, reducing their risk.

(1) is where we are today. IMO there is nothing fundamentally morally wrong with taking money from people with dumb opinions. But there still is something fundamentally "cursed" about relying on this too much. It gives the platform the incentive to seek out traders with dumb opinions, and create a public brand and community that encourages dumb opinions to get more people to come in. This is the slide to corposlop.

(2) has always been the idealistic hope of people like Robin Hanson. However, info buying has a public goods problem: you pay for the info, but everyone in the world gets it, including those who don't pay. There are limited cases where it makes sense for one org to pay (esp. decision markets), but even there, it seems likely that the market volumes achieved with that strategy will not be too high.

This gets us to (3). Suppose that you have shares in a biotech company. It's public knowledge that the Purple Party is better for biotech than the Yellow Party. So if you buy a prediction market share betting that the Yellow Party will win the next election, on average, you are reducing your risk.

Mathematical example: suppose that if Purple wins, the share price will be a dice roll between [80...120], and if Yellow wins, it's between [60...100]. If you make a size $10 bet that Yellow will win, your earnings become equivalent to a dice roll between [70...110] in both cases. Taking a logarithmic model of utility, this risk reduction is worth $0.58.

Now, let's get to a more fascinating example. What do people who want stablecoins ultimately want? They want price stability. They have some future expenses in mind, and they want a guarantee that will be able to pay those expenses. But if crypto grows on top of USD-backed stablecoins, crypto is ultimately not truly decentralized. Furthermore, different people have different types of expenses. There has been lots of thinking about making an "ideal stablecoin" that is based on some decentralized global price index, but what if the real solution is to go a step further, and get rid of the concept of currency altogether?

Here's the idea. You have price indices on all major categories of goods and services that people buy (treating physical goods/services in different regions as different categories), and prediction markets on each category. Each user (individual or business) has a local LLM that understands that user's expenses, and offers the user a personalized basket of prediction market shares, representing "N days of that user's expected future expenses".

Now, we do not need fiat currency at all! People can hold stocks, ETH, or whatever else to grow wealth, and personalized prediction market shares when they want stability.

Both of these examples require prediction markets denominated in an asset people want to hold, whether interest-bearing fiat, wrapped stocks, or ETH. Non-interest-bearing fiat has too-high opportunity cost, that overwhelms the hedging value. But if we can make it work, it's much more sustainable than the status quo, because both sides of the equation are likely to be long-term happy with the product that they are buying, and very large volumes of sophisticated capital will be willing to participate.

Build the next generation of finance, not corposlop.

[gluckq @gluckq2]

Chancellor on brink of first bailout for crypto.

[Cobie @cobie]

Bybit has to rebuy $1.4bn of ETH. It would be a shame if the price doubled.

[Base @base]

It's time to create your digital twin, with @freysa_ai

Create an onchain agent and watch them compete against other twins in a virtual town hall

[CZ 🔶 BNB @cz_binance]

Just the beginning.

[gaut @0xgaut]

ETH holders watching the rest of the market rip up

[Erik Voorhees @ErikVoorhees]

When demand for gold rises, more gold is produced.
When demand for oil rises, more oil is produced.
When demand for USD rises, more USD are produced.

When demand for Bitcoin rises...

[Senator Cynthia Lummis @SenLummis]

ICYMI: I just announced I will introduce legislation to establish a strategic Bitcoin reserve! #Bitcoin2024

[Tyler Winklevoss @tyler]

I just donated $1 million in bitcoin (15.47 BTC) to @realDonaldTrump and will be voting for him in November. Here’s why:

Over the past few years, the Biden Administration has openly declared war against crypto. It has weaponized multiple government agencies to bully, harass, and sue the good actors in our industry in an effort to destroy it. This Administration's actions have been nothing short of an unprecedented abuse of power wielded entirely for twisted political gain at the complete expense of innovation, the American taxpayer, and the American economy. There is nothing the Biden Administration can do or say at this point to pretend otherwise.

Some of the lowlights include the following:

The weaponization of the banking system against crypto companies and their principals. Known colloquially as Operation Choke Point 2.0, this starts with the OCC (a federal agency that licenses and regulates national banks) and the FDIC (a federal agency that provides deposit insurance to banks) giving “guidance” and instructing banks behind closed doors not to bank crypto companies. Any bank that doesn’t follow orders is threatened.

The conversation goes something like this: “That’s a nice bank you got there. It sure would be a shame if something were to happen to it because you bank some crypto folks.” If this tactic is not enough to scare a bank into line, the examiners will be sent in to turn everything upside down. This will almost certainly lead to some “finding” — show me the bank and I���ll show you the crime — that results in a massive fine or new supervisory rules and conditions that cripple a bank’s ability to operate. The risk is simply too great. Banks can either choose not to bank crypto companies or have that choice made for them.

These agencies have God-mode over banks because they can yank their license or FDIC deposit insurance at any time citing “safety and soundness” concerns. That is why they can behave like characters out of the Godfather and intimidate banks into dropping any customer or customer segment they want. This behavior of de-banking entire industries that are completely legal, but ideologically out of favor, began during the Obama Administration, when President Joe Biden was Vice President. It was nicknamed Operation Choke Point 1.0 back then and is a well-documented stain on the Obama Presidency. The Biden Administration has dusted off the playbook and has been running it at full speed against the crypto industry.

The blast radius has extended beyond crypto companies to individuals who work at them. I personally have lost multiple bank accounts because I own crypto and my investment firm @winklevosscap has as well.

The weaponization of the Securities and Exchange Commission (SEC) against crypto. The Biden Administration’s SEC has not written a single rule for the crypto industry to help any of its participants understand how to navigate the regulatory landscape for this new asset paradigm. This is by design.

By not writing any new rules for crypto, the SEC can disingenuously say that the existing rules — based on a 1946 Supreme Court decision about a citrus grove in Florida, issued before most homes had a telephone and 50 years before the advent of the commercial Internet — are fit for purpose. They are not.

Here’s one example. If ether is a security, an open question up until 48 hours ago, then you would be breaking securities laws if you sent ether to a friend from your smartphone to their smartphone. Why? Because only a broker dealer is allowed to transfer a security. And it can only do so to another broker dealer. From this example alone, anyone can understand how classifying a crypto like ether as a security would gut its utility and destroy its ability to usher in a decentralized future. It’s like asking an automobile to behave like a horse. Yet that is the position the Biden SEC has taken towards almost every crypto. It does this not because it doesn’t understand the consequences, but because it does. These are exactly the consequences it wants. To kill crypto.

By taking the ridiculous position that almost every crypto is a security, the Biden SEC has given itself the plausibility and carte blanche to bring litigation against any crypto project and company in the United States. The game is simple. Make it impossible to comply, then sue everyone for not complying. And that’s exactly what the Biden SEC has done over and over again to good actors in the space. Instead of the SEC hashing out rules for crypto — something that could be done in a matter of days — rules will be written years from now by judges and juries who determine that the SEC acted in bad faith and was wrong all along. The time and economic waste will be tremendous. The damage will be done. But that’s the point.

The Biden Administration has polluted the mission and corrupted the integrity of these agencies. All of them are led by unelected bureaucrats appointed by President Biden to carry out his marching orders. The moral compass of these foot soldiers is political gain and their higher calling is political power. Congress never granted them the statutory authority to determine the fate of the crypto industry or any other legal industry in America and they are totally unqualified to act as the gatekeepers of economic life in our country. That is the role of the market.

And yet the crypto industry is not alone. The Biden Administration has consistently attacked American business across the board and villainized its greatest heroes. The crime is always success and the reward is always ridicule, fines, and even more red tape. But to be clear, the Biden Administration doesn’t hate success outright. Only the kind that lives outside of its control. Once it figures out how to confiscate or coerce it, the Biden Administration becomes quite enthusiastic about success, gleefully manipulating it or redistributing it in a transparent attempt to buy votes. Over a long enough time scale, it's easy to see how these policies will lead to the destruction of our economy and our country.

Capitalism lifts people up. When allowed to flourish properly, it is the greatest generator of wealth and prosperity the world has ever known and it's the only economic system that can achieve all of this peacefully, while upholding the freedom and dignity of every individual who participates. With certain conditions in place — like the ability for anyone to incorporate a company, open a bank account to accept customer payments, and operate in the open market without government interference — innovation and wealth creation will thrive unbounded. Remove any one of these building blocks and you will have an entirely different system with entirely different results. This is exactly what the Biden Administration has done to the crypto industry and many other industries in America. It has been dismantling our economic way of life and the system that made America the greatest country in the world. And it has done this solely for its own power, control, and political ambition.

Of all the capitalist experiments, America has been the greatest. I have seen and experienced this first hand many times. @Gemini, a crypto platform I founded in 2014 with @cameron, went from an idea on a napkin to becoming a company that has employed thousands of people over the last decade and helped millions of customers gain access to crypto. I’ve had employees thank me in tears because their time at Gemini allowed them to buy a house for their family. I’ve had customers approach me on the street and thank me for building Gemini because it helped them achieve financial freedom and start their own business. It is these experiences that give me the greatest joy and provide meaning for everything we do at Gemini. The Biden Administration has tried to tear all of this down. I am not going to stand by idly and let them. I’m going to continue fighting for what I know to be so right.

President Donald J. Trump is the pro-Bitcoin, pro-crypto, and pro-business choice. This is not even remotely open for debate. Anyone who tells you otherwise is severely misinformed, delusional, or not telling the truth. It’s time to take our country back. It’s time for the crypto army to send a message to Washington. That attacking us is political suicide. This is why I will be casting my vote for President Trump in November and I hope you will too. Onward!

[CZ 🔶 BNB @cz_binance]

I would like to thank everyone for your care and support, be it writing letters, showing support on X, or in any other form. They all mean a lot to me and keep me strong. I will do my time, conclude this phase and focus on the next chapter of my life (education).

I will remain a passive investor (and holder) in crypto. Our industry has entered a new phase. Compliance is super important.

A silver lining of this whole process is that Binance has been under the microscope. And funds are SAFU.

Protect users!

[Luke Martin @VentureCoinist]

It's nice having @coinbase, @Snowden, @Fidelity, and countless other giant forces fighting for our coins when new FUD comes out.

Prices go up each cycle & so does the blocking ability.

[SamRed @SamredC]

@TheShamdoo HxMVLDW22Khi1uCb65F6R8cD7fkCeMG3tccNabMS4rvr

[Caleb Franzen @CalebFranzen]

#Bitcoin is going to new all-time highs today.

If I'm wrong, I'll give everyone who reposts this a free 7-day trial to the Cubic Analytics Patreon, where I'm sharing real-time setups & price action analysis on individual stocks & alts.
https://t.co/tQO8zbo3m3

[zencrypt @zencrypt2]

@gumsays Solana may be down but you can still @PlayHoneyland

Very smart decisions by the team on what gets handled on vs off chain

[icebergy ❄️ @Icebergy]

"this is my last cycle"

buddy you're here for life

[Caleb Franzen @CalebFranzen]

#Bitcoin broke the SEC. Satoshi won. GG's.

[Caleb Franzen @CalebFranzen]

A bunch of government bureaucrats are scrambling in a panic right now to figure out what the fuck just happened & what kind of damage control needs to happen next, and I can't stop laughing at the image in my head.

[Sicarious @Sicarious_]

So... Gary Gensler trainwreck aside, we all saw what REDACTED did on that "news," right?

[DCinvestor @DCinvestor]

i���ve been in crypto for a long time, and this is some of the craziest shit i’ve ever seen