More on Web3 & Crypto
OnChain Wizard
3 years ago
How to make a >800 million dollars in crypto attacking the once 3rd largest stablecoin, Soros style
Everyone is talking about the $UST attack right now, including Janet Yellen. But no one is talking about how much money the attacker made (or how brilliant it was). Lets dig in.
Our story starts in late March, when the Luna Foundation Guard (or LFG) starts buying BTC to help back $UST. LFG started accumulating BTC on 3/22, and by March 26th had a $1bn+ BTC position. This is leg #1 that made this trade (or attack) brilliant.
The second leg comes in the form of the 4pool Frax announcement for $UST on April 1st. This added the second leg needed to help execute the strategy in a capital efficient way (liquidity will be lower and then the attack is on).
We don't know when the attacker borrowed 100k BTC to start the position, other than that it was sold into Kwon's buying (still speculation). LFG bought 15k BTC between March 27th and April 11th, so lets just take the average price between these dates ($42k).
So you have a ~$4.2bn short position built. Over the same time, the attacker builds a $1bn OTC position in $UST. The stage is now set to create a run on the bank and get paid on your BTC short. In anticipation of the 4pool, LFG initially removes $150mm from 3pool liquidity.
The liquidity was pulled on 5/8 and then the attacker uses $350mm of UST to drain curve liquidity (and LFG pulls another $100mm of liquidity).
But this only starts the de-pegging (down to 0.972 at the lows). LFG begins selling $BTC to defend the peg, causing downward pressure on BTC while the run on $UST was just getting started.
With the Curve liquidity drained, the attacker used the remainder of their $1b OTC $UST position ($650mm or so) to start offloading on Binance. As withdrawals from Anchor turned from concern into panic, this caused a real de-peg as people fled for the exits
So LFG is selling $BTC to restore the peg while the attacker is selling $UST on Binance. Eventually the chain gets congested and the CEXs suspend withdrawals of $UST, fueling the bank run panic. $UST de-pegs to 60c at the bottom, while $BTC bleeds out.
The crypto community panics as they wonder how much $BTC will be sold to keep the peg. There are liquidations across the board and LUNA pukes because of its redemption mechanism (the attacker very well could have shorted LUNA as well). BTC fell 25% from $42k on 4/11 to $31.3k
So how much did our attacker make? There aren't details on where they covered obviously, but if they are able to cover (or buy back) the entire position at ~$32k, that means they made $952mm on the short.
On the $350mm of $UST curve dumps I don't think they took much of a loss, lets assume 3% or just $11m. And lets assume that all the Binance dumps were done at 80c, thats another $125mm cost of doing business. For a grand total profit of $815mm (bf borrow cost).
BTC was the perfect playground for the trade, as the liquidity was there to pull it off. While having LFG involved in BTC, and foreseeing they would sell to keep the peg (and prevent LUNA from dying) was the kicker.
Lastly, the liquidity being low on 3pool in advance of 4pool allowed the attacker to drain it with only $350mm, causing the broader panic in both BTC and $UST. Any shorts on LUNA would've added a lot of P&L here as well, with it falling -65% since 5/7.
And for the reply guys, yes I know a lot of this involves some speculation & assumptions. But a lot of money was made here either way, and I thought it would be cool to dive into how they did it.
Nabil Alouani
3 years ago
Why Cryptocurrency Is Not Dead Despite the FTX Scam
A fraud, free-market, antifragility tale
Crypto's only rival is public opinion.
In less than a week, mainstream media, bloggers, and TikTokers turned on FTX's founder.
While some were surprised, almost everyone with a keyboard and a Twitter account predicted the FTX collapse. These financial oracles should have warned the 1.2 million people Sam Bankman-Fried duped.
After happening, unexpected events seem obvious to our brains. It's a bug and a feature because it helps us cope with disasters and makes our reasoning suck.
Nobody predicted the FTX debacle. Bloomberg? Politicians. Non-famous. No cryptologists. Who?
When FTX imploded, taking billions of dollars with it, an outrage bomb went off, and the resulting shockwave threatens the crypto market's existence.
As someone who lost more than $78,000 in a crypto scam in 2020, I can only understand people’s reactions. When the dust settles and rationality returns, we'll realize this is a natural occurrence in every free market.
What specifically occurred with FTX? (Skip if you are aware.)
FTX is a cryptocurrency exchange where customers can trade with cash. It reached #3 in less than two years as the fastest-growing platform of its kind.
FTX's performance helped make SBF the crypto poster boy. Other reasons include his altruistic public image, his support for the Democrats, and his company Alameda Research.
Alameda Research made a fortune arbitraging Bitcoin.
Arbitrage trading uses small price differences between two markets to make money. Bitcoin costs $20k in Japan and $21k in the US. Alameda Research did that for months, making $1 million per day.
Later, as its capital grew, Alameda expanded its trading activities and began investing in other companies.
Let's now discuss FTX.
SBF's diabolic master plan began when he used FTX-created FTT coins to inflate his trading company's balance sheets. He used inflated Alameda numbers to secure bank loans.
SBF used money he printed himself as collateral to borrow billions for capital. Coindesk exposed him in a report.
One of FTX's early investors tweeted that he planned to sell his FTT coins over the next few months. This would be a minor event if the investor wasn't Binance CEO Changpeng Zhao (CZ).
The crypto space saw a red WARNING sign when CZ cut ties with FTX. Everyone with an FTX account and a brain withdrew money. Two events followed. FTT fell from $20 to $4 in less than 72 hours, and FTX couldn't meet withdrawal requests, spreading panic.
SBF reassured FTX users on Twitter. Good assets.
He lied.
SBF falsely claimed FTX had a liquidity crunch. At the time of his initial claims, FTX owed about $8 billion to its customers. Liquidity shortages are usually minor. To get cash, sell assets. In the case of FTX, the main asset was printed FTT coins.
Sam wouldn't get out of trouble even if he slashed the discount (from $20 to $4) and sold every FTT. He'd flood the crypto market with his homemade coins, causing the price to crash.
SBF was trapped. He approached Binance about a buyout, which seemed good until Binance looked at FTX's books.
Binance's tweet ended SBF, and he had to apologize, resign as CEO, and file for bankruptcy.
Bloomberg estimated Sam's net worth to be zero by the end of that week. 0!
But that's not all. Twitter investigations exposed fraud at FTX and Alameda Research. SBF used customer funds to trade and invest in other companies.
Thanks to the Twitter indie reporters who made the mainstream press look amateurish. Some Twitter detectives didn't sleep for 30 hours to find answers. Others added to existing threads. Memes were hilarious.
One question kept repeating in my bald head as I watched the Blue Bird. Sam, WTF?
Then I understood.
SBF wanted that FTX becomes a bank.
Think about this. FTX seems healthy a few weeks ago. You buy 2 bitcoins using FTX. You'd expect the platform to take your dollars and debit your wallet, right?
No. They give I-Owe-Yous.
FTX records owing you 2 bitcoins in its internal ledger but doesn't credit your account. Given SBF's tricks, I'd bet on nothing.
What happens if they don't credit my account with 2 bitcoins? Your money goes into FTX's capital, where SBF and his friends invest in marketing, political endorsements, and buying other companies.
Over its two-year existence, FTX invested in 130 companies. Once they make a profit on their purchases, they'll pay you and keep the rest.
One detail makes their strategy dumb. If all FTX customers withdraw at once, everything collapses.
Financially savvy people think FTX's collapse resembles a bank run, and they're right. SBF designed FTX to operate like a bank.
You expect your bank to open a drawer with your name and put $1,000 in it when you deposit $1,000. They deposit $100 in your drawer and create an I-Owe-You for $900. What happens to $900?
Let's sum it up: It's boring and headache-inducing.
When you deposit money in a bank, they can keep 10% and lend the rest. Fractional Reserve Banking is a popular method. Fractional reserves operate within and across banks.
Fractional reserve banking generates $10,000 for every $1,000 deposited. People will pay off their debt plus interest.
As long as banks work together and the economy grows, their model works well.
SBF tried to replicate the system but forgot two details. First, traditional banks need verifiable collateral like real estate, jewelry, art, stocks, and bonds, not digital coupons. Traditional banks developed a liquidity buffer. The Federal Reserve (or Central Bank) injects massive cash into troubled banks.
Massive cash injections come from taxpayers. You and I pay for bankers' mistakes and annual bonuses. Yes, you may think banking is rigged. It's rigged, but it's the best financial game in 150 years. We accept its flaws, including bailouts for too-big-to-fail companies.
Anyway.
SBF wanted Binance's bailout. Binance said no, which was good for the crypto market.
Free markets are resilient.
Nassim Nicholas Taleb coined the term antifragility.
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”
The easiest way to understand how antifragile systems behave is to compare them with other types of systems.
Glass is like a fragile system. It snaps when shocked.
Similar to rubber, a resilient system. After a stressful episode, it bounces back.
A system that is antifragile is similar to a muscle. As it is torn in the gym, it gets stronger.
Time-changed things are antifragile. Culture, tech innovation, restaurants, revolutions, book sales, cuisine, economic success, and even muscle shape. These systems benefit from shocks and randomness in different ways, but they all pay a price for antifragility.
Same goes for the free market and financial institutions. Taleb's book uses restaurants as an example and ends with a reference to the 2008 crash.
“Restaurants are fragile. They compete with each other. But the collective of local restaurants is antifragile for that very reason. Had restaurants been individually robust, hence immortal, the overall business would be either stagnant or weak and would deliver nothing better than cafeteria food — and I mean Soviet-style cafeteria food. Further, it [the overall business] would be marred with systemic shortages, with once in a while a complete crisis and government bailout.”
Imagine the same thing with banks.
Independent banks would compete to offer the best services. If one of these banks fails, it will disappear. Customers and investors will suffer, but the market will recover from the dead banks' mistakes.
This idea underpins a free market. Bitcoin and other cryptocurrencies say this when criticizing traditional banking.
The traditional banking system's components never die. When a bank fails, the Federal Reserve steps in with a big taxpayer-funded check. This hinders bank evolution. If you don't let banking cells die and be replaced, your financial system won't be antifragile.
The interdependence of banks (centralization) means that one bank's mistake can sink the entire fleet, which brings us to SBF's ultimate travesty with FTX.
FTX has left the cryptocurrency gene pool.
FTX should be decentralized and independent. The super-star scammer invested in more than 130 crypto companies and linked them, creating a fragile banking-like structure. FTX seemed to say, "We exist because centralized banks are bad." But we'll be good, unlike the centralized banking system.
FTX saved several companies, including BlockFi and Voyager Digital.
FTX wanted to be a crypto bank conglomerate and Federal Reserve. SBF wanted to monopolize crypto markets. FTX wanted to be in bed with as many powerful people as possible, so SBF seduced politicians and celebrities.
Worst? People who saw SBF's plan flaws praised him. Experts, newspapers, and crypto fans praised FTX. When billions pour in, it's hard to realize FTX was acting against its nature.
Then, they act shocked when they realize FTX's fall triggered a domino effect. Some say the damage could wipe out the crypto market, but that's wrong.
Cell death is different from body death.
FTX is out of the game despite its size. Unfit, it fell victim to market natural selection.
Next?
The challengers keep coming. The crypto economy will improve with each failure.
Free markets are antifragile because their fragile parts compete, fostering evolution. With constructive feedback, evolution benefits customers and investors.
FTX shows that customers don't like being scammed, so the crypto market's health depends on them. Charlatans and con artists are eliminated quickly or slowly.
Crypto isn't immune to collapse. Cryptocurrencies can go extinct like biological species. Antifragility isn't immortality. A few more decades of evolution may be enough for humans to figure out how to best handle money, whether it's bitcoin, traditional banking, gold, or something else.
Keep your BS detector on. Start by being skeptical of this article's finance-related claims. Even if you think you understand finance, join the conversation.
We build a better future through dialogue. So listen, ask, and share. When you think you can't find common ground with the opposing view, remember:
Sam Bankman-Fried lied.
Sam Hickmann
4 years ago
A quick guide to formatting your text on INTΞGRITY
[06/20/2022 update] We have now implemented a powerful text editor, but you can still use markdown.
Markdown:
Headers
SYNTAX:
# This is a heading 1
## This is a heading 2
### This is a heading 3
#### This is a heading 4
RESULT:
This is a heading 1
This is a heading 2
This is a heading 3
This is a heading 4
Emphasis
SYNTAX:
**This text will be bold**
~~Strikethrough~~
*You **can** combine them*
RESULT:
This text will be italic
This text will be bold
You can combine them
Images
SYNTAX:
RESULT:
Videos
SYNTAX:
https://www.youtube.com/watch?v=7KXGZAEWzn0
RESULT:
Links
SYNTAX:
[Int3grity website](https://www.int3grity.com)
RESULT:
Tweets
SYNTAX:
https://twitter.com/samhickmann/status/1503800505864130561
RESULT:
Blockquotes
SYNTAX:
> Human beings face ever more complex and urgent problems, and their effectiveness in dealing with these problems is a matter that is critical to the stability and continued progress of society. \- Doug Engelbart, 1961
RESULT:
Human beings face ever more complex and urgent problems, and their effectiveness in dealing with these problems is a matter that is critical to the stability and continued progress of society. - Doug Engelbart, 1961
Inline code
SYNTAX:
Text inside `backticks` on a line will be formatted like code.
RESULT:
Text inside backticks on a line will be formatted like code.
Code blocks
SYNTAX:
'''js
function fancyAlert(arg) {
if(arg) {
$.facebox({div:'#foo'})
}
}
'''
RESULT:
function fancyAlert(arg) {
if(arg) {
$.facebox({div:'#foo'})
}
}
Maths
We support LaTex to typeset math. We recommend reading the full documentation on the official website
SYNTAX:
$$[x^n+y^n=z^n]$$
RESULT:
[x^n+y^n=z^n]
Tables
SYNTAX:
| header a | header b |
| ---- | ---- |
| row 1 col 1 | row 1 col 2 |
RESULT:
| header a | header b | header c |
|---|---|---|
| row 1 col 1 | row 1 col 2 | row 1 col 3 |
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Architectural Digest
3 years ago
Take a look at The One, a Los Angeles estate with a whopping 105,000 square feet of living area.
The interiors of the 105,000-square-foot property, which sits on a five-acre parcel in the wealthy Los Angeles suburb of Bel Air and is suitably titled The One, have been a well guarded secret. We got an intimate look inside this world-record-breaking property, as well as the creative and aesthetic geniuses behind it.
The estate appears to float above the city, surrounded on three sides by a moat and a 400-foot-long running track. Completed over eight years—and requiring 600 workers to build—the home was designed by architect Paul McClean and interior designer Kathryn Rotondi, who were enlisted by owner and developer Nile Niami to help it live up to its standard.
"This endeavor seemed both exhilarating and daunting," McClean says. However, the home's remarkable location and McClean's long-standing relationship with Niami persuaded him to "build something unique and extraordinary" rather than just take on the job.
And McClean has more than delivered.
The home's main entrance leads to a variety of meeting places with magnificent 360-degree views of the Pacific Ocean, downtown Los Angeles, and the San Gabriel Mountains, thanks to its 26-foot-high ceilings. There is water at the entrance area, as well as a sculpture and a bridge. "We often employ water in our design approach because it provides a sensory change that helps you acclimatize to your environment," McClean explains.
Niami wanted a neutral palette that would enable the environment and vistas to shine, so she used black, white, and gray throughout the house.
McClean has combined the home's inside with outside "to create that quintessential L.A. lifestyle but on a larger scale," he says, drawing influence from the local environment and history of Los Angeles modernism. "We separated the entertaining spaces from the living portions to make the house feel more livable. The former are on the lowest level, which serves as a plinth for the rest of the house and minimizes its apparent mass."
The home's statistics, in addition to its eye-catching style, are equally impressive. There are 42 bathrooms, 21 bedrooms, a 5,500-square-foot master suite, a 30-car garage gallery with two car-display turntables, a four-lane bowling alley, a spa level, a 30-seat movie theater, a "philanthropy wing (with a capacity of 200) for charity galas, a 10,000-square-foot sky deck, and five swimming pools.
Rotondi, the creator of KFR Design, collaborated with Niami on the interior design to create different spaces that flow into one another despite the house's grandeur. "I was especially driven to 'wow factor' components in the hospitality business," Rotondi says, citing top luxury hotel brands such as Aman, Bulgari, and Baccarat as sources of inspiration. Meanwhile, the home's color scheme, soft textures, and lighting are a nod to Niami and McClean's favorite Tom Ford boutique on Rodeo Drive.
The house boasts an extraordinary collection of art, including a butterfly work by Stephen Wilson on the lower level and a Niclas Castello bespoke panel in black and silver in the office, thanks to a cooperation between Creative Art Partners and Art Angels. There is also a sizable collection of bespoke furniture pieces from byShowroom.
A house of this size will never be erected again in Los Angeles, thanks to recently enacted city rules, so The One will truly be one of a kind. "For all of us, this project has been such a long and instructive trip," McClean says. "It was exciting to develop and approached with excitement, but I don't think any of us knew how much effort and time it would take to finish the project."
Katherine Kornei
3 years ago
The InSight lander from NASA has recorded the greatest tremor ever felt on Mars.
The magnitude 5 earthquake was responsible for the discharge of energy that was 10 times greater than the previous record holder.
Any Martians who happen to be reading this should quickly learn how to duck and cover.
NASA's Jet Propulsion Laboratory in Pasadena, California, reported that on May 4, the planet Mars was shaken by an earthquake of around magnitude 5, making it the greatest Marsquake ever detected to this point. The shaking persisted for more than six hours and unleashed more than ten times as much energy as the earthquake that had previously held the record for strongest.
The event was captured on record by the InSight lander, which is operated by the United States Space Agency and has been researching the innards of Mars ever since it touched down on the planet in 2018 (SN: 11/26/18). The epicenter of the earthquake was probably located in the vicinity of Cerberus Fossae, which is located more than 1,000 kilometers away from the lander.
The surface of Cerberus Fossae is notorious for being broken up and experiencing periodic rockfalls. According to geophysicist Philippe Lognonné, who is the lead investigator of the Seismic Experiment for Interior Structure, the seismometer that is onboard the InSight lander, it is reasonable to assume that the ground is moving in that area. "This is an old crater from a volcanic eruption."
Marsquakes, which are similar to earthquakes in that they give information about the interior structure of our planet, can be utilized to investigate what lies beneath the surface of Mars (SN: 7/22/21). And according to Lognonné, who works at the Institut de Physique du Globe in Paris, there is a great deal that can be gleaned from analyzing this massive earthquake. Because the quality of the signal is so high, we will be able to focus on the specifics.
Enrique Dans
3 years ago
When we want to return anything, why on earth do stores still require a receipt?
A friend told me of an incident she found particularly irritating: a retailer where she is a frequent client, with an account and loyalty card, asked for the item's receipt.
We all know that stores collect every bit of data they can on us, including our socio-demographic profile, address, shopping habits, and everything we've ever bought, so why would they need a fading receipt? Who knows? That their consumers try to pass off other goods? It's easy to verify past transactions to see when the item was purchased.
That's it. Why require receipts? Companies send us incentives, discounts, and other marketing, yet when we need something, we have to prove we're not cheating.
Why require us to preserve data and documents when our governments and governmental institutions already have them? Why do I need to carry documents like my driver's license if the authorities can check if I have one and what state it's in once I prove my identity?
We shouldn't be required to give someone data or documents they already have. The days of waiting up with our paperwork for a stern official to inform us something is missing are over.
How can retailers still ask if you have a receipt if we've made our slow, bureaucratic, and all-powerful government sensible? Then what? The shop may not accept your return (which has a two-year window, longer than most purchase tickets last) or they may just let you replace the item.
Isn't this an anachronism in the age of CRMs, customer files that know what we ate for breakfast, and loyalty programs? If government and bureaucracies have learnt to use its own files and make life easier for the consumer, why do retailers ask for a receipt?
They're adding friction to the system. They know we can obtain a refund, use our warranty, or get our money back. But if I ask for ludicrous criteria, like keeping the purchase receipt in your wallet (wallet? another anachronism, if I leave the house with only my smartphone! ), it will dissuade some individuals and tip the scales in their favor when it comes to limiting returns. Some manager will take credit for lowering returns and collect her annual bonus. Having the wrong metrics is common in management.
To slow things down, asking for a receipt is like asking us to perform a handstand and leap 20 times on one foot. You have my information, use it to send me everything, and know everything I've bought, yet when I need a two-way service, you refuse to utilize it and require that I keep it and prove it.
Refuse as customers. If retailers want our business, they should treat us well, not just when we spend money. If I come to return a product, claim its use or warranty, or be taught how to use it, I am the same person you treated wonderfully when I bought it. Remember that, and act accordingly.
A store should use my information for everything, not just what it wants. Keep my info, but don't sell me anything.