"Insane" is subjective. The point is nothing safe yields ten or 20%. Someone saying "you will not lose your funds" [1] when paying above-market yields is lying.

[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680425...

There are funds out there that conduct these activities, I know because I recently consulted for one. They are promising risk free returns and getting them.

There are things that exist in DeFi (such as flash loans) that have no real world equivalent, which is why blanket statements made about traditional markets don't necessarily apply. If used properly, these things do in fact offer "too good to be true" types of returns.

As in, $100 in January becomes $500 in February, $2,500 in March, ... $976,562,500 in December?

Edit: actually I read that wrong, that would only be 500%. 5,000% per month (money x 50) would turn the $100 into $9,765,625,000,000,000,000 by December.

Unless by 5,000% yield you mean you get 50x your original investment on top of the original investment, like how 5% yield on a dollar gets me $1.05. In that case it would be more. But I think the 9.8 billion billion would be good enough for me.

Surely you see how even a 10% safe return on investment like these DeFi schemes offer is a whole different thing, when it's a compounding return. There's no way to sustain it. All the arbitrage opportunities in the world can't deliver the funds required to make investors' money grow exponentially.

I agree with you that throwing money at anyone who tells you they can take an unlimited investment and offer compounding returns on it is a recipe for disaster. But in DeFi, intelligence and strategy translate directly to greater yield. Math has proven time and again that those things matter very little in traditional markets.

You're all over the place with your usage of concepts.

Here you say that intelligence and strategy matter little in "traditional" (vague) markets. Yet, in DeFi, they do.

Not buying it. It feels like I could copy and replace your replace all of your uses of "DeFi" in this thread with <insert ponzi scheme>.

It's "different" than normal markets...I made it work personally (but not at scale)...

Is your counterparty risk always zero (between you and the chain)? Custody? What if a chain is halted or amended?

These systems run on novel rails. You couldn’t honestly tell an investor “you will not lose your funds,” and you’d refrain from using the word “deposit.” Because you’re trying to honestly communicate an opportunity, not to defraud.

In the case of flash loans/swaps, the answer is yes. It's 0. Further, I never have any capital at risk, all of my bots use flash loans/swaps. These transactions are atomic, which means that either all parts of it succeed or they all fail (it's a "revert" in blockchain parlance). So I can borrow $200 million without any prior permission and do an arb/liquidation or anything else I want with it for the life of my transaction, with the only requirement being that I must return it by the end. If my arb/liquidation/whatever succeeds and I return the loan, I keep the profits. If not, it's as if the whole thing never happened. The only risk is the transaction fee, which on the chains I do this on are miniscule.

I realize that it sounds unbelievable, but it exists. My code does thousands of these daily. I am not the only one doing this. See https://eigenphi.io/ . With the exception of sandwich transactions, every one of the bots you see on there is making profits without any capital at risk.

The risk of the trade on chain defaulting is virtually non-existent, agreed. Custody risk is never zero. Dollar in / dollar out returns involve lots of counterparties.

Millions of micro markets that produce what, exactly? Last time I checked there has to be at least something on the other side of the calculation what a coin is worth.

You think crypto coins magically make people work harder, better, faster, stronger?

That's not how the constraints of the physical world work.

You seem to be asking me to defend the merits of crypto, which is beyond the scope of this conversation. But generally speaking, most of the coins people actually buy are tied to protocols that are attempting to do things that interesting to at least some part of the population.

But, the ability to prove the provenance and ownership of any asset, whether physical or digital, has value. The ability to move value across borders instantly, cheaply, and reliably, has value.

In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value.

The possibilities are endless.

This assumes that 100% of the ecosystem is already some form of blockchain.

And guess what: It isn't and it never will be due to the democratic nature of the proposed system architecture.

The flaws of every coin I've seen is that there are too many assumptions about markets, and dependencies of the markets in the sense of goods and/or services that are just "assumed" to migrate to their blockchain at some point. That's not how incentive proposals should work, as they will (logically) lead to exit scams because a couple of people cannot write and reinvent an ecosystem from scratch.

Look at how long IPFS took to mature. Look at how long DAT was refactored in a backwards-incompatible manner. Look at how long it took to write the hypercore protocol stack.

Systems like this and - especially markets like this - need time to evolve, which means that the proposed DeFi assumptions about rapid growth bullshit are anti-market proposals, and literally the same way hyped and unverified bonds in the legacy financial systems lead to market crashes.

Right, but even then how deep are those pockets (what amount of investment can they absorb without being tapped out), how big a time window will they exist for, how will you know if those limits are being reached, and are you really sure you can quantify all the risks?

By definition if it’s a pocket of opportunity, it’s very constrained opportunity. As soon as those constraints are breached it will suddenly stop being low risk and might collapse completely. A lot of people have lost a lot of money on sure fire pockets of opportunity that were great when they lasted.

The point is that these opportunities exist, and they always will exist, you just have to be smart enough to be able to get into them. If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point.

If you needed money for infrastructure for more arb bot, would you look for random novices and offer them 15% (and raise $3m in VC to market to random novices)? Or would you take out an unsecured personal loan from a bank at a lower rate, or a much lower cost loan from a counterparty involved crypto, especially one who understands the nature your trades?

There’s a very low chance of that happening, but not zero.

It always happens with people who think they are smarter than the "dumb money" they're taking advantage of. "Sure it's a scam, but I'm smart enough to not be the one getting scammed!"

Whoever thinks "millions of markets trading in every way" is a guarantee of making money is in for an awful surprise