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27 September 2020

Shiv Malik: DeFi Mania Proves We Learned Nothing From the ICO Run-Up

Shiv Malik: DeFi Mania Proves We Learned Nothing From the ICO Run-Up


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“The most absurd and preposterous of all [the schemes] which showed more completely than any other, the utter madness of the people, was one started by an unknown adventurer entitled, ‘A company for the carrying on of an undertaking of great advantage but nobody to know what it is’.“.

Graeber writes that if the story is true then “the entire population of London conceived the simultaneous delusion, not that money could really be manufactured out of nothing, but that other people were foolish to believe that it could – and that by that very fact, they actually could make money out of nothing after all.”.

In other words, more money is locked into a platform than is being lent out at any given moment. .

What real value is being provided by all this money sloshing around.

Or to put it in 18th century terms, what is the “great advantage” here that is powering the money making machine.

If they are day traders and not long-term investors (which is highly likely; otherwise, why borrow at such high rates?) then the only work that is being done at a systemic level is to ensure a more accurate price for an asset

People win and lose money based on what they think others think that price should be. 

What if a lot of money is being pumped in to determine the price of a business or software project that doesn’t itself have a business model, revenue, consumer interest or any sort of foreseeable use

What, in other words, if there’s no actual coffee under all that froth? 

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