The Final Boss (Market Monday - Lite)
Market Monday for April 20, 2020
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Dear Crypto Natives,
When crypto faces its final boss I think crypto wins.
Let me tell you why.
But first let’s set the stage.
Crypto is Mario. He’s on a quest to save the world’s money system from Bowser the nation state. Bowser kidnapped the money system. At first his intentions were good, but the power corrupted him. Now he’s enslaved koopas and corrupted the land with ghost castles and lava traps.
Mario has to battle Bowser’s minions across the land—the SEC, FinCen, the IMF, the PBOC—Bowser has many lieutenants. And every once in a while Bowser pops up to fight him directly.
I tweeted this when I read the Financial Stability Board paper last week:
Now let’s be clear so people don’t go overboard on this: a stablecoin ban by central bankers isn’t imminent. The paper was a set of recommendations—not policy. And the large bulk of recommendations in this paper concerned properly regulating bank stablecoins—not banning them.
But the recommendations also included things like this:
Ability to require a GSC arrangement to be governed in a manner that facilitates effective regulation and supervision, including by prohibiting fully decentralised systems.
Prohibiting fully decentralised systems like Ethereum, DAI, or Bitcoin. Wow.
It’s an option on the table.
If a group of bankers some day decide these decentralized systems will lead to a loss of control—or in more Orwellian speak—if these bankless systems start to “negatively impact the world’s financial stability”….well what would you expect them to do?
For now Bowser has bigger problems. A kingdom to run. He can ignore Mario for now.
But what do you expect him to do if Mario becomes a threat?
Exactly what he’s done in the past. He’ll attack the threat.
Why Bowser won’t win
Some people will tell you Bowser won’t win because he can’t possibly stop a system as decentralized as Bitcoin or Ethereum. Seems naive. Motivated nation-states are really good at finding weak links and exploiting them, remember Stuxnet?
They could choke liquidity. Make holding illegal. Attack the social layer.
But even with all this firepower I still think nation states can’t win.
Why? Because there’s not just one Bowser.
There’s many. And each of them are playing a competitive game with each of the others. They’re fighting for resources, GDP, status, power. They’re uncoordinated.
If they band together surely they could squelch crypto.
But what if one breaks rank and adopts crypto?
What if a Bowser teams up with Mario?
If you’re a nation state that bans crypto you disadvantage yourself relative to other nation-states that adopt it. You kill your prospects. You can’t afford to miss out on this new value transfer & capital coordination protocol—it’d be like missing out on capitalism or the internet.
So what’s does the game theory force competitive nations to do? To adopt crypto.
Not right away.
At first they’ll try to replicate networks like Ethereum inside walled gardens they can control. But then they’ll end up settling on the networks like Ethereum for the same reason—because none of them can control it.
Sure he’ll pop his head up from time to time but I’m not worried about the final boss.
In the long-run Mario wins.
Scan this section and dig into anything interesting
ETH pops to $172 from $156 last Monday
BTC steady at $6,866 from $6,862 last Monday
DAI stability fee down to 0% with savings rate steady at 0%
Check out this Bankless exclusive deal for 10% off the new dYdX BTC/USDC contract
(Leverage) new dYdX BTC swap—get 10% w/ Bankless code 💎
(Trade) on new Gnosis DEX (tactic coming soon!)
(Stake) Get Keep tokens by staking ETH (help get tBTC to Ethereum)
(Lend) ETH at 4.5% using BlockFi (new—no limits to amount of ETH)
(Pay) Want a Crypto Visa card?
I prefer DeFiMaketCap to Coinmarketcap
Reflex bonds could be a new store-of-value money lego (a more stable ETH)
It’s time to build - Marc Andressen
SEC nearly destroyed my retirement account - Jameson Lopp
WHAT I’M DOING & WHAT YOU’RE DOING
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
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