The Chopping Block: Here’s What Was So Bad About Three Arrows Capital - Ep. 368

Welcome to The Chopping Block! Crypto insiders Haseeb Qureshi, Tom Schmidt, and Tarun Chitra chop it up about the latest news in the digital asset industry. In this episode, Taylor Monahan, matriarch of Metamask, joins the show to discuss the contagion of major crypto firms, the bear market, SBF saving crypto, and much more! Show topics:

The importance of UX and security

How Three Arrows Capital’s practice of borrowing to leverage their bets has caused a crisis for crypto lenders that rippled out to many customers

How the GBTC arbitrage trade was part of 3AC’s undoing, and how that trade was one many other crypto trading institutions had previously abandoned

How crypto lenders were being degens with customers funds

Why SBF stepped in and made sure that BlockFi and Voyager didn’t default on customers’ deposits

Whether this whole wind-down reflects a credit cycle

How DeFi protocols were built to avoid these kinds of centralized finance problems 

How the systemic issues caused by CeFi institutions like Celsius, BlockFi and Voyager are reminiscent of the Great Financial Crisis

What are the similarities between this crypto meltdown, the Mt. Gox debacle, and the 1907 and 2008 financial crises

What are the consequences of losing retail money vs. institutional money

How surviving a credit cycle crisis creates the best risk managers

The lessons to be learned from all these crises 

How MakerDAO is trying to figure out what to do with its money

What happened with Solend and why the DAO resorted to a centralized action

Why DeFi needs more clauses about how to handle edge cases

The difference between doing dumb things and wrong things

Why Tarun is impressed with Solana’s DAO tooling

Why Taylor is thankful for the bear market

Hosts

Haseeb Qureshi, managing partner at Dragonfly Capital

https://twitter.com/hosseeb

Tom Schmidt, general partner at Dragonfly Capital

https://twitter.com/tomhschmidt

Tarun Chitra, managing partner at Robot Ventures

https://twitter.com/tarunchitra 

Robert Leshner, founder of Compound 

https://twitter.com/rleshner 

 
Guest: Taylor Monahan

Twitter: https://twitter.com/tayvano_

Taylor’s thread on resources to learn about all things crypto: https://twitter.com/tayvano_/status/1509380091184246784?s=20&t=kNk8fJ7pJAWfEEVZQHwpvg

 
Episode Links
 

Crypto Contagion

3AC: https://blockworks.co/three-arrows-capital-brink-default-owes-voyager-657m/

Voyager

Celsius + Goldman buyout? https://www.protocol.com/bulletins/goldman-celsius-bankruptcy

BlockFi bailout: https://www.coindesk.com/business/2022/06/21/blockfi-receives-250m-credit-facility-from-ftx/

Unchained newsletter on BlockFi’s bailout: https://unchainedpodcast.com/vitalik-says-this-deserves-mockery/

CoinFlex: https://www.bloomberg.com/news/articles/2022-06-27/crypto-exchange-coinflex-to-issue-tokens-after-withdrawal-freeze?sref=Q2SpVkJl

Babel: https://www.coindesk.com/business/2022/06/20/babel-finance-reaches-debt-agreement-with-counterparties-after-withdrawal-freeze/

Unchained Coverage: Why Possible Insolvencies by Celsius and 3AC Could Spell Disaster for Crypto: https://unchainedpodcast.com/why-possible-insolvencies-by-celsius-and-3ac-could-spell-disaster-for-crypto/

Solend DAO situation:

Unchained Coverage: Solend and Bancor Drama: Did These DAOs Violate the Ethos of Crypto? – Ep. 366: https://unchainedpodcast.com/solend-and-bancor-drama-did-these-daos-violate-the-ethos-of-crypto-ep-366/

https://www.coindesk.com/tech/2022/06/19/solana-defi-platform-votes-to-control-whale-account-in-bid-to-avoid-liquidation-chaos/

Covered on Unchained Newsletter: https://unchainedpodcast.com/does-this-dao-deserve-emergency-power%e2%81%89%ef%b8%8f/

MakerDAO governance proposal: https://www.theblock.co/post/154515/maker-governance-is-voting-to-invest-500-million-in-us-treasury-bills

Learn more about your ad choices. Visit megaphone.fm/adchoices