‘Crypto Bros’ become desperate as the liquidity crisis deepens

In recent months, we have seen the entire digital foreign exchange market crash as lending platforms go up, hedge funds implode and investors, both large and small, run after the exits.

As the digital currency liquidity crisis deepens, stock exchanges, lenders and other players are making arrangements to survive the “crypto winter”. The latest of these is a plan by Polygon-based lending platform Teller Finance to introduce ‘Ape Now Pay Later’, a credit facility that allows speculators to buy blue-chip (read expensive) NFTs on payment plans.

What is the “Ape Now Pay Later” scheme about?

Teller Finance is one of many so-called decentralized lending platforms. It lives on Polygon, one of the proposed Ethereum scaling solutions.

Teller CEO Ryan Berkun and his team recently announced that investors could purchase blue-chip NFTs in installments through the platform. For a down payment, which can be as high as 50%, the platform will try to match the buyer with a lender who provides the loan to complete the purchase. After this process is complete, the purchased NFT is moved to an escrow wallet, where it is held until the repayments are completed.

Essentially, as the prices of Bored Ape NFTs and others like them plummet, Teller Finance enables everyday investors to buy JPEGs of monkeys with hundreds of thousands of dollars in credit without any noticeable reasonableness checks or regulations in place to protect anyone. It is not difficult to imagine what could go wrong.

The digital currency industry is starting to get desperate

As the liquidity crisis deepens, threatening to take down even more of the industry’s key players, stock exchanges and platforms are making all sorts of arrangements to stay afloat.

In addition to offering huge sums of credit for zero-utility JPEGs, other signs of desperation include Coinbase (NASDAQ: COIN) switching to a monthly subscription model and Bitstamp’s attempt to introduce inactivity fees of € 10 ($ 10.11 ). The former will incur fees of $ 30 per month for unlimited digital asset trading. The latter had to go back after a major setback from Bitstamp customers.

Thinking readers should realize two things:

1. These platforms are obviously desperate to keep the fees in place in all necessary ways.

2. It must be profitable for Coinbase to introduce a $ 30 a month model, indicating that the average user does not even generate it in fees. If they did, there is no way the company would undercut itself by offering a cheaper alternative. It’s not a great place to be for what is designated as the Amazon in the digital currency industry.

Another potential realization is that exchanges like Coinbase may not trade in digital currencies at all. Instead, they can operate just like the fractional reserve banking system – move digits around a screen to indicate who owns what while sitting on reserves in different currencies. Do they really have the reserves to let everyone take out their coins if there is a “run” on the stock exchanges? As the Zen master said, we’ll see.

Bitcoin has nothing to do with any of these

None of these were what Bitcoin (BSV) was about. It was never meant to be a speculative asset, it was not meant to be thousands of altcoins traded on platforms like Binance, and Satoshi probably never dreamed that people would be naive enough to borrow enough to buy a family home to buy one. overpriced JPEG on credit.

Bitcoin should eliminate intermediaries and fees, unleash unprecedented economic efficiency, and enable the building of new, sustainable industries based on the micropayments it enables. It was meant to be sustainable – generate enough fees to pay miners forever without the need to constantly pump up the price of tokens.

This “pump it” mindset is cancer at the heart of the industry, and that’s why the schemes mentioned in this article are designed in the first place; without an endless supply of new money, the whole house of cards will inevitably collapse.

Schemes like Ape Now Pay Later may avert the inevitable end for a while, but they will do nothing to change the fundamentals; nothing lasts without real value and benefit. Fortunately, both are built on Bitcoin SV.

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Ethereum, FTX and Tether—Who has chosen to use the digital asset revolution and turned the industry into a minefield for naive (and even experienced) market players.

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