crab notes 🦀 lobsterdao

After 3 months of being lazy... here is a new issue of the "using random data to fit your own narrative" piece 🦞

This time it's about 🦍 APE TAX 🦧 looking at MakerDAO, NexusMutual, KeeperDAO, Yearn Finance, KP3R etc.

Don't sub. No emails ever. No $.

PS: I made 100 mistakes with the explanations below, please correct and cancel me.

https://lobsters.substack.com/p/ape-tax-system-design

RUG PULL 🌊 EMM Post-Mortem [2/2]

Now to semantics 🍿

1] Influencers shilling 👾

I dislike the influencer insider zero sum pumps (positive sum games are fine). Was this one of those? Hm not per se. You see, we were all in the chat clicking the contracts and buying while 0 twitter people knew. They came in way later actually. Lobsters devs and community members were piling in at 200K AUM or so. So everyone was in the unknown here, at least I believe. No details about the game, finding clues... it's fun! Also, there were about 9 hours before the fomo started. Not coordinated. No insiders I believe.

2] Refund of 8M Dai ✅

Now people are talking about the 8M refund to be given at a snapshot to users, since it's on the Yearn Deployer address. Not sure this is the best strategy, but it's easy for me to say since I avoided the rug. I guess many would be voting for it, and it could offset the losses at a good rate. On the other hand, everyone knew what they were going for. And it seems like that is the solution people are going for: https://twitter.com/andrecronjetech/status/1310774715359924228

3] Test in prod and zero token value YFI meme ⚠️

Farms abused the zero token value meme and the “test in prod” narrative, so of course this marketing was going for EMN and GIL as well. But here you had no dilution and it was all a bonding curve with just a clope included. So an MMO rather than a farming bullshit scenario. Still weird, still sketchy a bit due to the unknowns, but very different. Everyone wanted a new YFI - got a rug instead. Risked for alpha, it is what it is. Again, easy for me to say, but it’s just a fact. Invested in shit ICO - do not call SEC, own it.

4] YFI team insiders ❌

No, YFI team members did not know. As I point out above, they were in the unknown and bought after other members did. There is no insider thing around it. Kirby? No clue. He has a fun shilly account, not a researcher-developer one. Don't put your responsibilities on anon cartoon accounts. I just want to avoid Y - which is an awesome dev community and product - being associated with outside activities. I know it's hard to distinguish from those, myself included, but you wanted alpha - and it was there. The hack wasn't expected by anyone. Don’t drag people with good intentions into the mud, those who have always stood for the community.

PS 🙏 my post is biased, because I have known Andre since 2018 and met him irl a few times. He was dragged around for being dishonest and taking payments on the side a lot of times, and every time it was wrong and he was coming out stronger. And he kept building and helping people. I am now in the position of just never doubting him. If I am wrong, be it. To top it off, nice reality check by Sam: https://twitter.com/SBF_Alameda/status/1310762299754295296

YOU RISK FOR BIG % -> YOU CAN GET REKT. Remember that.

RUG PULL 🌊 EMN Post-Mortem

So. First, the official post-mortem by Andre: https://twitter.com/AndreCronjeTech/status/1310763506170499072. Let him frame the narrative without me doing the subjective side.

Now my context: Andre deployed some contracts, they had a few tokens and interesting designs with a bonding curve. It was deployed from the Yearn Deployer, so some smart/opportunistic people noticed it right away. Me included. I put in, but the mathematician guy said the slope was flat, so I sold. You can check ivangbi.eth transactions. But damn, I was so enthusiastic about some new deployment and bonding curve stuff - but it seemed like the design was way too user-focused, aka no ponzi/pumpenomics. Saaaad, right.

The contract had back then about 25K Dai total: https://etherscan.io/address/0x5ade7ae8660293f2ebfcefaba91d141d72d221e8. A few hours later, someone noticed that the price was actually kinda going up harder... checked: fuck, it was aping. The contract had about 100K then. So I go and put in more. Lobsters do, it was all public. We see prices are going stronger than we thought. And damn, the fomo started. I bought more at about 500K AUM, then 1M AUM, and actually... at the top of 17M AUM was my 40% purchase lol. But we will get to that later.

Some game Dynamics 🕹

So they all use Bancor Bonding Curve - https://etherscan.io/address/0x16f6664c16bede5d70818654defef11769d40983.

And this is what we calculated wrong as being flat, as the total reserve balance actually is a more complicated math than a Uniswap formula (or, different). So then you have two main tokens: EMN and GIL, both on a curve with Dai. GIL is a thing for minting STR which is like a power boost for the cards in the game. And EMN mints eSNX, eYFI, eAAVE, eCRV, eYFI as factions. So two tokens with direct Dai curve, and other ones as a 1-hop... and there is likely more, we barely saw anything yet. So yes it's fun to play with contracts, being early on every curve, and so on! And let me point out that yes, this is a zero sum game at first glance, but obviously it's Andre and we all expected/knew that more cool stuff is coming. Cause it was/is. And it’s part of the game.

PS 🃏 it's apparently some cool NFT multiverse game with cool backend mechanics and fractions. With some gamedev shops included. It was all supposed to come later.

Now to the price part ☠️

AUM at 17M, I buy 40% more, and 5 minutes later - a few market sells making the AUM drop to 12M. I am a panic seller and a pleb. What do I do? I pack losses on eTokens and sell at small profits anyway. By far not what I would have had, but enough to get a nice laptop after 6 hours, a lot of fun, and fun-ethereum interactions. I am then on a call with Klim and Artem, who aped in around that price again, and they are making fun of me being a pleb. Everyone knows that when I sell - freedom is coming. So I finish selling, and we go to sleep...

And then 5min later the AUM goes back to 15M, I already message in the chat that I am rekt and thinking of buying back. And then bam: it's empty. Just empty, all gone: https://twitter.com/IvanGBi/status/1310752541240590336. Yes, all 15M Dai evaporated. A flashloan type of attack (still need to understand the math) pocketing the entire Dai pool and rekking everyone: https://etherscan.io/tx/0x3503253131644dd9f52802d071de74e456570374d586ddd640159cf6fb9b8ad8. And then 8M Dai goes back to Yearn Deployer: https://etherscan.io/address/0x223034edbe95823c1160c16f26e3000315171ca9#tokentxns. This is the story, all facts which you can go and double check in the chat.

[1/2]

Whale shaming into public good 🐳

Triple digit APY... we all understand it is a zero-sum game selling rotten vegetables. While policing it is a sad endeavour, there are other ways to make something good out of it. Grants.

Why? 🤔

Muh charity? Not really, this is not even about virtue signalling or pipi measuring. Supporting the industry you are in is simply rational long-term greed. By giving a chance to new, non-systematic (and thus likely without funding) ideas to prosper - you support innovation. As money left the industry in 2019, teams survived on the remaining stashes and there was no bullshit around - either stay, try, pivot - or go to IBM. So only developers, cool ideas and pure building stayed. There was no greed, no noise 😇

While developers are generally worse with money management [just look at YFI degens lol] they are inspiring innovation 🖥 The fact that they are now gatekeepers of big capital allows them to fund themselves and their friends, building all the crazy weird stuff... Which is only crazy to people like me because my IQ is low. Thus, giving developers spotlight, resources, and supporting them - is the least we can do. Don't hesitate throwing in some if you aped $$$ from farms. Follow the examples set up by Andre, Artem, and others.

I am also shaming whales into throwing some in [this or next round] and somehow inspiring nonVC open-source development.

10b57e6da0 threw in a small 10,000 USDC to support this vision. Keep blazing forward, developer community! If you guys need any support, just reach out 🦄

https://twitter.com/IvanGBi/status/1307026078968483840

2/2

The ETH Demand and NU WorkLock 🐳

This gets us to another point - the launch of decent actual projects. How do you expect me to touch your stuff if I have 10000% reasonably stable APY in some weird shitcoin farm? This is kind of the question DODO, Mooniswap, and others are facing now - people kinda like these projects, they have cool stuff to research there... but how can they justify participating there? I don't think good teams should actually give away a fuckton of tokens just to be competitive. It's impossible sustainability-wise. They need another marketing approach imho. Can't win this battle with weird scams.

Now to ETH. People make a bullish case because of Medalla, yETH vault... hold on a second, yETH vault will have over 60% APY expected and max out Dai supply?! Yep, very likely within hours after launch. Here is some more info: https://twitter.com/bantg/status/1300786653481631752. Does this influence the security of the staking? In the case of ETH, no, in case of other PoS tokens - surely it does (check Tarun's articles in the chat). Vitalik has been very much of a careful boomer and doesn't think such tools with higher APY will have any effect - seems like he feels that such things will be complimentary end of the day, perhaps with liquid staking for ETH later on: https://twitter.com/VitalikButerin/status/1297669121711042560

Also 🌀 NuCypher WorkLock started today. You either make a node yourself (and your ETH comes back to you during 6 months) or you participate with CoinList and get your ETH back after 6 months - but they will run a node for you. With the node you also need to price in your gas costs accordingly - so while it is nice to support the network running it locally, it's hard for plebs like me.

Here is a good FAQ, has all you need: https://coinlist.co/help/nucypher-worklock-faq. Speaking further, trying to hedge for 6 months might be a futile idea, but maybe some have an alpha on how to do it. Putting your ETH bag that you just hold and not trade seems to be a fine idea. Otherwise see how much more random LockDrops and Sushi-style farms can deliver to you. If this bullshit farming starts dying down, I might throw it all into there before September 28. Unless the maximum amount of nodes gets reached and then I will be sad.

Just 69K ETH to Make It 🦄

One cool thing - as we discussed in the first ever and last newsletter (lol) https://lobsters.substack.com/p/the-next-round-must-be-priced-higher - to keep the psychological price above the private sale price, over 32.5M USD needs to be WorkLocked. That means at the ETH price of 475 USD, it is just 69K ETH. The more ETH gets locked, the more psychologically media and shillers will use this metric as ser TVL big demand and the stronger support it would show. So I'd say NU would benefit if these farms will have less ETH pools by September 28... From a speculative standpoint.

<>

PS 🙏 my apologies for the noise and the degeneracy. We stay true to our vision of good research, giving spotlight to founders, and advancing legitimate crypto use cases forward. But in markets where 500% APY makes you non-competitive, it's close to impossible to get good eyes unless your product has 10x engineers. We will be back to good founders soon, but for now the market just shows that due diligence is a sad thing. Again, remember to not fuck people over and trap them in shit. Always talk about risks and warn them to not buy if they can farm for free. Stay safe sers.

I do not hold any positions actually. I am 85% in stables (most are in yVault) and then single digits BTC and ETH. Farming goes straight into the book. IL on ETH-USDC is ok for me.

​​Opportunity Cost Of Food

Here is to another long post that will never see light as a newsletter, because farming takes away my sleep and brains... 🥃

Imagine you go out to a steak bar 🥩 You like t-bone, rib-eye, tomahawk - and would like to eat them all. But your asset, meaning your stomach, has limited capacity. You need to decide what will be the most enjoyable to you today, and choose that. With meat, you just take whatever you feel like. With investments, you price in risk + APY + other factors. You need to also understand the timeframe of your investment because that will largely influence if the gas costs are worth it, if there is a better option, and which one has the best balance of lambo + peace of mind.

The Farm War 👨‍🌾

Sushi launched. Then Kimchi went live. Right after, Harvest. Also Yuno launched on the sidelines. Based pool still ongoing, there is some YAM, and so on. You literally see 20 dashboards open and can't figure out what to put your money in. Remember, gas costs for wrapping and staking are probably around 200 USD one-way now!

1️⃣ Audits: Sushi has CZ, Sam's millions in it, devs went through it... seems "ok" before LP migration. Although they all have permissions rekt in some places, devs can sometimes mint more tokens (at least not within the hours when the timelock goes up) and dump into your IL pool with the main asset... It's incredibly unsafe ❗️ Yet we all dump 6 figs into this. Smh. I prefer to usually give some hours (a day) so that TVL moves in and some smart community devs check the stuff. Better to miss out on some % than to lose your stack.

2️⃣ APY and market depth: it largely depends on utilization ratio, as the more capital joins - the lower the APY goes. Market depth also determines how real the APY is. If a few people would cause the price to go to 0, there is no point to join usually. For example, sushi has CZ's retail supporting the buy side thus the high APY. Other coins are more vaporware and their depth is not as good.

So this is how I justified sushi for myself. But if I didn't chicken, I would have made x5 more in Kimchi. However, if you jump into every second highest APY coin, you might end up doing too much micromanagement and not even making back your gas costs - or rushing too much and getting rekt. If your positions in farming are 500K and above, jumping around is more justified.

Verify URLs: https://app.sushiswap.org/; https://harvest.finance/; https://kimchifinance.firebaseapp.com/; etc. Not endorsing this in any way sers. Sun is also launching his SUN on Tron... Big LOL, never thought I'd cite his shit here, but you will be degening anyway, so here it is - to save you time: https://twitter.com/justinsuntron/status/1300449573274443776

1/2

You make money... and feel poorer every day. You hedge... and it goes up x2. My sleep is non-existent. I forget to eat. Ledger physically cannot create more addresses.

This is a ponzi and a bubble, don't think otherwise. But nobody knows where the top is. Price your risk accordingly. Check SCs before farming, don't overhold vaporware coins. Muh familia.

I give up on good research for now. It's futile. Sorry for the spam - we will be back to research as soon as the market allows for any legitimate research. For now not-spamming is simply impossible. I practically give up for a few days and open up my wallet for you to scam me lol: https://twitter.com/IvanGBi/status/1300736078421336064

🦄 Once there is hope that brainded behavior is gone, I will announce it here. If you have degening, go offline for now.

​​Governance Rush 🌾👨‍🌾 2/2

So how much does this governance cost? 🤷

We have been on the governance train since over 2 years ago! Check this post, for instance - t.me/blockchain_lobsters/441. Back then, governance participation was just a mere single digit percentage of token holders. Here is a great piece of data - https://aragon.org/blog/a-report-on-aragon-network-votes-1-5. But even when there were some incentives, the market didn’t want to be active… Now we are in a bullish market, governance yields strong yCRV rewards like in YFI, so it makes more sense to participate! The levels of inclusion and in the double digits now of token holders.

But like with any governance, it’s still basically plutocracy. Smart people will say “go for Quadratic voting sir” and they will be right, but it doesn’t fix things 100%. See this cool metric: twitter.com/AndreCronjeTech/status/1297757154691162112. The participation is still quite low, and hundreds of millions of intertwined economic effects are in the hands of a few (responsible) people. Which is how it has always been, so that is not a surprise. But the question is how to activate those other people?

So what fixes this apathy? 🤔

The experiment I am eyeing - PowerPool

This won’t fix everything either. But it’s pretty interesting.

So when Anton made a twitter post about asking on how to increase governance participation - many thought “ser just give extra rewards”: twitter.com/k06a/status/1298347312603897857. Moreover, staking LP tokens is also not the best idea at all times as galaxy brain Tarun points out: twitter.com/tarunchitra/status/1298359745426993159. And as we see from Andre’s post, even big yCRV (real dividends!) do not turn traders into passionate protocol participations. Most people just won’t do it.

So some have been thinking of creating parliaments, or let’s say or “Trade Unions” in a way where minority holders would be able to participate and make their small voices heard. Meta-DeFi Democracy as PowerPool calls it: medium.com/@powerpoolcvp/powerpool-the-tool-for-meta-defi-democracy-8bb82f02f40. For the minority token holders, PowerPool expands utility of governance tokens by adding cashflow and influence farming — an opportunity to continually grow token stake. For like what, a few billion dollars protocols? Kinda scary.

One has to note that buying and selling introduces new issues. However, it’s not as easy to find enough lending weight in any protocol to really get the majority of the quorum with flas loans. VoteLock of CRV went ahead and figured out this attack vector right away, and other governance coins are thinking of how to implement measures to prevent such attacks. Super interesting!

I might try to dump my CVP testnet tokens on you! So keep that in mind.

🦞 I would like to turn this little post into proper research with data, governance votes, participation across protocols, and so on. Willing to subsidize your time with coins. Please let me know if you can join this! We can look into how forks abuse the notion of a governance token and yield no meaningful returns, and all that stuff. Thanks for reading 🙂

PS: a cool post by Arthur must-read - https://blog.bitmex.com/dreams-of-a-peasant. Although seems like he spends more time farming than improving his casino xoxo

​​Governance Rush 🌾👨‍🌾

If you missed a few governance things of the past few weeks, this is for you.

Fellow farmers, unite! We have been collectively turning these fertile lands (not your sister, don't worry) into wastelands. Coming as a swarm in full force and annihilating the entire supply of crops within days, Ethereum lands start to feel the effects. But fear no more, we must collectively now decide on how to keep the crops growing while buying a house every second week...

This isn't really a joke. And it's not DeFI policing either! It's governance, ser. 👮‍♀️

So we have yEarn making proposals in MakerDAO, Aave supporting yEarn, then you try to vote for a gauge increase in renBTC pool by asking your CRV friends to pamp your REN bags... super fun, right? The combination of these things makes for powerful play controlling hundreds of millions of dollars.

You see, people chase yields, always and forever. When you increase the yield on sBTC CRV gauge to triple digits, it automatically makes for a good case to get some sBTC and put it into the pool. That immediately influences the fees on swaps, the volumes, and the interest for sBTC itself. Even centralized platforms like FTX and NEXO jump in. Now go a bit further and look at YAM. So you deposit COMP SNX and other governance coins. With high yields, you end up increasing the demand for these governance coins. That boosts the DeFi index for traders, borrowing rates for Compound and Aave, and so on. The indirect effect of semi-ponzis helping more legitimate projects: twitter.com/Rewkang/status/1296737576166944768

Here are some cool snippets:

-> Yearn and YAM deciding to allocate some of the reserves to Gitcoin open-source projects: twitter.com/bantg/status/1298591059606474753.
-> Curve DAO started and was immediately seeing the boost in Compound APY rewards. The Michael wanted to vote as a founder and fat-fingered a huge governance part… but holders came together and reduced his vote strength.
-> Since veCRV has VoteLock against gaming it via lending-borrowing governance tokens, Y contract had to be first approved to vote for the boost in CRV rewards, meaning for about a week longer Y is waiting to vote for the boost: twitter.com/iearnfinance/status/1298858608533397504. But as we see, the gauges are somewhat similar to how the initial weight started.
-> Credit Delegation launched by Aave, and then immediately proposed by Aave to include it in yVaults to increase APY: twitter.com/iearnfinance/status/1298303842296135680
-> Like many other protocols, farming issuance long-term neither captures more TVL nor is a good idea for price performance. Compound is trying to find an answer to this question: twitter.com/compoundfinance/status/1298720987144286209
-> SNX’s DAO, Yearn’s YCombinator idea, MetaCartel Ventures and Moloch DAO being more active, and so on. A lot of cool initiatives! We will talk about them later.

PS: this in now way relates to scam DAOs your paid chat admins are launching. Those are not experiments but are blatant moneygrabs. Cancelling such people is a must.

1/2

The Degens Are Toxic 👨‍🌾

You and me, sers. We are the retail now. We are toxic degens. The MMO PVP veggies are fun, but we are also killing the market.

We put huge bags into farming where the average APY turns into a 20% profit at best, while we risk the full 100% with no downside protection? Yup, that sums it up.

And I don't want to be a boomer, but when every second well-known founder starts participating in memes and PnDs, it's not really the community spirit or whatever CT tries to tell you - it's just degeneracy. And scammy, to be honest. "Projects" written in 2 days, not audited, attracting 500M USD TVL (total value locked) is pretty retarded. Wouldn't call that "experiments". YAM and its forks, potatoes of all sorts, shrimpy cream, and now bolognese - that's what I would like to eat when I go out... but we are stuck next to our laptops farming virtual shit! Next to being degenerate, this behavior is outright scammy as it dumps on unaware retail. Rug pulling, abusing token contracts to mint more, and all that stuff. Absolutely retarded.

Let's stop? 🤔

Give your attention to real value!

The bull starts and continues for longer if there is actual value being created. DeFi started something cool and fueled the market, but it's quickly detaching from reality. Not good sers.

If we want to save muh familie, we can do better. Give your attention and brains to projects with real cool use cases, participate in governance if you have time.

For example, YFI builders have been shipping a bunch of stuff, really making B.C. = Before Cronje = look like medieval times. I yolo'd all-inned into yVault, and there are other cool Y products and insurance coming up... Here are some links to click around and have fun with: ycosystem.info, learnyearn.finance/vaults/help, feel-the-yearn.vercel.app, yearn.finance/vaults, yieldfarming.info/yearn/yvault. The DAO makes about 15M USD annualized revenue (profits) now, which is mind-blowing: twitter.com/iearnfinance/status/1295582920841793537

The slight cannibalistic (parasitic?) Vault approach of harvesting and selling CRV could be soon mitigated - gov.yearn.finance/t/yip-37-participate-in-crv-governance-and-2-5x-crv-reward-boost/2611... We will dive into liquidity mining pitfalls likely in the next article. With CRV DAO launching dao.curve.fi, we could play around with: pool fees, admin fees, amplification, unkilling a pool, adding a gauge, changing gauge type, changing gauge weights, adding a pool to registry. That's pretty fun! And likely Y can play a role here as well, for the sake of growing the ecosystem long-term.

100 projects from China and Korea are coming with their DeFi (total scham, let's be honest) and many ICOs are getting ready to moneygrab. The older non-listed projects are gearing to list in the next months, coming out of retarded sleep which lasted over a year. They are late to the party, as always. But which founders kept shipping during bear? Let's give them some spotlight! 🦞

PS: is the TOP in? 👁

From the one hand, every second pooler is making their own coin coin and is preparing 3 DeFi projects. On the other hand, youtubers and the retail still know nothing about DeFi. It's not like it was with ICOs where retail was activerly participating. So it's not really whether we are late in the cycle or early. A lot of it will be decided by traditional markets and BTC. Stay safu.

The story of 0xc4ad and 10b57e6da0 🦞 How we __didn’t-but-kinda-did__ launch Curve.

All is in the next, thank you for being part of this! Was super fun. Now time to farm 👨‍🌾

PS: farming is just a model - but the internet value was with those protocols since day 0. If you compare them to farming no-value coins, I feel sad for you.

https://twitter.com/IvanGBi/status/1294122386716008448

https://twitter.com/CurveFinance/status/1294007705263386631

*WAIT TO VERIFY** Contract address of $CRV - etherscan.io/token/0xD533a949740bb3306d119CC777fa900bA034cd52

Vesting contract - etherscan.io/address/0x575ccd8e2d300e2377b43478339e364000318e2c#readContract

Wait to check here 👾 www.curve.fi/contracts

Distribution LP 🌀 22:17:28 UTC

Channel name was changed to «Blockchain Lobsters 🦐🌱 10b57e6da0»

It looks like LobsterDAO just allegedly launched Curve Finance $CRV. Everybody is still confused.

It might be a joke, but might be real. Everyone is confused af. Post-mortem incoming.

This is not a joke. Wait for confirmations. This was the best launch party ever.

Any time, degens, any time... CRV will likely make 200 gas look like a baby. Cryptokitties x2: github.com/curvefi/curve-dao-contracts/pull/39

DO NOT BUY IMHO

The last 24 hours have been insanely fun. People are experiencing their first rebase in life, an AMPL copy. But this time you also get the protocol dumping into you BY DESIGN: https://etherscan.io/tx/0x7b9017ec92b0200455e5269380195fbecfbf91c8acda30985cc1dc413d215076. "But I got more coins now" well great champ, now find liquidity. Let's see how it goes.

PS: protocol bug, it's off by 1e18

Long Read on WTF this is 🦞 t.me/lobsters_chat/76950

https://twitter.com/IvanGBi/status/1293647116020191234

Dear Private Sale bag of 2018-19.

I hope you are developing further! I love your project.

Also, it looks like the market is doing well. In fact, very well. Actually...

IT IS DOING SO FUCKING WELL WHY ARE YOU NOT LISTING PIECE OF SHIT?!?!

Kind regards,
Mr. in it for the tech

-------

FIO on Binance, SAND on Launchpad, BAND on Coinbase.

If you still hadn't fired your analyst, you are doing something wrong.

It's 2020. Stop trying to make sense of things.