The yield farming “Magic Box” model and crypto venture capital represent a divergence from traditional finance and traditional venture capital. gckaloudis writes for this week’s Crypto Long & Short newsletter.
You start with a company that builds a box… they probably dress it up to look like a life-changing, you know, world-altering protocol that's gonna replace all the big banks in 38 days. Maybe for now ignore what it does and pretend it does literally nothing. It's just a box. You can then put a token in The Box and you take it out of The Box. Alright so, you put it into The Box and you get an IOU token for having put it in The Box and then you can redeem that IOU back out for the token.
Then the yield farming kicks in, and The Box starts giving out tokens as interest payments to people who have put tokens in The Box. Uh … who turned the heat up in here? This is a scathing take on yield farming that you’d only expect from its harshest critics. That it came out of the mouth of one of crypto’s richest was surprising. SBF basically said that yield farming consisted of:I have nothing more to add, because I think these quotes largely stand on their own. I wanted to write about these quotes to highlight that individuals should exercise caution when it comes to deciding on partaking in yield farming or not.
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