BC CRYPTO
Saved by @Shubham51ngh

If you've been following DeFi or Ethereum over the past few months, you've likely heard the term "flash loan" mentioned again and again.

This new DeFi primitive has been at the core of a number of economic exploits and arbitrages.

A thread on the basics of flash loans - 👇

 Most DeFi loans take place across days, weeks, or even months.

You can deposit Ethereum into Aave, then withdraw stablecoins for yield farming in Yearn, for instance.

On-chain loans have garnered much traction, with total debt outstanding moving toward $2.5 billion.
While popular, DeFi loans are not capital efficient: to account for custodial risk and volatility risk, you need to put up 130-150% of the value of your loan in collateral.

If your collateral slips below the threshold, you're liquidated, resulting in a fee anywhere from 5-13%.
Flash loans are much different than longer-term DeFi loans.

Flash loans are non-custodial, take place over the course of one block, and require no collateralization.

That's to say, the coins you borrow never appear in your wallet.
When taking a flash loan, you can direct the coins to any protocol and function, as long as you pay back the loan + interest fee within the same transaction.

So what the hell? What are flash loans used for?

More often than not, arbitrage.
This means that if you spot mispriced markets between AMMs or dexs, you can take a flash loan to arbitrage the pools.

Here's a simple example I spotted in the mempool a few months back:

https://t.co/hiBHuTerQH

More on what's happening in the next tweet.
- This user flash borrowed 2,048,000 USDC from dYdX

- Traded that USDC for 2,028,367 DAI in Curve's Y pool

- Traded that DAI for 2,064,182 USDC in Curve's sUSD pool

- Paid dYdX back + 2 wei

All in one block...

Profit: 16,182 USDC
Cost: $60 in gas

Crazy, right?
The transaction I mentioned is just one of many simple arbitrages between different AMMs and diff pools. (More on AMMs in the linked thread.)

There are also advanced arb strategies that enabled the "attacks" on Eminence, Harvest, etc.

Let's take a look.

https://t.co/wftj1YuPtG
Many of these arbs are not AMM based. Instead, these arbs are accomplished by leveraging some faulty or buggy logic in the economic design of a protocol.
Eminence:

- Borrow 15 million DAI from Uniswap
- Mint EMN
- Burn some EMN for eToken, driving up EMN up the curve
- Sell remaining EMN for DAI
- Make millions

The bug was the bonding curve was steep and could be manipulated.

https://t.co/fP3ae4oDXQ
Harvest:

The bug was that Harvest didn't use the get_virtual_price() function from Curve, allowing for manipulation.
Flash loans can also be used for other purposes.

Governance attacks are a good example. They're scary but still kind of sick, to be honest.

On October 26th, a user used flash loans to influence a MakerDAO proposal.

https://t.co/naqLqOi1bS
This user completed multiple complex functions with a single tx, within a single block.

They

- borrowed $20m worth of WETH from dYdX
- deposited it on Aave to borrow $7m worth of MKR
- Locked MKR in governance
- Voted on a proposal
- Unlocked MKR
- Sent MKR, then ETH back
Related to flash loans, developers are working on flash mints for Wrapped Ethereum and DAI. Will do another thread on these later.

Flash loans will be similar in concept to flash mints but will involve the minting, then burning of tokens rapidly to accomplish some feat.
To conclude: Flash loans are an extremely powerful DeFi primitive.

I forgot who said it but they're going to accelerate the wheat from the chaff when it comes to protocols with good economic design.

I'm excited (and scared) to see what flash loans are used for next.

More from Crypto

Ryan Watkins
Ryan Watkins
@RyanWatkins_
The most effective meme I’ve found for Ethereum is “Digital Economy”

From there it’s easy to layout how Ethereum is the foundation for a variety of digital institutions (protocols) built upon the same principles of decentralization as Bitcoin.

1/


With “Bitcoin : Digital Gold :: Ethereum : Digital Economy” as the framing its then much easier to describe what a bet on ETH is.

I first explain DeFi (the new Wall Street), NFTs, Web3, and all the other mind blowing projects built on Ethereum...

...then illuminate how ETH is at the center of all it.

If BTC is like gold - an asset that people store value in but don’t use as money.

Then ETH is like money - the most liquid asset in Ethereum’s on-chain economy that is demanded for a wide range of economic uses.


If I get pressed on the semantics of “money” I explain how ETH is used as a medium of exchange, store of value, and unit of account...

...but also eventually as the ultimate source of security for the Ethereum blockchain, stretching the idea of what money is.

A lot these ideas are what we attempted to express and put numbers behind in our latest ETH 2.0
CRYPTO
Lee | The Winter Ouroboros
Lee | The Winter Ourob...
@WinterOuroboros
You are running out of time to get ahead in cryptocurrency.

You know what's coming:

🔺️ Regulation
🔺️ More shutdowns
🔺️ Banks deciding who gets to do business

It's time you got your own crypto wallet.

Don't know how? I'll show you.

/////THREAD\\\\\

METAMASK

What's metamask? It's a wallet. That you -- I mean YOU -- own.

You see, when you buy crypto through an exchange like CoinBase, you own it but only kind of.

If they get

🔺 Hacked
🔺 Shutdown
🔺 Servers crash

-- your money is STUCK.

We are gonna avoid that 👇


First thing,

Go to

https://t.co/JXAp9o5RzJ

You can download it on your computer. It's a browser extension.

Alternatively, go to the app store on your Android or iPhone. It's there too.

As part of the setup process, you will choose a password.

More importantly though...

SEED PHRASE

As you follow the setup process, you will be given a 12-word seed phrase.

WRITE. THIS. DOWN.

Take it down and guard it like the map to Davey Jones' Locker.

THESE ARE THE ONLY WAY TO RECOVER YOUR ACCOUNT.

DO NOT LOSE.

We good? Great.

Let's continue.


Once you're all setup, your MetaMask wallet is going to look something like the picture below.

See where it says Crypto Address? That's where your actual address will be.

It'll be a random arrangement of letters, numbers, etc.

Click on it to copy to your clipboard

NEXT STEP
CRYPTO
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XRPatience
XRPatience
@xrpartisan
1/20 Bitcoin is too slow and expensive for payments. We all know this. To solve this problem, the Lightning network is being built on top of Bitcoin's blockchain. Will it be the end of XRP?

(Video version @ https://t.co/7zJCuKrpqx)

A thread. 👇


2/20 On a normal day outside a bull run, Bitcoin takes ~10 mins to transfer, at a cost of about $0.50. Any time network activity ramps up, those times and fees multiply. Bitcoin's Proof of Work system is painfully slow and can only handle 7 transactions per second.


3/20 To attempt to solve this problem, the Lightning Network is being developed. It's a 2nd layer network that sits on top of Bitcoin's blockchain. It's been in the works since 2015. Yes, 6 years. Do you know anybody who uses it? Me, either, but I'll get to that.


4/20 Lightning works by opening "channels" between parties. Those parties can perform as many Bitcoin transactions as needed and then close the channel. Because the transactions aren't written to the Bitcoin blockchain until the channel is closed, it's much faster.


5/20 Individual payment channels between various parties combine to form a network of lightning nodes that can route transactions among themselves. The resulting interconnections between various payment channels is the Lightning Network.
CRYPTO
Jonty Wareing
Jonty Wareing
@jonty
Out of curiosity I dug into how NFT's actually reference the media you're "buying" and my eyebrows are now orbiting the moon

Short version:

The NFT token you bought either points to a URL on the internet, or an IPFS hash. In most circumstances it references an IPFS gateway on the internet run by the startup you bought the NFT from.

Oh, and that URL is not the media. That URL is a JSON metadata file

Here's an example. This artwork is by Beeple and sold via Nifty:

https://t.co/TlJKH8kAew

The NFT token is for this JSON file hosted directly on Nifty's servers:

https://t.co/GQUaCnObvX


THAT file refers to the actual media you just "bought". Which in this case is hosted via a @cloudinary CDN, served by Nifty's servers again.

So if Nifty goes bust, your token is now worthless. It refers to nothing. This can't be changed.

"But you said some use IPFS!"

Let's look at the $65m Beeple, sold by Christies. Fancy.

https://t.co/1G9nCAdetk

That NFT token refers directly to an IPFS hash (https://t.co/QUdtdgtssH). We can take that IPFS hash and fetch the JSON metadata using a public gateway:

https://t.co/CoML7psBhF
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scott walk(6.25)er
scott walk(6.25)er
@scottwalker99
1/20 Stablecoin Tweetstorm- I have a fairly unique perspective on stablecoins... I was an "unofficial advisor" to the launch of USDT (Tether) Some of my best friends were CEO/CTO/Founders, etc. I didn't invest at the time (which was a lucky move) as the company sold

2/20 for a loss to Bitfinex within two years of creation. It had very little usage, banking issues, and really no clear path to growth (that is until one of the largest exchanges on earth began using it) So with this short background let me share a bit of my thoughts on

3/20 this category and why I think it is so important... (Full Disclosure: after all these years I finally found a stablecoin project that I thought was worth investing in and i will be shilling it later in this thread:-)

4/20 The community knows all about how important stablecoins are to the overall health and usage of the entire crypto marketplace. With an overall market cap of in excess of $1 Trillion the crypto market is large and growing... No category of crypto is growing faster than

5/20 Stablecoins: With a total category value of just over $33B and over $10B per day in trade volume it is no longer just a "niche" Stablecoins are a major category and I predict this category will increase in value faster then the overall crypto market. (My bet is $100B
CRYPTO

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तृतीय भाव-
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2⃣

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