High on the list of cryptocurrency's most impressive achievements is the ability of crypto finance to convince people that lend money, with a very high loan-to-value ratio, against collateral that is somewhere between "extremely risky" and "transparently worthless." Have speak repeatedly about the time Sam Bankman-Fried told me, on a podcast, that in crypto you can build a box and issue tokens from the box and "put [the] token in a lending protocol and borrow dollars with it" and "never, you know, pay the dollars back." And we've talked about how Bankman-Fried's FTX crypto exchange did pretty much exactly that, borrowing billions of dollars of client money against its stash of made-up tokens and not paying the money back.
And we have talked about Kyle Davies, one of the founders of crypto trading firm Three Arrows Capital, or 3AC, whose superpower was convincing people to lend him hundreds of millions of dollars to conduct crypto โarbitrageโ trades that were simply buying tokens speculative new cryptos. protocols, holding them for a while and waiting for them to come up. The innovations in the 3AC business model were:
