[SERIOUS] Latest detailed Bankless episode - Most of the 2021 Bull run was caused by a ponzi system created by the crypto hedge funds and yield farming protocols

The latest detailed Bankless episode is pretty brutal. It says that the bulk of the 2021 Bull run was caused by a ponzi system created by the crypto hedge funds and yield farming protocols.

In the first 10 minutes, David straight up says that the 2021 price bull run was fueled by a giant ponzi scheme with all of DeFi and the minted shitcoins. This involved the crypto hedge funds, 3AC, Alameda, Genesis, all the CeFi companies offering interest, Yield Pools, FTX, ETH killers, and many more. His theory is that this was all fueled by CeFi lending, collaterallized loans, and other high-interest schemes.

This probably explains why David has been looking a lot more stressed in recent episodes.

The Super cycles

• 2013-2014 bull market: caused by PoW copycats (OP: along with Mt. Gox and Silk Road)
• 2016-2017 bull market: caused by ICOs
• 2020-2021 bull market: caused by yield farming, which started with Compound in Dec 2020. This fed into the CeFi lending and all the crypto hedge funds. (OP: Retail also pumped a lot into both crypto and stock markets with funds from stimulus checks and quantitative easing.)

That was pretty brutal reveal, and it also might explain why David has been looking a lot more stressed in recent episodes. It's definitely a strong reverse of the typical Bankless pro-crypto stance.

2020 to mid-2022: 3AC, DCG, Grayscale GBTC scheme explained

Here's my best summary. This probably isn't 100% accurate because there's so much info presented, and I don't understand every section of it:

1. Gemini Earn borrows BTC from from retail customers, which then gets lent to Genesis/DCG, which then gets lent to crypto hedge funds like 3AC
2. DCG/Genesis is the only company that can mint GBTC out of thin air
3. Unlike retail customers, 3AC is able to acquire GBTC 1:1 for BTC. It trades its BTC for GBTC and begins selling GBTC, which at that time had a premium was worth way more than BTC. 3AC kept trading BTC for GBTC and then selling GBTC, which absolutely destroyed the value of GBTC. GBTC's premium quickly became a discount. That's pretty much how 3AC made all their money.
4. With the discount, all GBTC holders are underwater compared to BTC, which is temporarily fine since BTC's value also went up. But once BTC's value falls, they're all way underwater.
5. OP: In addition, there's currently a lot of speculation on whether it actually has enough BTC collateral. GBTC acts like a futures market. GBTC only needs to redeem the amount of BTC 6 months after the redemption request, so it doesn't necessarily have to hold BTC 1:1.
6. 3AC then sold their profits and went into deep into investing into Ethereum killers like Avalanche, Solana, and Terra Luna. This whole time, their GBTC collateral is underwater compared to their BTC loans from Genesis.
7. Jerome Powell begins raising interests, starting the collapse of the Bitcoin bull market. BTC and ETH fall 50% from their ATH at the start of the year.
8. By Apr-May, the Terra Luna money making machine begins running out of steam. 3AC sells $1.5B worth of BTC for Terra's UST. Within a week, Terra's UST collapses, taking down half of the crypto hedge funds.
9. 3AC goes down under, along with Celsius, Voyager, BlockFi. 3AC being looking for funds from anyone who would lend to them. Doesn't get it and gets liquidated. Fails.
10. Genesis takes a big loss from their loan to 3AC but survive after getting bailed out from DCG.

Everyone who expected more collateral to happen due to the Terra Luna/Celsius contagion were right. It just took more months to fully-realize because companies were good at hiding it.

Mid-2022 to now: FTX

1. The Terra Luna collapse is also likely when Alameda Research and FTX secretly went underwater.
2. Alameda and FTX bail out BlockFi and Voyager with lines of credit (which we now know weren't backed by anything). This builds up a lot of false trust in FTX and Alameda as the good guys.
3. FTX takes customer deposits over and over again to secretly bail out Alameda Research, which then gets sent to Genesis because Alameda Research had loans from Genesis.
4. FTX core members continue to gaslight the crypto community and hide their fraud
5. FTX keeps afloat using their FTX shitcoins (FTT, SRM) as collateral. They manipulate the price and markets of their collateral by keeping the liquidity low while minting more out of thing air (through interest). The keep buying their shitcoins back to keep the prices up, and they're able to do this because they keep taking loans against these coins as collateral. That's a straight up Ponzi scheme because it's completely unsustainable.
6. The rest is history that's been covered over and over this week.

At this point, Bankless temporarily puts on ther conspiracy hats starts wondering if the SEC knew about this ahead of time and just let the house of cards fall down on its own because that would've had a bigger effect.

Further contagion

1. Genesis stops withdrawals and has a $1B hole. It announces it'll go bankrupt without additional line of credit. DCG also has a $1.1B promissory note to Genesis??
2. DCG might go bankrupt. CZ takes a look and decides not to bail out DCG/Genesis/Grayscale.

Their conclusion

The bulk of the price action after Jan 2021 was caused by this giant interest lending system akin to a ponzi scheme