1/ in good old finance, derivatives are scary and opaque. They live on legal paper stacked to the sky. Nobody knows how much exposure anyone has.

So when the Big Bad Wolf comes to blow the house down, you get a crisis of confidence ...

2/ a run on the bank and a run on overnight paper and a run on swaps and everything tied into a bog gray knot

So long Lehman Brothers. Nobody knew how much exposure you had

3/ in the DeFi world, yes the embedded leverage is starting to suck. There’s no intrinsic anything good about borrowing at 10% margin and yield farming governance tokens at 30% APR, recursively until it blows up

This isn’t like, super good and altruistic or anything

4/ but! At least you know exactly where and how and when everything cascades. Who gets liquidated when and how and at what rate.

https://cryptopotato.com/cream-finance-exploited-price-crashes-30-instantly/

There’s no scary mystery behind the door at 30x leverage. There’s just bad decisions or economic attack vectors

5/ it’s still a better system. It will be gamed and kicked around and thrown against the wall, until it is battle ready.

The point of risk capital is to take risk. So I’m glad someone is taking it.