Great thread.

Yield farming APYs seem obviously unsustainable, a ponzi. I think this might be true, but it also may not be. https://twitter.com/mrjasonchoi/status/1301058476693573632

These apps are printing millions of USD worth of tokens and distributing them to early liquidity providers. In 5 days, SushiSwap has minted 38mm SUSHI, trading around $7 each right now is over $250MM of incentives handed out to buy early adopters! Obviously ponzi amirite?

I think probably Ponzi and the price of Sushi will collapse.
But, network effects businesses like PayPal or Facebook sold equity for millions that became worth billions. The no-ponzi case is that, instead of giving billions of gains to VCs for the cash to get the network ...

flywheel spinning, you're cutting out the middleman and giving it straight to the network. And it works esp. well in DeFi where you're happy to get 1,000 customers each giving you $1MM -- you don't need a 100MM people each worth $10 to you, your network is assets not bodies

I think this idea of paying with equity to break the monopolies of existing networks effects businesses is one game changer of crypto and DeFi is the leading edge of that.

The key question is: if the incentive works to bring the network, is a moat created that will retain the network even after the incentive faucet is turned off (or turned way down?) -- the answer tells you whether to hold or flip the equity they are shoveling at you.