Gustav: Several days ago, I cautioned against seeking yield on #Bitcoin. A few days later, one of the most influential voices, @saylor had an interview to the opposite effect. This produced a great deal of discussion. Some said they had lost faith in Saylor. Others said he is playing a messaging game to entice large investment pools into the space. Others now say you should seek yield. Have I changed my mind? No. My recommendation is to stay away from any yield-bearing offerings on Bitcoin. But, as with anything interesting in life, it is complicated. I will begin from the case of the ideal world. Assume a return to sound money. Some sit on hoards of Bitcoin with nothing particularly productive to put it towards, while others have great ideas but no capital to make their ideas into reality. Banking, lending, investment: these all bridge the gap from capital holder to entrepreneur. In this ideal world, they provide a societal service by driving economic development. And yield will be the incentive that allows this to function. In this world, the yield implies risk in two flavors. First the risk of the individual capital venture failing. Perhaps the idea is not so great after all, or the entrepreneur lacks the gusto to execute it properly, or perhaps luck or fate simply decide not to smile upon the endeavor. Second, systemic credit risk. Since yield is exponential, even in a fully reserved lending system, the capacity to repay diminishes over time. Eventually, you reach a large enough credit event, contagion begins, and liquidity dries up. How much debt has built up, what fraction of reserve lenders are operating on, and sentiment all play a role here. But a rational risk/reward calculation can be made. You can decide to seek yield and not be a fool in this world. But I am telling you, we are not in that world, especially now. Discipline is gone due to excessive fiat printing to cover up debt problems. Decades of this have distorted everything. The capital markets have degenerated into a rigged casino. I will reiterate: offerings to stake Bitcoin are a likely a grift. Self custody and don't be foolish. image generated with

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