Cheers, chaps! Thanks for the update. I hope you’re right and I hope you win
If bonds stop generating yields, we’ll have to rethink our strategy.
Sorry about not sparing effort to sound nicer, want to write comment quickly: I think of markets (in the sense of “which things are generating how much yield?”) as rather fickle, and if I was involved I wouldn’t build any strategy at all around these short-term signals, my assessment of your circumstances is not the assessment that would lead to me getting behind a myopic strategy. And I’ll go one further—it’s a bit of a red flag that y’all are willing to stake so much on fickle behaviors that you’re observing in a notoriously fickle market.
The discussion here is a broad one: on the one hand, I don’t have a good track record in that I’ve never been super glad about worshiping at the altar of EV theory (the altar hasn’t made me an OOM more money than I could make working hourly), which you can interpret as either lack of luck or lack of wisdom, and you don’t want to listen to advice from people without a good track record. On the other hand, the nature of your product is specifically more involved in trust and stability, which comes with a kind of responsibility that makes the class of reasoning you want to do decidedly not the “EV theory YOLO” that characterizes for example SBF’s journey from a well-off jane street alum to $30b. The fact is that a person reasoning about the journey from $1 to $100 /day has a qualitatively different EV theory than a person reasoning about the journey from $1000 to $10000 /day, because logarithms. A claim I’m considering making is that the GLO team ought to be using the former EV theory—because it is the one used by the users! -- even though most defi projects prefer the latter EV theory.
I think I could be wrong by not misassessing how much the strategies you’re building around short-term properties of market behavior really actually are short-term strategies, and won’t shoot you in the foot when the properties change and you have to reassess.
For us, 2% is a fine (if perhaps conservative) estimate, though, as you note, it fluctuates. We don’t think that bond rates are likely to fall to zero any time soon, and if they fell by half (say, to 1%), that would still be a substantial amount of UBI generated. (I’ve edited the text to reflect this.)
To flip this around for a second, what would suffice — in terms of concreteness of future plans, benchmark returns at which we’d explicitly plan to pivot, or something like that — to make this no longer a red flag? Just curious if something comes to mind.
If I’m understanding the point about different theories of EV correctly, it’s that moving up 3 OOMs from extreme poverty to middle-class-in-America (MCiA) is a qualitatively different thing than moving from MCiA to fabulously wealthy (another way of saying this is that utility is non-linear)? If so, would you mind clarifying how endorsing one theory or another would impact how we conceive or execute our plans? It might not be super essential that I understand, so if it’s more effort than it’s worth to explain, no worries 😃
Some note to the effect that you’ve redteamed the strategy, planned for contingencies. I think if I had read a brief comment like
I think you’re following the way I set up the point about EV theories, what I meant really just had to do with risk tolerance, that I think the risk tolerance of the user base implies a more conservative approach.
gotcha, thanks. This goes back to the thing we’ve learned in the past few month that our potential donors and our potential users have, we think, pretty different attitudes towards risk. This is speculative, but I think that a stablecoin approach is likely to generate more usage but less fervor, and I think that tradeoff makes sense.
Cheers, chaps! Thanks for the update. I hope you’re right and I hope you win
Sorry about not sparing effort to sound nicer, want to write comment quickly: I think of markets (in the sense of “which things are generating how much yield?”) as rather fickle, and if I was involved I wouldn’t build any strategy at all around these short-term signals, my assessment of your circumstances is not the assessment that would lead to me getting behind a myopic strategy. And I’ll go one further—it’s a bit of a red flag that y’all are willing to stake so much on fickle behaviors that you’re observing in a notoriously fickle market.
The discussion here is a broad one: on the one hand, I don’t have a good track record in that I’ve never been super glad about worshiping at the altar of EV theory (the altar hasn’t made me an OOM more money than I could make working hourly), which you can interpret as either lack of luck or lack of wisdom, and you don’t want to listen to advice from people without a good track record. On the other hand, the nature of your product is specifically more involved in trust and stability, which comes with a kind of responsibility that makes the class of reasoning you want to do decidedly not the “EV theory YOLO” that characterizes for example SBF’s journey from a well-off jane street alum to $30b. The fact is that a person reasoning about the journey from $1 to $100 /day has a qualitatively different EV theory than a person reasoning about the journey from $1000 to $10000 /day, because logarithms. A claim I’m considering making is that the GLO team ought to be using the former EV theory—because it is the one used by the users! -- even though most defi projects prefer the latter EV theory.
I think I could be wrong by not misassessing how much the strategies you’re building around short-term properties of market behavior really actually are short-term strategies, and won’t shoot you in the foot when the properties change and you have to reassess.
Thanks for your thoughtful reply Quinn.
For us, 2% is a fine (if perhaps conservative) estimate, though, as you note, it fluctuates. We don’t think that bond rates are likely to fall to zero any time soon, and if they fell by half (say, to 1%), that would still be a substantial amount of UBI generated. (I’ve edited the text to reflect this.)
To flip this around for a second, what would suffice — in terms of concreteness of future plans, benchmark returns at which we’d explicitly plan to pivot, or something like that — to make this no longer a red flag? Just curious if something comes to mind.
If I’m understanding the point about different theories of EV correctly, it’s that moving up 3 OOMs from extreme poverty to middle-class-in-America (MCiA) is a qualitatively different thing than moving from MCiA to fabulously wealthy (another way of saying this is that utility is non-linear)? If so, would you mind clarifying how endorsing one theory or another would impact how we conceive or execute our plans? It might not be super essential that I understand, so if it’s more effort than it’s worth to explain, no worries 😃
Some note to the effect that you’ve redteamed the strategy, planned for contingencies. I think if I had read a brief comment like
I think you’re following the way I set up the point about EV theories, what I meant really just had to do with risk tolerance, that I think the risk tolerance of the user base implies a more conservative approach.
gotcha, thanks. This goes back to the thing we’ve learned in the past few month that our potential donors and our potential users have, we think, pretty different attitudes towards risk. This is speculative, but I think that a stablecoin approach is likely to generate more usage but less fervor, and I think that tradeoff makes sense.