Su Zhu's latest long tweet: The collapse of CeFi began in 2020
On November 22, Bloomberg released a new interview with Su Zhu, the co-founder of Three Arrows Capital. In the face of reporters' questions, Su Zhu said: "Some industry leaders said that the collapse of FTX has set the industry back by 5 years, but I think the situation is more serious, and it may take seven to eight years. If the fundamental problem is not properly resolved , the retrogression will be longer."
In addition, Su Zhu also said that he has been reflecting on the failure of Three Arrows Capital in recent months, and will consider establishing a new investment and trading company, which may be an all-weather fund that invests in both encrypted assets and traditional assets. However, Su Zhu also mentioned that this matter is not urgent, because "FTX's domino effect has just begun, and more dominoes will fall."
After Bloomberg published the article, Su Zhu himself updated a long series of tweets again. From the perspective of the loser and even the instigator of the market crash, Su zhu gave his own views on the path of CeFi going to extremes step by step. The following is the specific content of the tweet, compiled by Odaily.
Regarding the time needed for the industry to recover, I think it can be faster, but only if we need to do the following:
Regulators need to clean up rampant insider trading and deal with the interests of cryptocurrency companies, especially US companies;
Two grasps: on the one hand, improve the transparency of custodians and exchanges, and on the other hand, develop self-custody and DeFi;
The new generation of investors and builders can no longer pay so much attention to Ponzi economics;
Make a big push towards decentralization, even if it takes longer;
Focus on growth that benefits users and create a community with sustainable value;
Oversee marketing, public relations and lobbying activities.
I admit that our company (Three Arrows Capital) was one of the two or three large fuses that eventually led to the collapse of CeFi. I've spent a lot of time reflecting on this, and I think there are a number of reasons why things ended up this way. The change in mindset across the CeFi industry can be traced back to March 2020.
In the early spring of that year, we repaid billions of dollars of loans in one go, which caused lenders to panic (because they promised depositors a fixed rate of return) and beg us to borrow from them again.
Think about us and Alameda Research, as the largest borrower in the CeFi field so far, we have gradually developed the illusion of "unlimited backup".
As lenders and brokerage firms have been engaging in insider trading, the industry has cast a black box on some of the largest trading firms, fostering a culture of secrecy and opacity.
The rate of return of CeFi income-type products should have been linked to the duration, and the sources of risks and possible losses need to be clearly disclosed. However, the mismatch at the duration level allowed the big brokers to earn outsized returns prematurely in the bull market, which led to an overextension of credit as the "more is better" mentality was ingrained.
Trading companies also feel that they are too big to fail.
For Sanjian Capital, we have never borrowed money from retail investors, nor have we ever done unsecured lending in DeFi, nor have we ever created our own tokens for collateralized lending, but we have indeed contributed to arrogance, arrogance and other unhealthy tendencies Evil, bringing weird centralization risks to the decentralized world.
This is a sin against Satoshi and God, and something I think about every day.
Last month, a friend sent me a copy of the "Quran", in which there is a sentence that has been repeated repeatedly - "Easyness will inevitably lead to misery".
