TRX Short, JustLend insolvency, very asymmetrical risk-reward
Updated
Really there's no reason for me to post this here, but since ideas (at least the chart) cannot be edited retro-actively, maybe I'll get hired off of this and someone will give me 100 mill to play with at a trading desk once my theory proves correct.
I believe Justin Sun's JustLend platform is insolvent and it's another Terra Luna / FTX type situation brewing. On top of that, going just by TRX's chart and TA alone, it's primed for a major correction.
All other major DeFi lending platforms have roughly $1.5 - $3 dollars on the supply side for every $1 on the borrow side. Since the borrow side APYs are often 2-3x higher than supply side APYs, these numbers at glance make sense and seem sustainable, dare I even say, Allah forgive me, profitable for the platform.
AAVE TVL 4.597b
AAVE BORROWED 2.478b
COMP TVL 1.923b
COMP BORROWED 909.26m
SPARK TVL 441m
SPARK BORROWED 199.88m
VENUS TVL 957.03M
VENUS BORROWED 334.32M
(Core pool)
MORPHO TVL 917.95M
MORPHO BORROWED 463.97M
Queue Justin Sun's JustLend.
For every $1 on the borrow side, there's...$55 on the supply side. Yup.
It doesn't take a PhD mathematician to understand that in order for a supply-borrow ratio of 55:1 to be sustainable whilst offering DeFi market competitive APY rates, the borrowers would have to pay such obscenely high interest rates, it would put your local friendly loansharks Vlad & Olek to shame.
Yet, JustLend seems to offer APY's comparable to platforms with a healthy supply-borrow ratios. How is this sustainable then? Fraud, stupidity and debauchery - going by occam's razor.
So Justin Sun being a crafty little fella, wanted to get his hands on the crypto equivalent of JPow's LaserJet 9000 HP, ideally without the public's knowledge
He then proceeded to recently print nearly a billion USD "worth" of TUSD, and deposit that into his platform
He staked Wrapped Staked USDT (wstUSDT) because there's no borrow APY but massive supply APY.
So even at 0% pool utilization from the borrower's side, there's 4.21% APY for the supply side. Where the hell is this money coming from? Well, fret not, as Justin as a one word answer for us. T-Bills. Yep.
However there isn't a single iota of proof anywhere, on-chain or off-chain, that these T-Bills exists and are actually sitting somewhere, bought by real hard cash, earning that sweet sweet 5%.
Furthermore, T-Bills are 5%, but some pools offer at high utilization % of the pool upwards of 30% APYs.
The entirety of JustLend feels like 2 + 2 = apple pie. Nothing here adds up or checks out, but maybe I'm just too autistic to understand Justin's genius.
wstUSDT, the made up "stablecoin" by Justin actually has a higher supply side APY than borrow APY. This is like your local retail bank giving you a 3% mortgage while the feds fund rate is at 5.5%. It doesn't make any sense.
There could be multiple explanations for what he's doing with the printed TUSD.
1) Best case scenario, there's unironically $850~ mill sitting somewhere, actually backing these TUSD tokens 1:1. Which means he deposited the money into his own pool, in order to farm his own token, to launder money.
Either "Look guys, I didn't print this money out of thin air, I farmed it in my lending platform"
Or "This is not dirty money, look I launde...I mean earned it via farming it in my lending platform"
2) The unfortunately much more likely scenario, is that Justin's billion dollar airdrop isn't backed 1:1 by real cash, and quite possibly isn't backed at all due to him having direct access to the Print button. He's deposited the money into his platform to prop the failing platform up, in order to be able to cover the large discrepancy between what borrowers are paying for the platform versus the APY that has been promised to the liquidity suppliers.
Possibly using the farmed tokens to swap them out for other (supposedly farmed) rewards in the backend to be able to pay out those yields.
I will post more tidbits in the comments later. I'm not able to post links unfortunately, but everything I talk about can easily be verified by google.
I believe Justin Sun's JustLend platform is insolvent and it's another Terra Luna / FTX type situation brewing. On top of that, going just by TRX's chart and TA alone, it's primed for a major correction.
All other major DeFi lending platforms have roughly $1.5 - $3 dollars on the supply side for every $1 on the borrow side. Since the borrow side APYs are often 2-3x higher than supply side APYs, these numbers at glance make sense and seem sustainable, dare I even say, Allah forgive me, profitable for the platform.
AAVE TVL 4.597b
AAVE BORROWED 2.478b
COMP TVL 1.923b
COMP BORROWED 909.26m
SPARK TVL 441m
SPARK BORROWED 199.88m
VENUS TVL 957.03M
VENUS BORROWED 334.32M
(Core pool)
MORPHO TVL 917.95M
MORPHO BORROWED 463.97M
Queue Justin Sun's JustLend.
For every $1 on the borrow side, there's...$55 on the supply side. Yup.
It doesn't take a PhD mathematician to understand that in order for a supply-borrow ratio of 55:1 to be sustainable whilst offering DeFi market competitive APY rates, the borrowers would have to pay such obscenely high interest rates, it would put your local friendly loansharks Vlad & Olek to shame.
Yet, JustLend seems to offer APY's comparable to platforms with a healthy supply-borrow ratios. How is this sustainable then? Fraud, stupidity and debauchery - going by occam's razor.
So Justin Sun being a crafty little fella, wanted to get his hands on the crypto equivalent of JPow's LaserJet 9000 HP, ideally without the public's knowledge
He then proceeded to recently print nearly a billion USD "worth" of TUSD, and deposit that into his platform
He staked Wrapped Staked USDT (wstUSDT) because there's no borrow APY but massive supply APY.
So even at 0% pool utilization from the borrower's side, there's 4.21% APY for the supply side. Where the hell is this money coming from? Well, fret not, as Justin as a one word answer for us. T-Bills. Yep.
However there isn't a single iota of proof anywhere, on-chain or off-chain, that these T-Bills exists and are actually sitting somewhere, bought by real hard cash, earning that sweet sweet 5%.
Furthermore, T-Bills are 5%, but some pools offer at high utilization % of the pool upwards of 30% APYs.
The entirety of JustLend feels like 2 + 2 = apple pie. Nothing here adds up or checks out, but maybe I'm just too autistic to understand Justin's genius.
wstUSDT, the made up "stablecoin" by Justin actually has a higher supply side APY than borrow APY. This is like your local retail bank giving you a 3% mortgage while the feds fund rate is at 5.5%. It doesn't make any sense.
There could be multiple explanations for what he's doing with the printed TUSD.
1) Best case scenario, there's unironically $850~ mill sitting somewhere, actually backing these TUSD tokens 1:1. Which means he deposited the money into his own pool, in order to farm his own token, to launder money.
Either "Look guys, I didn't print this money out of thin air, I farmed it in my lending platform"
Or "This is not dirty money, look I launde...I mean earned it via farming it in my lending platform"
2) The unfortunately much more likely scenario, is that Justin's billion dollar airdrop isn't backed 1:1 by real cash, and quite possibly isn't backed at all due to him having direct access to the Print button. He's deposited the money into his platform to prop the failing platform up, in order to be able to cover the large discrepancy between what borrowers are paying for the platform versus the APY that has been promised to the liquidity suppliers.
Possibly using the farmed tokens to swap them out for other (supposedly farmed) rewards in the backend to be able to pay out those yields.
I will post more tidbits in the comments later. I'm not able to post links unfortunately, but everything I talk about can easily be verified by google.
Comment
I was looking at all the other assets / crypto's Justin is involved in, and out of those, cross referencing potential exposure, TRX seemed like the overall best short to get exposure to the underlying insolvency / fraud whilst still being a solid short entry just by TA aloneDisclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.