Unstablecoins

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TBI - December 12, 2018

Thing you need to know right now:

The Block reports that Basis, the creator of the Basecoin and stablecoin darling that raised $133 million from an impressive group of crypto investors, is shutting down and refunding investor money due to regulatory concerns.

My two bits:

1. It’s not really $133 million. A lot of this was earmarked to stabilize the currency at launch. If the team didn’t deliver the protocol, the plan was to refund the collateral all along. (Similar to the mega-rounds raised by P2P lending platforms in years past that were 90%+ collateral vs. equity commitments.)
2. This outcome isn’t surprising. The design was such that private investors I’d spoken with (telegram is gonna get so many people in trouble, man) were openly discussing how much of a no-brainer it was for the VCs that backed the project because they could make money early, exit, and have none of the long-term tail risk associated with a stablecoin blow-up.