Cost of Capital is the new APY
“I know why you're here, N̶e̶o̶ $NIO. I know what you've been doing... why you hardly sleep, why you live alone, and why night after night, you sit by your computer.”
The last time I blogged about crypto, in late 2018, I had been following the space closely. This was at the height (or depths) of the crypto winter, when Bitcoin was trading below $4000, DeFi had yet to be coined, and no crypto project had any real use cases to speak of. Crypto casino funtime reverted to a market of esoteric promises and ideas; my last blog post on crypto was about the ethics of pull requests.
Today Bitcoin is nearing it’s all-time high while DeFi has taken off and crypto projects are finding real-world use cases. But in spite of near-record prices and volumes of capital locked in DeFi, what’s happened over the past two years within crypto pales in importance to what’s happened without:
Jesse Walden introduced the term “crypto adjacent” to describe non-crypto applications that are priming the pump for crypto. I like this term though I think it gets it backward: In many ways crypto is just adjacent to a world that’s become much more speculative. Cost of capital now trumps APY as the most important metric for our savings accounts.
This is the rejoinder to the trope that crypto is all just speculation. Of course it is; so is everything else now. Zirpy derp derp.