Vitalik Stability Myth

Firstly, a reminder that Vitalik is a Peter Thiel asset, so that any conceptual framework must be put in that context of self-serving interests.

For example:

He acknowledged that the underlying stability of distributed ledger and the technology powering the crypto asset economy has not come into question. The problem in this instance (and several before it) has been people, not technology.

Vitalik Buterin offers lessons for crypto in wake of the FTX collapse and Ethereum Co-Founder Vitalik Buterin Says FTX Saga Offers Lessons for Crypto.

It is true that collusion and fraud require humans, and not just code, but I disagree that the current DLT, of which crypto is a subset, has "not come into question". I shall continue to point out that Uniswap pools are mathematical garbage and accelerate contagion and evaporate the value of tokens in a disastrous manner. And Uniswap is one of Ethereum's babies - astonishingly, it seems to be coming out of this with praise.

I don't get it. Try thinking this through. You have some stake in a simple Uniswap-style constant-product liquidity pool. Now, if the value of one token starts to drop, the reason the price drops within the pool is that there are more swaps out of that token and into the other, safer token. But the way the arithmetic works is that the value of your stake starts to drop. So you bail out and free your liquidity. You are now part of the Uniswap death spiral. As the value of one token drops, and the liquidity also drops, this accelerates the price downwards. The "good token" is still there, but in small numbers as users have swapped it out.

In the end, if you were not paying attention, what started as a 50-50 investment ends up being a bag of worthless sand. Now, repeat this across 100s of similar pools across many copycat sites and you will see how panic spreads and value is destroyed. Add some bridges and the virus of value destruction can now metastasise across networks.

So, Vitalik, leaving aside all the scammy smart contracts and ponzinomic yield farms, Uniswap does not improve the stability of the crypto ecosystem, rather it accelerates contagion and value destruction.

There is a solution to this - use Balancer protocols, not Uniswap. This change of algorithm would give stakeholders some measure of protection. It would not "save a shitcoin", but it would distribute the losses more equitably among holders and liquidity providers.

On a final note,

"Please recognize the fact that my elite social connections to people who are early to know things make me cool, and please help me validate my self-image of coolness," the Canadian programmer added.

The word "crypto" has multiple meanings.