Morning Tea #12: Squid game season 2, Zillow buys high and sells low

Squid game season 2

Last week I wrote about squid game token, a crypto scam that saw its price plummet from $2860 to $0.0008 in a few minutes. In short, an enterprising scammer built a token that you basically couldn’t sell and, once the price went stratospheric, pulled liquidity from the exchange and sold the whole lot, sending the whole thing to basically zero.

End of story right? Wrong. After ditching their bags, the developer removed all selling restrictions and the token showed signs of life. It rose by a few hundred percent over the course of a day or so at which point I decided to sell a third of my tokens (that I got for free) for a few dollars. After all, it was the remnants of one of the biggest crypto rug pulls in history and a few dollars is better than nothing. I kept a third of my holdings because I had a funny feeling something stupid was about to happen but sold them about a day later.

I should have known better than to bet against the ridiculousness of crypto. A few days after selling, Binance made a change (they can do that? decentralised lol) meaning that the original developer could no longer interact with the contract. It became a truly decentralised highly memeable piece of shit. Quite quickly, the value of squid increased by a factor of ~60 from its lows. A few hundred dollars that I missed out on. Whoops. A day or so later, it increased by another 10 times. Several thousand dollars I sold for ~$5. Big Whoops.

Fortunately, I remembered I’d sent some squid to a separate wallet to try and mess with the contract whilst it was in scam mode. I dug it out and sold it for $30. An infinite gain on a $0 investment but I still feel pretty stupid knowing that it could have been thousands. I even sort of expected it. Pretty stupid indeed, but not quite as stupid as the person who sent me them for free.

Zillow buys high and sells low

A few weeks ago I started writing about tech companies that use models to price and buy houses without seeing them. I stopped partway through because it wasn’t that interesting and I got bored. I decided to try again after it emerged that Zillow’s doomed ibuying business cost them a very interesting $300m in the space of a few months. Now they have 7,000 homes to get rid of in a perfectly executed buy high, sell low trade.

Zillow have learned the hard way that markets are usually trying to kill you. The movements of a market are not random happenings to be delighted over, analysed, and fed into your model for signal generation. They are the machinations of adversarial evildoers, trying to trick and steal from you at every turn to put food on the table and Ferraris in the garage.

In this case, the counterparty simply chooses only to take you up on your stupidest offers and ignore your reasonable ones. Your adversaries are not allowing your model to make profitable deals. They drink your milkshake. Can Opendoor avoid a similar fate? Well, plenty of people seem to think so.

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Simon Spurrier

Simon Spurrier

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