“If you can walk away from a landing, it’s a good landing. If you can use the airplane the next day, it’s an outstanding landing.” — Chuck Yeager
It was the Fall of 1947 when superstar test pilot Chuck Yeager arrived at an airbase in the Southern California desert where the US Air Force was pushing the limits of physics with rocket-propelled aircraft. At that time, scientists questioned if principles of aerodynamic drag made such a feat even possible. On October 14th, Yeager’s X-1 “rocket plane” was lifted to an altitude of 25,000 feet in the bomb bay of a B-2and then released rocketing to 40,000 feet while exceeding 662 MPH and breaking the sound barrier of Mach 1. Scientists and engineers feared that reaching the speed of sound in an aircraft could potentially be like flying into a proverbial brick wall.
There was actual test flight evidence to support that view when in 1946, a British attempt to simply approach the speed of sound turned catastrophic when the pilot’s aircraft disintegrated and killed him.
Yeager, however, thought it could be done and was happy to risk disintegration to find out.
He volunteered to be the first man to travel at the speed of sound, and if he survived, “punching” through Mach 1, and upon landing, he suffered no ill effects other than sore eardrums.
piloted by Chuck Yeager.
However, a later test flight by Yeager went less smoothly.
Yeager piloted a supersonic jet into the lower reaches of outer space knowing he had only enough fuel for the trip up through the atmosphere but with no fuel left for the trip back down.
Once the jet ran out of fuel and lost momentum in space, Yeager’s mission intended for him to maneuver the aircraft back to Earth in a glide.
Instead, Yeager’s aircraft tumbled in its descent tail first and went into an uncontrollable spin that forced Yeager to eject at a dangerously low altitude of 6,000 feet at high speed.
After being shot like a bullet from the spinning aircraft, his parachute yanked him into a face-first collision with his ejected pilot’s seat.
The seat smashed his visor and got tangled in his parachute lines, while ejection propellant ignited a fire literally inside his helmet.
Yeager, to the complete astonishment of ground control, was somehow able to untangle the seat, extinguish the fire with his hands and parachute safely to the ground.
Chuck Yeager was indeed a very special breed and despite third-degree burns over his face, neck, and hands, he was back in the air just a few weeks later.
Having the Right Stuff
Why is Byron Gilliam relating Chuck Yeager’s story in a newsletter on crypto and markets?
Because, on a somewhat less heroic scale, investing in DeFi often feels like volunteering to fly into a proverbial brick wall. Or flying into space with no particular plan on how to get back to Earth.
There is less at stake, of course: You stand to lose only whatever fiat you chose to risk, not life and limb.
But the probability of disaster seems similarly high.
At least that’s how I felt after last week’s $625 million Ronin hack.
I had volunteered in the Ronin experiment by buying AXS and SLP and farming them in return for an unknown number of RON — I had no real idea of what the return would be, but it seemed like something to try.
It looks like my return is going to be about -100%.
DeFi crash-and-burns are becoming as regular as clockwork. We keep losing millions to buggy code, not-so-smart smart contracts, and wobbly bridges.
Yet we heroically soldier on, risking our hard-earning crypto in the cause of decentralizing finance.
And the cause has advanced: The Ronin hack was a new and more sophisticated type of attack, and I’m sure every bridge developer is now working on avoiding the same mistakes.
Who’s the Dummy?
Ok, fine. Losing a few grand in RON tokens is not going to get me a ticker-tape parade.
I am more of a crash test dummy than a fighter pilot hero.
But that is exactly the point: We are all just crash testing this DeFi thing.
DeFi is a brand new financial vehicle, and we’ve volunteered to test drive it full speed — while talking on the phone, drinking a latte, and smoking a cigarette.
When critics say crypto is risky, scammy, not really decentralized, etc., they are right. It’s all of those things.
But of course, it is! It’s barely four years old!
Writing off DeFi because it’s risky and scammy in 2022 would be like writing off flight after the Wright Brothers had a couple of crashes in 1903.
You can’t get to commercial air travel without the Wright Brothers crashing a few planes, and you can’t get to space travel without Chuck Yeager crashing a few jets.
Similarly, we cannot get to a new financial system without crashing a few P&Ls.
Running new protocols in a simulation would not do the job.
DeFi is a volatile, unpredictable mix of tokenomics, smart-contract code, memes, and money.
It can only be stress-tested in the wild, with real fiat. Yours and mine.
And there’s no way to regulate away the risks we take, either.
If we had tried to develop a new financial system with full investor protections in place, we wouldn’t even be out of the SEC working-paper stage by now.
And if it were possible to regulate the risk, you wouldn’t want to: There’s nothing useful to be learned from risk-free trading.
Just the opposite: As demonstrated in 2008, allowing too-big-to-fail commercial banks to play the markets with risk-free, FDIC-insured deposits created the moral hazard that resulted in the Great Financial Crisis.
Moral hazard is perhaps the single biggest problem with traditional finance, and DeFi has none of it.
Because moral hazard is bad, its inverse — the immoral hazard of degen-ing — must be good.
We launch ourselves into DeFi knowing the Fed is not going to be there to bail us out of our bags — and that’s a feature, not a flaw.
So don’t let a few hacks deter you: Keep aping into those new, risky, possibly scammy protocols. Not for a ticker-tape parade but, we hope, for a much improved financial system.
Via: — Byron Gilliam Blockworks
