There's also Anchor, which is the third piece of this Ponzi. Anchor promises 20% yield on UST, and this is what generates demand for UST. However, the yield contains risk which is hidden on purpose or not generally understood. Ponzi schemers profit from this information asymmetry, and work to maintain it.
Most of the yield in crypto is generated from dilution, and therefore the real return can be positive as long as there are new investors, which offset the effect of dilution. Now, classifying them as Ponzi schemes depends on how these assets are marketed and sold. Expected return of these kind of schemes is zero, which is how they should be marketed.
Most of the yield in crypto is generated from dilution, and therefore the real return can be positive as long as there are new investors, which offset the effect of dilution. Now, classifying them as Ponzi schemes depends on how these assets are marketed and sold. Expected return of these kind of schemes is zero, which is how they should be marketed.