SBF

Chapter 27Market Cap

Serum brings us to the serum (SRM) token. Tokens mean prices, and prices mean market caps. Market caps are key to understanding what went so horribly wrong with SBF.

So here's a fun fact for you: market caps are nonsense. They aren't complete nonsense, but they are mostly nonsense.

From Apple stock all the way down to garlicoin: a market cap is less a fixed number and more a bit of wishful thinking.

Market caps are much like the gross domestic product (GDP) of nations: both are terrible ways of measuring what each is attempting to measure (the value of a company or the health of a nation's economy), except for all the other ways.

Market caps are simple: take the spot price of a token (or a company's equity, for that matter) and multiply it by supply. So if there's a thousand tokens and they are selling for $1 each, it has a market cap of $1,000.

Spot prices (market prices) are real for you and me, but they are not real for someone like SBF. He knows this. He made a business out of this.

But for you and me, if we have 10 or 100 or 1000, say, sol tokens and the websites are saying they are selling for $10, we can probably get $10 each for our whole portfolio. That's because, well, we just don't have much. To the market, our trades just don't really matter.

But try to sell a million? That's going to fetch a lower price. No one is paying full price for a giant pile.

This is why, big picture, market caps are perhaps more misleading than helpful. Here's how they ...