What happens to people airdrops when exchanges kick people off?

[brianwalden]

Binance kicked people from Ontario off this summer. Nexo is kicking New Yorkers off in a month. I understand that there's no way their lawyers will allow them to pay the airdrops to these people. So what happens to all that FLR? Flare was very big on making sure every last FLR goes to the exchange users. Did they have a contingency plan for this situation? Or do exchanges just get to keep it for themselves. It will only affect more people as time goes on over the course if the 3-year airdrop.

I'm not a "not your keys, not your crypto" maximalist, but this airdrop has been a painful lesson in not your keys, not your crypto. Whether we're talking about an exchange or a smart contract, only give them your funds if they're giving you an opportunity to earn income that you wouldn't have if the funds were sitting in your own wallet. In this case, people have largely gotten nothing but trouble for using exchanges for the airdrop. There's been no advantage over using your own wallet, only more risk. I fully admit this is all hindsight, I don't think anyone saw this much trouble coming.

[Guest]

35 minutes ago, brianwalden said:

Binance kicked people from Ontario off this summer. Nexo is kicking New Yorkers off in a month. I understand that there's no way their lawyers will allow them to pay the airdrops to these people. So what happens to all that FLR? Flare was very big on making sure every last FLR goes to the exchange users. Did they have a contingency plan for this situation? Or do exchanges just get to keep it for themselves. It will only affect more people as time goes on over the course if the 3-year airdrop.

I'm not a "not your keys, not your crypto" maximalist, but this airdrop has been a painful lesson in not your keys, not your crypto. Whether we're talking about an exchange or a smart contract, only give them your funds if they're giving you an opportunity to earn income that you wouldn't have if the funds were sitting in your own wallet. In this case, people have largely gotten nothing but trouble for using exchanges for the airdrop. There's been no advantage over using your own wallet, only more risk. I fully admit this is all hindsight, I don't think anyone saw this much trouble coming.

A few days ago, I wondered why I self-custodied XRP in the first place, for this exact reason.  Hope you’ll allow me to reminisce a bit.

And I figured I have to thank Coinbase for that. And the XRPL DEX. There were two or three dumps or pumps where I simply could not offload my tokens even if I could see the pump waning off or the dump coming. There was too much traffic. I simply couldn’t log on in some cases. My orders wouldn’t go through.

That’s when I figured that even with the illiquidity of the DEX, I could at least hold on to some profits if I had to get rid of things in a hurry. And I could always transfer to an exchange in “normal times” if I were looking for better order books.

If Coinbase were able to scale, or if XRPL didn’t have the DEX, I would have still not self-custodied. Soon I became comfortable with Ledger but they lost my business when they had that major leak which also included my personal data. I’d avoided Xumm because it was a software wallet and as someone with a strong technical background I couldn’t bring myself to trust mobile OSes to be secure, even IOS. But when the Tangem card integration came through, that was just perfect. Xumm+Tangem+Regular Key is possibly the most secure way to manage XRPL private keys.

Eventually the world would find out that iMessage had a zero day vulnerability that gave root even if you didn’t see or open the message. 

And now, I’m confident that in a couple of years I’ll never have to go back to an exchange again. The XRPL DEX will have a lot of liquidity, and there is the Flare cross-chain DEX (F-Assets), XRPL side chains… If XRP is not deemed a security, what a time it’ll be !!

[Guest]

1 hour ago, brianwalden said:

Binance kicked people from Ontario off this summer. Nexo is kicking New Yorkers off in a month. I understand that there's no way their lawyers will allow them to pay the airdrops to these people. So what happens to all that FLR? Flare was very big on making sure every last FLR goes to the exchange users. Did they have a contingency plan for this situation? Or do exchanges just get to keep it for themselves. It will only affect more people as time goes on over the course if the 3-year airdrop.

I'm not a "not your keys, not your crypto" maximalist, but this airdrop has been a painful lesson in not your keys, not your crypto. Whether we're talking about an exchange or a smart contract, only give them your funds if they're giving you an opportunity to earn income that you wouldn't have if the funds were sitting in your own wallet. In this case, people have largely gotten nothing but trouble for using exchanges for the airdrop. There's been no advantage over using your own wallet, only more risk. I fully admit this is all hindsight, I don't think anyone saw this much trouble coming.

I know I rambled a bit in my other post, but wanted to bring up something else which is important but would have been lost in that other post.

This is not about “not your keys, not your crypto” IMO. That phrase was coined when exchanges would rug pull or run away with funds. This is, frankly, an inability to understand the risks involved in crypto. Binance has been in trouble for a long time with authorities in several countries. There was plenty of opportunity to get out, and while those who were not aware of it could be excused, there were many who thought “surely nothing bad is going to happen!” The new Binance CEO quit in 2 months for god sake. 

Nexo, Celsius, BlockFi cases have been ongoing for several months now. Several states have sued, in the US. How many here in this forum got their funds out ? Most think “it’s not my state, and it’s not for existing customers” and hold on to their accounts. Sure it’s a personal decision, but is everyone aware of the risk they’re incurring ? If there is a panic, will you be able to recover your funds before the smart contracts start to fail ? Is a yield high enough to justify the risk ? 

Same with Tether.  With using a VPN to access markets not available otherwise. These are all risks. Unfortunately it’s very important to be sensitive to the risks and hedge accordingly, rather than be a passive hodler.

Edited October 31, 2021 by Ripley

[Seoulite]

11 hours ago, brianwalden said:

Or do exchanges just get to keep it for themselves. It will only affect more people as time goes on over the course if the 3-year airdrop.

My guess is that they will either just keep it on the books, or if it becomes more valuable to start using it for something then they will quietly start using it. Right now if Binance suddenly delegated into the Songbird FTSO we would notice, but a year from now? If they did it slowly? I think no one would know and maybe no one would care.

11 hours ago, brianwalden said:

There's been no advantage over using your own wallet, only more risk.

I disagree with this, but only if you trade your stack. Admittedly this is much less common now that people are more worried about taxes, but a few years back it was necessary to have a trading stack on an exchange if that's what you were into. 

I agree though, now, unless you are actively trading (most people shouldn't) then there is now no advantage to holding on an exchange. Wallets are much easier to use. DeFi is open. Airdrops galore. Never a better time than to get off the exchange.

[brianwalden]

10 hours ago, Seoulite said:

My guess is that they will either just keep it on the books, or if it becomes more valuable to start using it for something then they will quietly start using it. Right now if Binance suddenly delegated into the Songbird FTSO we would notice, but a year from now? If they did it slowly? I think no one would know and maybe no one would care.

I disagree with this, but only if you trade your stack. Admittedly this is much less common now that people are more worried about taxes, but a few years back it was necessary to have a trading stack on an exchange if that's what you were into. 

I agree though, now, unless you are actively trading (most people shouldn't) then there is now no advantage to holding on an exchange. Wallets are much easier to use. DeFi is open. Airdrops galore. Never a better time than to get off the exchange.

I meant strictly for the airdrop, the exchanges don't really give you anything. I agree, if you're a trader, that's a good reason to have your funds on an exchange. If you're using Nexo or Celsius to earn interest or take a loan, that's a good reason.