I'm struggling to understand what the use-case of this is, both from a borrower and a lender viewpoint? Who would use this and for what?
Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
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Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#42I'm struggling to understand what the use-case of this is, both from a borrower and a lender viewpoint? Who would use this and for what?
As a borrower, this is a perfect way to attempt to get free money, since there's no penalty for defaulting on the loan.
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#43Earlier quoted context omitted.
Risk assessment is literally the entire product is it not? Loans are not a technical problem to solve, and there's no inherent usefulness in it being a smart contract. A guy in a office is not a risk assessment strategy.
Not necessarily. I think a great example of something that smart contracts enable in a lending scheme is built-in secondary market functionality. A lot of marketplace lending platforms have built in proprietary secondary markets, but none of them are anywhere near as liquid as crypto markets are in general, and the vast majority are not interoperable, to my knowledge. Your ownership in a loan on Dharma is denominated…
So Dharma should just offer loans in tranches and let them be tradeable on Ethereum?
Also if you're loaning in ETH, but presumably people need the loan for USD-based operations, what do they do when the price of ETH spikes?
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#44Earlier quoted context omitted.
No need to forgive. You're not wrong nor naive. I'd pin the difference as one of personal risk tolerances. I have much less than you, that's all. Right now Solidity is the only choice of public smart contracts. All I meant before was that this is an impressive project and to be careful. > But, after all, a dark horse 20 year old college dropout spearheaded the development of Ethereum, and the technology now secures n…
Re: FV -- I admittedly have a surface level understanding of the entire subject matter. If you have any good primers and / or resources, I'd love to hear them. re: Pact -- sounds super cool. I look forward to reading the white paper. Would be happy to scan the drafts if you'd be interested in sharing too re: SEC -- just saw that too. I wouldn't say I totally disagree with the decision -- by Howie test standards, a go…
### FV Resources
These are few and far between. My paper on it is soup to nuts for how we do it in Pact which, while technical, should be somewhat approachable for most devs to grasp (I tried at least -- representing a program as equations is just an abstract concept).
Until it comes out, the best one I've found as an entry point was the approach they use in Cryptol: https://youtu.be/ruNFcH-KibY?t=897 . Cryptol, generally is a great project to look to for guidance. We're not going with the interactive approach. An EDSL in the docstrings is our approach so that you can pull a contract from the chain (pact is interpreted so the code on chain is the code that executes... well after it gets inlined and validated) and do the verification for yourself. Pact inlines at module creation/update time as a safety feature -- this way if a dep upgrades the code your contract runs doesn't change though the dep can revoke your code's right to access its tables/data until you update your contract. The "no leftpad" approach to deps.
All the imported code that's pure, however, still works. This way, when you are building a module, you know that the code you formally verified/tested against is the only code that will ever run (until you update it).
### Whitepapers
Thanks for the offer but I've already got enough people looking at them currently and we're keeping them confidential for now... a glaring stupid mistake would be embarrassing. Subscribe to the mailing list on kadena.io and you'll get updated with them the second they get released publically.
### SEC
FYI I used to work at the SEC and I was their tech lead when they formed the Cryptocurrency Steering Committee, which has been renamed to the Distributed Ledger Technology Working Group (DLTWG). I worked with Valarie (then the head of it, still is probably) on a few actions. This is the group did the investigation and put out the release.
Yep, no one is surprised by the take on the DAO and you're 100% right about the grayer-area of app coins. The key distinguisher will be, IMO, if the app-coin has real world use when it's sold + isn't supposed to return a profit as part of the app itself.
IMO, expecting to resell the app-coins for a profit will be fine in the same way that art can be bought/sold for a profit, and a profit can be expected when one purchases it, but also art can be hung (or rented out and shown for a profit). Everything else is strictly a security.
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#45Forgive what might be an obvious question, but though I see there is a concept of trying to determine the risk of a loan, it isn't clear to me how that is actually done. What is used as a source of identity of the borrower? IE, how do you punish bad borrowers on future loans? Or does that fall outside of this?
Credit-risk assessment is indeed the most brittle aspect of what I'm building. In short -- borrowers have to get a cryptographically signed attestation from what's called a Risk Assessment Attestor in order to request a loan in Dharma. RAAs use whatever means they have to assess a borrower's identity and creditworthiness -- be that through social media logins, uploaded identification documents, authenticated phone nu…
Could something like Civic.com be used for this?
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#46I'm struggling to understand what the use-case of this is, both from a borrower and a lender viewpoint? Who would use this and for what?
As a borrower, this is a perfect way to attempt to get free money, since there's no penalty for defaulting on the loan.
That's what it seems like. I'm happy to be convinced otherwise, but the homepage doesn't really explain anything.
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#47Earlier quoted context omitted.
I think the idea is that RAAs can bridge the reality divide by tying the pseudo-anonymous contract identity to a real life identity. You can, for example, require the user upload a video showing them, any government IDs, their house number, their last utility bills, pay stubs, etc. You might require a mobile app that could look at ongoing phone telemetry/contact info to see someone has a network and is regularly goin…
Exactly. Tala's a great analogy insofar as developing world microfinance faces a lot of same challenges Dharma will likely encounter -- namely the lack the of legal recourse for defaults.
I heard a guy talking on Bloomberg radio this morning about this in regards to emerging markets bond investing. The interviewer was commenting that the legal system didn't provide good recourse in the event of default. The guy said like you that the credit analyst would need to focus more on the likelihood of default than the recoverability of the collateral.
It reminded me of my time working on credit models for subprime mortgages. We forecasted 2 variables: frequency and severity of default. The total loss prediction was the product of the two. If your severity is always 100% at least it makes your model simpler.
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#48Earlier quoted context omitted.
> It's like calling something 'The Gospel' or 'The New Testament' or the 'Quran Protocol'. Yeah, I don't think that is true, at all. Dharma is a concept and you've listed books (or close enough to books). According to Wikipedia, > In certain contexts, dharma designates human behaviours considered necessary for order of things in the universe, principles that prevent chaos, behaviours and action necessary to all life…
This is an oversimplified answer. Dharma certainly has religious significance to many millions of people. So, it's not "like any other name". It's evocative, and if you are unaware of just which feelings you are evoking, your product is at risk. Consider the case of the javascript test runner, Karma. It was originally named testacular. Possibly a play on spectacular, but also close enough to testicular to make female…
This is kind of ironic since Karma is also a sanskrit word with religious significance. But at this point it has been fully accepted into english.
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#49Earlier quoted context omitted.
> It's like calling something 'The Gospel' or 'The New Testament' or the 'Quran Protocol'. Yeah, I don't think that is true, at all. Dharma is a concept and you've listed books (or close enough to books). According to Wikipedia, > In certain contexts, dharma designates human behaviours considered necessary for order of things in the universe, principles that prevent chaos, behaviours and action necessary to all life…
This is an oversimplified answer. Dharma certainly has religious significance to many millions of people. So, it's not "like any other name". It's evocative, and if you are unaware of just which feelings you are evoking, your product is at risk. Consider the case of the javascript test runner, Karma. It was originally named testacular. Possibly a play on spectacular, but also close enough to testicular to make female…
> Dharma does carry a secular sanskrit definition, but sanskrit is not a precise written language like English. The meanings of words are often only discoverable in context, and approachable only with a prior familiarity of common illustrations and allegories depicting the concept.
But for the part about it being different in this regard from English, this is probably true of Sanskrit.
But that's not a different from English; lots of things in English require similar (local and cultural) contextual information to understand.
Re: Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts
#50Earlier quoted context omitted.
As a borrower, this is a perfect way to attempt to get free money, since there's no penalty for defaulting on the loan.
That's what it seems like. I'm happy to be convinced otherwise, but the homepage doesn't really explain anything.
The white-paper has more detail than the homepage and I recommend reading it for a better understanding of the project
From what I understand, third party entities responsible for vetting borrowers. These entities referred to as "Risk-Assessment Attestor"(RAA) are incentivized to do quality risk assessment as they get a piece of the loans they vet.
Here's a section from the white paper, discussing the importance of RAAs and how they might deter habitual defaulters
"Moreover, RAAs are capable of reporting borrower defaults to relevant credit bureaus on the behalf of lenders. Thus, borrowers are disincentivized from defaulting on loans insofar as their future creditworthiness, both within the Dharma network and in traditional loan markets, will be adversely affected."