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Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

news.ycombinator.com

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Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#51

Post by TekMol »

nahollander wrote: post #45
TekMol wrote: post #43

Earlier quoted context omitted.

How can this make sense? If the collateral is X, then the borrowed amount (Y) has to be less then X. Why lend anything in the first place, when that means you can only spend Y while otherwise you could have spent X which is more?

This happens quite regularly in the world of margin trading. Imagine the following: 1. I own ETH, and want to hold my ETH position so I can enjoy price increases, but I need liquidity to live my day to day life and, well, it's hard to pay for things with ETH. 2. Instead of selling ETH and exiting my position, I put ETH up for collateral and borrow a stable-coin (like DAI) against it. That way, I maintain my price exp…

Oh! So this is not about lending buying power. But about lending in the context of betting on currencies.

A lends 10 Xcoins to B. B puts 11 Ycoins into escrow. A will either get back 11 Xcoins or 11 Ycoins.

If Xcoins rise in price relative to Ycoins, B is happy and A is sad.

If Xcoins fall in price relative to Ycoins, B is sad and A is happy.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#52

Post by songeater »

TekMol wrote: post #43
nahollander wrote: post #40

Earlier quoted context omitted.

In the current implementation / use cases we're focused on, your collateral, which is held in a smart contract, would become eligible for seizure by the lender.

How can this make sense? If the collateral is X, then the borrowed amount (Y) has to be less then X. Why lend anything in the first place, when that means you can only spend Y while otherwise you could have spent X which is more?

Say I own 1 bitcoin at $10k/BTC. I want to go buy a mining rig for $5k. I could sell 0.5BTC and buy the rig. BUT, I believe that BTC is going to $20k, and I don't want to sell. So I go to person X and say lend me $5k against what is currently $10k of BTC. He has 2x collateral coverage... so he makes the loan. if BTC falls to $7500, he may have the option to sell and recover his loan. I get my money so I can create more "money" out of thin air (or rather electricity and metal). When BTC goes to $20k I am rich. RICH.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#53

Post by RightMillennial »

danenania wrote: post #39
RightMillennial wrote: post #21

Earlier quoted context omitted.

In general, no, we don't find it offensive. The word "bible" is simply from the Greek word for book or books.

I believe almost all of these 'sacred' terms have totally pedestrian etymological roots. Bible = book. Koran = recitation. Dharma = decree or custom. Karma = fate. Christ = anointed. Another interesting semi-related one I remember about the Bible: the "Virgin" Mary was translated from the Hebrew "almah", which just means a young unmarried woman (not necessarily a virgin in the way we define it).

Interesting, I didn't know the origins of the words Koran or Dharma.

I don't know much about biblical hermeneutics, but wasn't the New Testament written in Greek? Also, based upon Church tradition and history, even if the word didn't explicitly mean virgin, it is certainly understood to mean it with relation to Mary.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#54

Post by jacquesm »

edent wrote: post #42

There's something I don't understand about Smart Contracts. Normal contracts are written by lawyers. They are reviewed by both parties' lawyer. Sometimes, after the contracts are signed, the lawyers disagree what a particular provision or clause means. At which point, they either negotiate or sue. In which case, a human judge weighs up the case and decides. How do disagreements work with smart contracts? I assume som…

> How do disagreements work with smart contracts?

In the case of Ethereum that's easy: you hard fork the currency.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#55

Post by iMuzz »

nahollander wrote: post #47
iMuzz wrote: post #26

What stops someone from putting up some collateral, disappearing with the loan and then just creating a new account?

The collateral is held in a smart contract -- if the borrower disappears and fails to make a repayment, his collateral becomes eligible for seizure.

Are the collaterals always worth equal or more than the amount borrowed?

I asked that assuming people put up 1 eth as collateral to borrow 2 eth.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#56

Post by cortesoft »

matte_black wrote: post #48
nahollander wrote: post #40

Earlier quoted context omitted.

In the current implementation / use cases we're focused on, your collateral, which is held in a smart contract, would become eligible for seizure by the lender.

And what is the collateral here? My house? A car? Money? If my collateral is another liquid asset it doesn’t make sense to borrow, and if it isn’t how exactly does the lender go about seizing it? I want this explanation to reach a satisfactory conclusion.

Other cryptocurrency, I am guessing.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#57

Post by matte_black »

songeater wrote: post #52
TekMol wrote: post #43

Earlier quoted context omitted.

How can this make sense? If the collateral is X, then the borrowed amount (Y) has to be less then X. Why lend anything in the first place, when that means you can only spend Y while otherwise you could have spent X which is more?

Say I own 1 bitcoin at $10k/BTC. I want to go buy a mining rig for $5k. I could sell 0.5BTC and buy the rig. BUT, I believe that BTC is going to $20k, and I don't want to sell. So I go to person X and say lend me $5k against what is currently $10k of BTC. He has 2x collateral coverage... so he makes the loan. if BTC falls to $7500, he may have the option to sell and recover his loan. I get my money so I can create mo…

What happens if after immediately getting his $5k BTC I buy a sweet rig for $15K BTC and the price of bitcoin drops to $4k?

I guess I can’t spend the collateral in the first place?

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#58

Post by cortesoft »

matte_black wrote: post #50
nahollander wrote: post #45

Earlier quoted context omitted.

This happens quite regularly in the world of margin trading. Imagine the following: 1. I own ETH, and want to hold my ETH position so I can enjoy price increases, but I need liquidity to live my day to day life and, well, it's hard to pay for things with ETH. 2. Instead of selling ETH and exiting my position, I put ETH up for collateral and borrow a stable-coin (like DAI) against it. That way, I maintain my price exp…

And if you don’t use coins for day to day living expenses?

You could cash out the borrowed coins for cash.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#59

Post by nahollander »

matte_black wrote: post #48
nahollander wrote: post #40

Earlier quoted context omitted.

In the current implementation / use cases we're focused on, your collateral, which is held in a smart contract, would become eligible for seizure by the lender.

And what is the collateral here? My house? A car? Money? If my collateral is another liquid asset it doesn’t make sense to borrow, and if it isn’t how exactly does the lender go about seizing it? I want this explanation to reach a satisfactory conclusion.

The collateral can be any other asset that is represented by a cryptographic token. Right now, few crypto-assets map to real world assets in some capacity, but we're willing to make a bet that this will change faster than most expect.

Already, though, there are many interesting assets in the world of crypto that are particularly well suited to being put up for collateral -- namely, the emerging class of crypto-collectibles such as CryptoKitties.

Re: Launch HN: Dharma (YC S17) an open protocol for borrowing/lending cryptoassets

#60

Post by jbob2000 »

nahollander wrote: post #13
zanek wrote: post #3

I didnt see this mentioned on the website, but what about the legality of this ? Is this legal in the US ? Or where is it legal , illegal to use ?

Yes -- two parties are permitted to lend money to one another in a mutually agreed environment. It's important to note, though, that developers who build end-user applications on top of Dharma ought to be cognizant of lending regulations / securities law in the jurisdictions they are active in. However, we've opted to build Dharma in a non-jurisdictionally-biased manner -- we think that jurisdiction-specific regulato…

That is a dangerous position to put yourself in. AML and Terrorist financing laws make everyone responsible, you generally cannot claim innocence if you take no precautions and are involved in some kind of incident.

Good luck.

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