61–70 of 140 posts
> It is difficult to get a man to understand something when his salary depends upon his not understanding it.
Earlier quoted context omitted.
All loans are overcollateralized, and basically used for leverage: put up your bitcoins as collateral, borrow stablecoins, buy more bitcoins. So the risk is limited as long as the loans can be liquidated in time in case of a price crash. The rates are determined the ratio of all stablecoin liquidity provided vs the amount actually borrowed. Liquidity providers can remove liquidity at any time, and so the smaller the…
> So the risk is limited as long as the loans can be liquidated in time in case of a price crash. If I may guess, it seems unlikely there are too many folks in DeFi circles who have ever heard acronym LTCM. (TL;DR: A bunch of actual Nobel laureates (no kidding, or at least as much as Nobel price in economics is an actual Nobel) founded a huge and famous hedge fund with a trading strategy assuming they can liquidate t…
Then again if it's all crypto and everything goes down at once, I suppose there isn't too big issue. Apart from losing some fiat, but they who cares about that in cryptoworld...
The decentralisation illusion argument seems weak. One could have claimed the same about the early internet: Early internet wasn't truly decentralized as there were still ISPs, and you still need to register your domain with a centralized entity. This misses that the big change is one of access. Content creators were able to reach a large audience without playing ball with the big publishers or newspapers. With defi,…
Second, banks do a lot more than just be middle men in financial markets. They do have risk bearing capacity and they are willing to - crucially - use that on uncollaterized risk and things not netted atomistically. This means the demand for liquidity is kept low - which is good because money can flow towards longer term objectives.
The decentralisation illusion argument seems weak. One could have claimed the same about the early internet: Early internet wasn't truly decentralized as there were still ISPs, and you still need to register your domain with a centralized entity. This misses that the big change is one of access. Content creators were able to reach a large audience without playing ball with the big publishers or newspapers. With defi,…
Instead of having to curry favor with bankers, you now have to do so with a clique of developers, lest they hard or soft fork your crypto out of existence. “The development community is proposing a soft fork, (with NO ROLLBACK; no transactions or blocks will be “reversed”) which will make any transactions that make any calls/callcodes/delegatecalls that execute code with code hash (ie. The DAO and children) lead to t…
Bitcoin remains the only decentralized cryptocurrency that keeps living without governance.
Earlier quoted context omitted.
DeFi loans are over-collatoralized usually by 1.5-2x. If you want to borrow $100k, you put up $200k in collateral.
Sorry I don't get it. Why would you lock up 200k in order to borrow 100k? Why not just use part of the 200k you already have?!
Their entire point about defi not being decentralized is almost entirely false. Uniswap the company is entirely disconnected from the uniswap router which is what defi really is. The uniswap router is what completes transactions on the blockchain. Not the uniswap website. The uniswap website simply provides a front end for interacting with the uniswap protocol. You can easily, like less than 100 lines of code, write…
The blockchain just provides a decentralized trusted authority to ensure that the portable data is authentic. Without this, any data portability solution would have a problem with spoofing, or the data would require another centralized authority to validate the data which defeats the purpose. I guess you could argue the government could be that authority but idk how that works in a global sense.
Having a data portable chat app is sketch if someone can just make up messages and import them into their new 3rd party app. it's dangerous/unworkable if the application is something with more consequences like defi.
Earlier quoted context omitted.
Loans are overcollateralized, so you need to put in the same or more amount of capital that you're loaning out. That may not seem useful at first, but it allows you to have exposure to multiple assets. For example, you may want to use ETH temporarily, but you only have BTC. But you want to keep your BTC investment for the long term. So you're putting up BTC to borrow ETH. You keep your exposure to BTC, but you have l…
> It's the same concept as putting up your house as collateral. The crucial difference is in a mortgage loan the borrower keeps the collateral and gets to use of it, e.g. live in it, while they pay off the loan, whereas in a DeFi "loan" the lender has to keep the collateral the whole time.
Earlier quoted context omitted.
DeFi loans are over-collatoralized usually by 1.5-2x. If you want to borrow $100k, you put up $200k in collateral.
Sorry I don't get it. Why would you lock up 200k in order to borrow 100k? Why not just use part of the 200k you already have?!
Earlier quoted context omitted.
You don't require a bank in the same sense that you don't require a baker. If you want to make your own bread, go head, nobody is stopping you. But in a modern society people engage in division of labour and specialisation, because this allows us to be orders of magnitude more productive and have things that we couldn't dream of making ourselves. People don't want to make their own bread, and they don't want to be th…
Maybe someone does want to create a very special and expensive type of bread and sell it worldwide. In order to accept payment, they must become a merchant with some centralized entity (Paypal, Mastercard, Visa). They must hope they live in the subset of countries where this is allowed. They must agree to a one-sided TOS that can be changed at any time. Then they must hope that all their buyers are honorable and trus…
The decentralisation illusion argument seems weak. One could have claimed the same about the early internet: Early internet wasn't truly decentralized as there were still ISPs, and you still need to register your domain with a centralized entity. This misses that the big change is one of access. Content creators were able to reach a large audience without playing ball with the big publishers or newspapers. With defi,…
First off, this probably only holds if you sort of ignore current rules and regulations in a lot of cases (e.g. KYC, AML, securities laws, clearing requirements, reporting etc.). But to be fair, there is a discussion to be had if all those regulations are fit for purpose. Second, banks do a lot more than just be middle men in financial markets. They do have risk bearing capacity and they are willing to - crucially -…