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Crypto exchange AAX suspends withdrawals

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Re: Crypto exchange AAX suspends withdrawals

#631

Post by agumonkey »

pavlov wrote: post #605
agumonkey wrote: post #583

Earlier quoted context omitted.

one dude explained that they wanted to make a loan platform that would avoid usual bank management costs since it's automated, so he claimed the higher yields came from that. It seemed a coherent explanation to me (he could be lying too, but at least his talk had some foundations and not moonshots of potential decentralized nirvanian future)

How does the automated loans-on-blockchain platform discover someone’s real income and existing debts in a way that can’t be forged? If it doesn’t do that, it’s not really automating anything that banks currently do when deciding to extend you a loan. And if it uses existing sources like credit scores and the salary data sold by employers, then it’s merely the same as the systems banks and other consumer lenders alre…

The risk managing part was not discussed indeed.

Re: Crypto exchange AAX suspends withdrawals

#632

Post by MrMan »

overgard wrote: post #547

Can someone actually explain what the intrinsic use of coins is supposed to be (aside from speculating). Their value is so volatile they suck as actual currency, not to mention if you were the guy that spent 10,000 bitcoins on a pizza back in the day you'd feel pretty stupid about your 300 million dollar pizza. They're not even particularly good for illegal purchases -- you have to know what you're doing to keep your…

I think algorand is by far the best crypto platform out there, but the sad part is that it's the economic / behavioral issues that hold crypto back. if you could earn Algo and it was widely adopted, it would be an attractive alternative currency and smart contract platform.

but for me tech and adoption are like two out of four things needed to make crypto non-evil (literally) - the third is democratic governance. the fourth is environmental impact which Algorand checks off. But it's not democratically organized or run, which is a complete non-starter.

the foundation that runs it is probably the least corrupt org I can think of in crypto (I am not an expert) but its still a group that hold a giant percentage of the existing coins, which is a huge non-starter as well, and there is no concept of citizen ship or personhood that maps to the real world.

I dont believe in the decentralization nonsense and this pseudo anonymous thing over crypto is not good. to really run a DAO you need real people interacting in something like a co-op. kind of like the internet, actually.

what some people call decentralization I call by an old fashioned name - distributed. there is another concept which is more to the point than the term centralization and it is concentration. The Gini index of a logical dimension of a system is more important to me than whether it is centralized per se.

So voting power should not be too concentrated, wealth should not be too concentrated.

We are a long way from a workable model for crypto that fulfills these criteria. Buterin who is a frontman for libertarians (and worse) who are actually evil is the closest thing we have besides the Algo founder to a non-greedy figurehead, but we need no figurehead.

what has proven good enough for countries will prove good enough for crypto. democracy.

Re: Crypto exchange AAX suspends withdrawals

#633

Post by dragontamer »

stickfigure wrote: post #621
dragontamer wrote: post #584

Earlier quoted context omitted.

> Staking is not a loan. Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later. Its totally a bond. > Some token networks may market a mechanism as "staking" when it's just a way to keep people from selling. That's a different topic. I'm feeling some "no true Scotsman" fallacy here. If those guys call it sta…

>> Staking is not a loan. >Yes it is. Sort of? The risk profile is significantly different.

Real life bonds range from Savings accounts (which are tied to the overnight Fed rate, with an assumed repayment within days or one week at the worst), to "Junk" bonds to companies and/or governments that are currently going through default and/or bankruptcy (See Greek bonds between 2009 and 2017)

At the lowest risk end, we have the "risk-free rate", guaranteed by the central bank. At the higher risk end, we have highly risky loans (ex: Greek Bonds in 2014 or so). Or mortgaged backed securities. Or student loans. Etc. etc.

--------

Bonds / loans are a very old economic subject that have been around for hundreds of years (maybe thousands?). There's a myriad of historical subjects and writings on this subject.

In general, the more trustworthy the issuer and the shorter the maturity, the safer the loan is. An overnight loan with the Fed (aka: Central bank of the United States) will be lower risk than a 30-year subprime mortgage. The economics will demand that the longer-loan will (usually) be priced higher (except in times of inverted yield curves, where people think there's more near-term risk than long-term risks). Etc. etc. Its a big complex subject.

But its all about loans and bonds, and money and IOUs and promises and trust.

Re: Crypto exchange AAX suspends withdrawals

#634

Post by zeroclip »

bogomipz wrote: post #615
zeroclip wrote: post #535

Earlier quoted context omitted.

They are widely used and process billions per day.[1] There are other problems with DeFi: protocol risk, transaction fees, speed, UX. They are newer and less known than CEXes and most users who buy and hold crypto on FTX or BlockFi do not know how to use the blockchain. Most of these problems can be overcome, like see L2 development, but it will take some time. [1] https://defillama.com/chain/Ethereum

Could you elaborate on what exactly is the "protocol risk" in DEX?

A protocol is just code, code can have bugs. Another risk is around governance. Some protocols use proxy contracts, so a single developer or team can upgrade them. But they can accidentally push out a bug in a new version. Other protocols like Uniswap opt for non-upgradeable contracts, users have to opt-in to the new version.

Re: Crypto exchange AAX suspends withdrawals

#635

Post by wizeman »

dragontamer wrote: post #584
dibt wrote: post #570

Earlier quoted context omitted.

>Coinbase Rewards You are referring to staking. FTX was giving a static yield on deposits. The funding for this came from their marketing budget. Very different from what Coinbase does. >"staking" == crappy loans / bonds business. Staking is not a loan. It is a component of proof of stake networks to maintain security. Coinbase provides stacking services, but all they do is pass the yield onto the customer while taki…

> Staking is not a loan. Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later. Its totally a bond. > Some token networks may market a mechanism as "staking" when it's just a way to keep people from selling. That's a different topic. I'm feeling some "no true Scotsman" fallacy here. If those guys call it sta…

> > Staking is not a loan.

> Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later.

> Its totally a bond.

But in a bond and in a loan you are not guaranteed to get your money back (or the yield), while in staking, you are always guaranteed to get it back because of the consensus rules, right?

So I don't think it's the same thing, as in staking there is no such default risk because the staked coins remain yours [0] (with cryptographic assurance) and the yield is financed by currency inflation, which is guaranteed to happen (assuming there are no major bugs in the consensus rules, and that Coinbase and Binance don't become malicious and try to cheat the rules and get penalized for doing so).

[0] Well, technically they belong to Coinbase / Binance at that time if you use them to stake the coins, because in that case they are the holders of the cryptographic keys.

Re: Crypto exchange AAX suspends withdrawals

#636

Post by dragontamer »

wizeman wrote: post #635
dragontamer wrote: post #584

Earlier quoted context omitted.

> Staking is not a loan. Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later. Its totally a bond. > Some token networks may market a mechanism as "staking" when it's just a way to keep people from selling. That's a different topic. I'm feeling some "no true Scotsman" fallacy here. If those guys call it sta…

> > Staking is not a loan. > Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later. > Its totally a bond. But in a bond and in a loan you are not guaranteed to get your money back (or the yield), while in staking, you are always guaranteed to get it back because of the consensus rules, right? So I don't thin…

You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank).

This "risk free rate" serves as the basis of the theory behind our entire banking system. The fact that Ethereum decided to recreate this under separate principles is somewhat amusing, but its just that. A recreation of what we're already familiar with in the financial world.

The next question is if the cryptocoin world realizes how important it is to set the risk-free rate as appropriate for their ecosystem to function. Given how arbitrary it was to set the Etherium rate however, I don't think there was much thought put into that in practice. But baby steps I guess. The cryptocoin world is learning things at a different rate than the historians / financial experts who already see where things are going. Bad things happen if you set the risk-free rate too high, or too low by the way.

Re: Crypto exchange AAX suspends withdrawals

#637

Post by dibt »

dragontamer wrote: post #624
zoklet-enjoyer wrote: post #612

Earlier quoted context omitted.

Look up how consensus works on proof of stake blockchains. Specifically Tendermint chains, Ethereum, Tezos, Algorand.

Just because its a complicated loan/bond doesn't mean its not a loan/bond. Lending money to somebody else, with a promise for future returns, is fundamentally a bond. It will act like a bond, subject to the economic principles of a bond / loans / etc. etc.

> Lending money to somebody else

It is not a loan!

> promise for future returns

There is no such promise!

It is an alternative to proof-of-work, which requires capital investment to provide security to the network (e.g. purchase and run Bitcoin mining machines). Staking is a substitute for that capital requirement. You are refusing to understand this simple fact.

If you loan a business money or buy a government bond, they are SPENDING that money to run the business/government. The Ethereum network is not selling your staked ETH to maintain security.

Re: Crypto exchange AAX suspends withdrawals

#638

Post by nicbou »

chitowneats wrote: post #68
throwup wrote: post #38

Earlier quoted context omitted.

Not your keys, not your cheese. It's sad how many people have to learn this the hard way.

Also not your cheese if you bought BTC any time in the last few years. Without the exchanges, and especially without investor confidence, the days of wild speculation are ending. The price is going to continue to fall and everyone with BTC in their personal wallets gets to take a haircut too.

It's still your cheese if no one wants to buy it. It's arguably even more yours.

Re: Crypto exchange AAX suspends withdrawals

#639

Post by nlitened »

aeyes wrote: post #630
nlitened wrote: post #581

Earlier quoted context omitted.

I can explain seriously and answer follow-up questions. I will simplify and just highlight the most valuable current use case, there might or might not be others now or in the future. The value of ether (ETH) is to be a currency that you need to spend in order to include transactions into Ethereum's distributed ledger. Most useful transactions are transfers of stablecoins like USDT or USDC. USDT and USDC can be excha…

I fail to understand how this use of stable coins is better than licensed currency transfer companies. You still need to exchange your local currency twice on shady unlicensed crypto exchanges. Or am I missing something here? I regularly transfer thousands of Dollars to different countries, the provider I use usually gets the job done on the same day. There are also huuuge differences in crypto exchange rates dependi…

> I fail to understand how this use of stable coins is better than licensed currency transfer companies.

It's not better—if you have access to licensed currency transfer companies. But 220 million people from Russia and Iran don't nowadays, and likely from many other "third world" countries where people still want to do honest work, buys stuff, pay salaries, feed their kids, etc. Hundreds of millions of people all over the world can't just walk in and open a low-fee bank account, they just instantly get rejected.

Previously I thought that "think of the unbanked" was a rather silly excuse, until this year it happened to me and my business.

Re: Crypto exchange AAX suspends withdrawals

#640

Post by selectodude »

anon291 wrote: post #554
selectodude wrote: post #360

Earlier quoted context omitted.

Cryptocurrency has value because people are willing to trade for it, whether money or goods. I don't understand why people are willing to trade for it, but to say it has literally zero value isn't exactly accurate.

Who is willing to trade it other than exchanges to purchase fiat currency? I've never found an item that I can actually buy with crypto, where the seller is not simply using crypto as a money transfer service. If a seller 'accepts' crypto via an exchange that converts it to fiat... that's not really crypto. That's just using it for money transfer, but we have way better solutions for that. Other than one off gags, I'…

If it can be exchanged for money that can be exchanged for stuff, it has value. I can't spend gold or equities at the grocery store but those are priced in dollars and have value as well.
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