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The explosion in stablecoins revives a debate around “free banking”

economist.com

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Re: The explosion in stablecoins revives a debate around “free banking”

#31

Post by viraptor »

kranke155 wrote: post #28
viraptor wrote: post #26

Earlier quoted context omitted.

What problem is that? We had art auctions before and they already supported money laundering via value inflation.

What? I said NFTs SOLVED a problem. They introduced a liquid global permissionless marketplace for digital Art. That's a solution for digital artists who previously had to jump through tens of hoops to get anything out there with any value. I think we're agreeing but I'm not sure.

> tens of hoops to get anything out there with any value

Does it actually have value then? Money transfers / crypto payments existed before. So did services listing digital art. What did the nft provide?

Re: The explosion in stablecoins revives a debate around “free banking”

#32

Post by _clhx »

diveanon wrote: post #15
odonnellryan wrote: post #14

Earlier quoted context omitted.

Well, some people will get rich. Many will lose a lot of money.

Yeah, that’s called capitalism.

It's the worst parts of capitalism if you have people getting rich by taking advantage of others.

Re: The explosion in stablecoins revives a debate around “free banking”

#33

Post by diveanon »

_clhx wrote: post #32
diveanon wrote: post #15

Earlier quoted context omitted.

Yeah, that’s called capitalism.

It's the worst parts of capitalism if you have people getting rich by taking advantage of others.

I love how these conversations always come up in relation to defi/crypto.

I don’t know what world you live in, but it’s like you guys believe there is some kind of ethics or moral high ground in sneering at something you barely understand.

Re: The explosion in stablecoins revives a debate around “free banking”

#34

Post by diveanon »

wittycardio wrote: post #30
diveanon wrote: post #13

Earlier quoted context omitted.

Fundraising as we know it will be replaced by coin offerings soon. Just consulted on a project that was able to raise $20m on their own through a yield farm and is using it to build out their product team and do tons of marketing. Defi is the future, anyone who doesn’t see that is being willfully ignorant.

Congrats you've reinvented ponzi schemes

Oh my, never heard that one before.

People’s willingness to speak confidently from a position of ignorance always surprises me.

Re: The explosion in stablecoins revives a debate around “free banking”

#35

Post by diveanon »

pjc50 wrote: post #20
diveanon wrote: post #13

Earlier quoted context omitted.

Fundraising as we know it will be replaced by coin offerings soon. Just consulted on a project that was able to raise $20m on their own through a yield farm and is using it to build out their product team and do tons of marketing. Defi is the future, anyone who doesn’t see that is being willfully ignorant.

> raise $20m on their own through a yield farm What is a yield farm and how is is structured?

That’s a very googleable question, but in a nutshell it is a series of smart contracts that reward token holders for holding a staking a token.

It incentivizes investors to buy and hold instead attempting to trade the asset and create unwanted volatility.

It can also raise funds through a small fee structure that can be applied on deposit of non-native token pools.

Re: The explosion in stablecoins revives a debate around “free banking”

#36

Post by pjc50 »

diveanon wrote: post #35
pjc50 wrote: post #20

Earlier quoted context omitted.

> raise $20m on their own through a yield farm What is a yield farm and how is is structured?

That’s a very googleable question, but in a nutshell it is a series of smart contracts that reward token holders for holding a staking a token. It incentivizes investors to buy and hold instead attempting to trade the asset and create unwanted volatility. It can also raise funds through a small fee structure that can be applied on deposit of non-native token pools.

OK, so it's a shadow bank: lend long, into other people's short term borrowing.

So it must have extremely high interest rates? Which raises the question, who's borrowing all this and how's it collateralized?

Re: The explosion in stablecoins revives a debate around “free banking”

#37

Post by diveanon »

pjc50 wrote: post #36
diveanon wrote: post #35

Earlier quoted context omitted.

That’s a very googleable question, but in a nutshell it is a series of smart contracts that reward token holders for holding a staking a token. It incentivizes investors to buy and hold instead attempting to trade the asset and create unwanted volatility. It can also raise funds through a small fee structure that can be applied on deposit of non-native token pools.

OK, so it's a shadow bank: lend long, into other people's short term borrowing. So it must have extremely high interest rates? Which raises the question, who's borrowing all this and how's it collateralized?

I think you are starting with an incorrect assumption and trying to work your way backwards from it.

If you want more mature examples of this structure in the wild I would start with pancakeswap ($4b market cap) and apeswap ($500m market cap).

Re: The explosion in stablecoins revives a debate around “free banking”

#38

Post by perl4ever »

spiralx wrote: post #29
gizmo686 wrote: post #6

Earlier quoted context omitted.

Several differences: 1) Fractional reserve banking has caused numerous financial crisies. 2) In the US, banks are required by law to carry deposit insurance (FDIC). While it is theoretically possible for the FDIC to become insolvent, that is far less likely than a bank becoming insolvent. Further, in practice, the FDIC can't fail because the government will just fund it directly if it's actual funds ran out. 3) While…

Banks don't lend out deposits though - a $100 loan creates both a $100 liability - the value in the customer's account - and a $100 (plus interest) asset - the loan itself - which also balances out to $0. The process literally creates money, meaning a bank could theoretically lend money even if it had no deposits at all. The constraints on making loans come from central bank requirements and regulations, not deposits…

>which also balances out to $0

>The process literally creates money, meaning a bank could theoretically lend money even if it had no deposits at all

If the assets and liabilities balance, why describe it as "literally creating money"?

It makes it sound to me like someone gained something, like banks have a special privilege, and like money is a physical resource.

And being able to lend money without deposits is possible whenever a bank has money from another source. Are you suggesting that there is something non-obvious going on that permits bootstrapping from nothing?

Re: The explosion in stablecoins revives a debate around “free banking”

#39

Post by perl4ever »

tata71 wrote: post #8
gizmo686 wrote: post #6

Earlier quoted context omitted.

Several differences: 1) Fractional reserve banking has caused numerous financial crisies. 2) In the US, banks are required by law to carry deposit insurance (FDIC). While it is theoretically possible for the FDIC to become insolvent, that is far less likely than a bank becoming insolvent. Further, in practice, the FDIC can't fail because the government will just fund it directly if it's actual funds ran out. 3) While…

> if banks overestimate the actual value of the debts, they can end up in a situation where they are actually insolvent. I think everyone here knows they'd never do that!

Of course they would do that, which is why they historically are required by regulators to more than 100% back their liabilities with assets.

With stablecoins, does anyone even care?

Re: The explosion in stablecoins revives a debate around “free banking”

#40

Post by kranke155 »

viraptor wrote: post #31
kranke155 wrote: post #28

Earlier quoted context omitted.

What? I said NFTs SOLVED a problem. They introduced a liquid global permissionless marketplace for digital Art. That's a solution for digital artists who previously had to jump through tens of hoops to get anything out there with any value. I think we're agreeing but I'm not sure.

> tens of hoops to get anything out there with any value Does it actually have value then? Money transfers / crypto payments existed before. So did services listing digital art. What did the nft provide?

please refer to the part where I said "liquid global permissionless marketplace" ?

Really tiring to repeat this 100x here on HN. For digital artists NFTs are a revolution.

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