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> If you need to lock up 1.5 USD for 1 USD, you may as well go get 1 USD. It's a dumb idea to use 1.5 USD to get 1 USD. DAI locks up 1.5 USD of ETH, not 1.5 US

> If you need to lock up 1.5 USD for 1 USD, you may as well go get 1 USD. It's a dumb idea to use 1.5 USD to get 1 USD. DAI locks up 1.5 USD of ETH, not 1.5 USD. There is an important difference. The main benefit/use of DAI is that it effectively lets you increase your leverage when you are betting long on ETH. The trick is that when you lock ETH in the contract you can then use the resulting DAI to purchase more ETH, lock up that ETH/etc. The end result is about 3X leverage for relatively minimal fees.

rhlsthrm 7y ago
The real idea here is even beyond going long on ETH. It's multi collateral DAI. The idea that you can (eventually) lock up any collateralized asset and mint DAI. Need to take out a mortgage on a property you own? You can do it automatically and atomically through smart contracts without any middlemen. Eventually people could tokenize things like their future earnings and take out a loan against that now. As dystopian as that last point sounds, it illustrates the point.
- arcticbull 7y ago
  > mortgage... Where on earth are you going to get accurate price data for a house when you allow this? What if the foundation is crumbling and there are termites? The process of getting a mortgage involves a ton of inspections, background checks and paperwork. No amount of magic blockchain dust will change that. > Eventually people could tokenize things like their future earnings and take out a loan against that now. As dystopian as that last point sounds, it illustrates the point. Yeah that’s just called an unsecured loan, you can get one online now in minutes.
  - rhlsthrm 7y ago
    Why can't all the background checks and inspections be part of the process towards tokenizing the house? If everything is verifiable and transparent on the blockchain it can surely be used for this process. The key with this is it's not unsecured. It's secured by something.
    - arcticbull 7y ago
      Secured by what? Magic beans that live in your computer? That's strictly less powerful than the contract law an unsecured loan is based on today. It's also totally verifiable: the person lending you the money has every interest in retaining an audit trail for themselves. They're the only ones that need to verify this. Who on earth else needs to know you have a loan?
- ficklepickle 7y ago
  How do you prove you own the physical asset you are collateralizing? How do you prove you will have future earnings to borrow against? Do we use the existing systems (legal, credit score, etc) or something new? I'm genuinely curious, I don't know much about cryptocurrencies.

rhlsthrm 7y ago

The real idea here is even beyond going long on ETH. It's multi collateral DAI. The idea that you can (eventually) lock up any collateralized asset and mint DAI. Need to take out a mortgage on a property you own? You can do it automatically and atomically through smart contracts without any middlemen. Eventually people could tokenize things like their future earnings and take out a loan against that now. As dystopian as that last point sounds, it illustrates the point.

arcticbull 7y ago
> mortgage... Where on earth are you going to get accurate price data for a house when you allow this? What if the foundation is crumbling and there are termites? The process of getting a mortgage involves a ton of inspections, background checks and paperwork. No amount of magic blockchain dust will change that. > Eventually people could tokenize things like their future earnings and take out a loan against that now. As dystopian as that last point sounds, it illustrates the point. Yeah that’s just called an unsecured loan, you can get one online now in minutes.
- rhlsthrm 7y ago
  Why can't all the background checks and inspections be part of the process towards tokenizing the house? If everything is verifiable and transparent on the blockchain it can surely be used for this process. The key with this is it's not unsecured. It's secured by something.
  - arcticbull 7y ago
    Secured by what? Magic beans that live in your computer? That's strictly less powerful than the contract law an unsecured loan is based on today. It's also totally verifiable: the person lending you the money has every interest in retaining an audit trail for themselves. They're the only ones that need to verify this. Who on earth else needs to know you have a loan?
ficklepickle 7y ago
How do you prove you own the physical asset you are collateralizing? How do you prove you will have future earnings to borrow against? Do we use the existing systems (legal, credit score, etc) or something new? I'm genuinely curious, I don't know much about cryptocurrencies.