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> There is so much money locked up in DeFi. Is the money really "locked up"? No money actually enters these systems; whenever someone buys a token with money,
by cesarb 6y ago
> There is so much money locked up in DeFi.
Is the money really "locked up"? No money actually enters these systems; whenever someone buys a token with money, there was someone else selling that token for money, and the money went from the buyer to the seller, who is free to do anything with that money.
- sickygnar 6y agohmm, maybe you are referring to money as currency, where i am referring to it as assets (tokens) anyway, yes there is money locked in the lending platforms. most of it is used as collateral, which is locked when borrowed against. the reserve ratios are high (60-80%), so unlike a regular bank, no money is "printed" when lent. "real money" does enter these systems. people spend resources to acquire real money which is subsequently traded then locked into these platforms. also, while a lot of ethereum tokens are simply minted with no real backing, some are mined (even erc20), which again people dedicate finite resources to
- Sargos 6y agoYou are confusing money with value. Value is what something is worth and is what people prize. Money is just a convenient way to transfer value. I think you got stuck on that one piece of money (USD) that went from buyer to seller but forgot that the value transferred between them as well.