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Most of the issues with complex financial products leading to the 2008 Global Financial Crisis was the lack of pricing and provenance. People did not know who

Most of the issues with complex financial products leading to the 2008 Global Financial Crisis was the lack of pricing and provenance. People did not know who owns what, what the underlying assets were, and what the prices were. In a system where all states are visible and the prior states unchangeable, these cease to be issues, allowing for many of those complex products to exist very easily, which is exactly what is happening and has happened. If you don't trust that, there is also smart contract insurance you can buy for when smart contracts and oracles create results outside the bounds of the community understanding. This doesn't mean there won't be problems, an insurance smart contract recently got hacked, it is prudent to recognize that the solutions are presented and the market is choosing those solutions. You should be in the place to laugh about it and know what specific issue occurred and know how you can improve that, as opposed to simply waiting for me to finish so you can play devil's advocate on a mere concept of "crypto" because you might be stuck in the wrong decade since we're way past that. I'm okay with the rapid iteration towards stronger more robust systems. The permissionless nature is driving that rapid iteration. Unlike the outsiders in "The Big Short", you don't even need an ISDA Master Agreement to trade these esoteric products. And the flash loan market is very similar to the Federal Reserve's overnight repo market, you don't have to be a big bank. In the repo market, the Fed creates and destroys hundreds of billions of dollars for minute long trades on request, allowing banks to complete deals without needing the cash themselves. This is very onbrand to what "crypto" aspired to do, lower barriers of entry. The permissionless nature is specifically that it doesn't require your opinion or any gatekeeper in order to offer something to the market.

exo762 6y ago
There is also an issue of complexity hiding the risk. I'm not convinced that DiFi solves this problem.
- vmception 6y ago
  It doesn't solve the problem, most of the issues are related to current prices with oracles instead of not knowing any price. Services in the DeFi space introduce solutions to prior iterations of complex products hiding the risk. They aren’t trying to show how its better than traditional wall street, there is no one person or organization saying “eureka now we can offer the biggest CDOs since Lehman”, its new people picking up new tools building what the community wants, or else they dont have a community.

exo762 6y ago

There is also an issue of complexity hiding the risk. I'm not convinced that DiFi solves this problem.

vmception 6y ago
It doesn't solve the problem, most of the issues are related to current prices with oracles instead of not knowing any price. Services in the DeFi space introduce solutions to prior iterations of complex products hiding the risk. They aren’t trying to show how its better than traditional wall street, there is no one person or organization saying “eureka now we can offer the biggest CDOs since Lehman”, its new people picking up new tools building what the community wants, or else they dont have a community.