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Some of the protocols/dapps mentioned in the article that are great entry points into DeFi: - https://uniswap.org/ https://uniswap.org/ - https://aave.com/ ht

by arberx 6y ago

Some of the protocols/dapps mentioned in the article that are great entry points into DeFi: - https://uniswap.org/ https://uniswap.org/ - https://aave.com/ https://aave.com/ - https://makerdao.com/ https://makerdao.com/ - https://yearn.finance/ https://yearn.finance/

rawtxapp 6y ago
MakerDAO (aka oasis, dai system) is one of the coolest software project I've ever used, highly recommend anyone checking it out. It's essentially a system of smart contracts and surrounding system which create a stablecoin pegged to the dollar (1DAI=1$) backed by crypto collateral. One of the benefits of that is, you can access your crypto and use it without selling your position, which means you're not paying any capital gains taxes. There's a 4% stability fee with borrowing against your collateral (notice it's not an interest, it's a fee, which means many people who can't deal or don't want to pay/receive interest can actually use it). 4% is a drop in the bucket when you consider gains on your assets and a lack of capital gains tax. p.s. I'm a long term BTC believer who always thought most of these projects were scam until I've actually started researching and trying to understand it.
- hanniabu 6y ago
  > always thought most of these projects were scam until I've actually started researching and trying to understand it. Unfortunately these seems to be the case for most people. What have you this notion that it's all a scam? What it news pundits? Twitter/Reddit threads?
  - rawtxapp 6y ago
    I've been in crypto since 2014 and was here for 2017 when all ICOs that did absolutely nothing were being pumped and dumped, so I wrote off ether for a few years until defi kept creeping up in my news couple times. I think there's still lots of scams out there, but the big projects like Maker, uniswap, compound, etc, have made me change my mind.
    - bhupy 6y ago
      I'm trying to wrap my head around it and I have a genuine question: I see on these DeFi platforms coins that have APY's well in excess of 10%. Who's borrowing at these rates, and why?
      - hanniabu 6y ago
        I know many people that are, because if you're savvy you can earn much more than that with the amount you're being loaned.
        bhupy 6y ago
        But why wouldn't they instead borrow USD? Interest rates are the lowest they've ever been. In other words, if you're really savvy, you can earn even more than "much more than that" by borrowing USD at low interest rates (or Euro at negative interest rates), and then buying crypto and doing whatever you would have done after directly borrowing crypto at the much higher interest rates. Who is choosing to forsake borrowing fiat currency at lower interest rates and then converting to crypto to do profitable things in favor of borrowing crypto directly at (much) higher interest rates, and why?
        splix 6y ago
        Traditional finance has higher friction. I.e., higher cost to take credit, to operate, in many cases slower, and in general, has much higher entry barrier. With defi you can get a loan for millions of dollars just immediately, maybe for a couple of seconds or milliseconds. Without filling any form asking why you need it. Without even creating any account anywhere except your own machine. It's new "in internet nobody knows you are a dog".
        bhupy 6y ago
        That makes sense. Then the next logical question is: what if I never get my money back? What if I lend it to a "dog" who then buys highly leveraged calls on GME, only to be unable to pay me back. Do I, the lender, just write it off as a loss? As you suggest, if you can get a loan for millions of dollars just immediately without filling any form asking why you need it or without even creating any account anywhere, then what's stopping me from just taking a bunch of loans in excess of the collateral and just never paying them back? After all, as a borrower, I don't have to worry about any sort of credit rating or rate limiting. As a lender, how do I know that the borrower on the other end isn't running such a scam?
zaarn 6y ago
I love some of these, using them to swap USDC/ETH when I need some more stable tokens. However, the downside at the moment is a high price for transactions on Ethereum, I hope this will get better this year, heard there is some upcoming changes to make transactions cheaper.
mikkelam 6y ago
When ETH2 goes live and transaction fees become lower. Centralized exchanges will have a hard time competing with DEX'es like uniswap. Fees are only as high as they are due to gas prices. ETH2 will be a game changer
- arberx 6y ago
  DEXs can move to L2 in the coming months. Once a giant like uniswap moves, the rest will follow. Should see transactions fees become a lot lower towards the end of the year.

by arberx 6y ago

rawtxapp 6y ago

MakerDAO (aka oasis, dai system) is one of the coolest software project I've ever used, highly recommend anyone checking it out. It's essentially a system of smart contracts and surrounding system which create a stablecoin pegged to the dollar (1DAI=1$) backed by crypto collateral. One of the benefits of that is, you can access your crypto and use it without selling your position, which means you're not paying any capital gains taxes. There's a 4% stability fee with borrowing against your collateral (notice it's not an interest, it's a fee, which means many people who can't deal or don't want to pay/receive interest can actually use it). 4% is a drop in the bucket when you consider gains on your assets and a lack of capital gains tax. p.s. I'm a long term BTC believer who always thought most of these projects were scam until I've actually started researching and trying to understand it.

hanniabu 6y ago
> always thought most of these projects were scam until I've actually started researching and trying to understand it. Unfortunately these seems to be the case for most people. What have you this notion that it's all a scam? What it news pundits? Twitter/Reddit threads?
- rawtxapp 6y ago
  I've been in crypto since 2014 and was here for 2017 when all ICOs that did absolutely nothing were being pumped and dumped, so I wrote off ether for a few years until defi kept creeping up in my news couple times. I think there's still lots of scams out there, but the big projects like Maker, uniswap, compound, etc, have made me change my mind.
  - bhupy 6y ago
    I'm trying to wrap my head around it and I have a genuine question: I see on these DeFi platforms coins that have APY's well in excess of 10%. Who's borrowing at these rates, and why?
    - hanniabu 6y ago
      I know many people that are, because if you're savvy you can earn much more than that with the amount you're being loaned.
      - bhupy 6y ago
        But why wouldn't they instead borrow USD? Interest rates are the lowest they've ever been. In other words, if you're really savvy, you can earn even more than "much more than that" by borrowing USD at low interest rates (or Euro at negative interest rates), and then buying crypto and doing whatever you would have done after directly borrowing crypto at the much higher interest rates. Who is choosing to forsake borrowing fiat currency at lower interest rates and then converting to crypto to do profitable things in favor of borrowing crypto directly at (much) higher interest rates, and why?
        splix 6y ago
        Traditional finance has higher friction. I.e., higher cost to take credit, to operate, in many cases slower, and in general, has much higher entry barrier. With defi you can get a loan for millions of dollars just immediately, maybe for a couple of seconds or milliseconds. Without filling any form asking why you need it. Without even creating any account anywhere except your own machine. It's new "in internet nobody knows you are a dog".
        bhupy 6y ago
        That makes sense. Then the next logical question is: what if I never get my money back? What if I lend it to a "dog" who then buys highly leveraged calls on GME, only to be unable to pay me back. Do I, the lender, just write it off as a loss? As you suggest, if you can get a loan for millions of dollars just immediately without filling any form asking why you need it or without even creating any account anywhere, then what's stopping me from just taking a bunch of loans in excess of the collateral and just never paying them back? After all, as a borrower, I don't have to worry about any sort of credit rating or rate limiting. As a lender, how do I know that the borrower on the other end isn't running such a scam?

zaarn 6y ago

I love some of these, using them to swap USDC/ETH when I need some more stable tokens. However, the downside at the moment is a high price for transactions on Ethereum, I hope this will get better this year, heard there is some upcoming changes to make transactions cheaper.

mikkelam 6y ago

When ETH2 goes live and transaction fees become lower. Centralized exchanges will have a hard time competing with DEX'es like uniswap. Fees are only as high as they are due to gas prices. ETH2 will be a game changer

arberx 6y ago
DEXs can move to L2 in the coming months. Once a giant like uniswap moves, the rest will follow. Should see transactions fees become a lot lower towards the end of the year.