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I do. I can take out a 6 figure loan in 15 seconds and send it to anywhere in the world (https://aave.com/ https://aave.com/). I can deploy capital, I can parti

I do. I can take out a 6 figure loan in 15 seconds and send it to anywhere in the world (https://aave.com/ https://aave.com/). I can deploy capital, I can participate in liquidity pooling on decentralized exchanges in a completely permissionless manner (https://uniswap.org/ https://uniswap.org/) (impossible unless you're a Wall Street insider in the current system), I can lend out currency at higher market rates to day traders participating in leverage trading (https://dydx.exchange/ https://dydx.exchange/) (impossible unless I'm a Wall Street insider today), I can mint a derivative of a Tesla stock that follows the price action of Tesla from anywhere in the world (https://www.synthetix.io/ https://www.synthetix.io/). I can trade 24/7. I can play a game, earn in-game swag and trade that on an open marketplace (https://opensea.io/ https://opensea.io/). I can take out crop insurance backed by a smart contract in an African country that lacks a stable legal system or currency (https://www.arbolmarket.com/ https://www.arbolmarket.com/). I can go on and on...

vmception 6y ago
I’m glad you wrote this, my favorite part coming up is when they pretend a MySQL database would be better for cross chain yield farming
jude- 6y ago
The unspoken truth here is that defi tokens all worthless until you cash out, and that leaves a paper trail. Hope you paid your taxes on those trades!
- chrisco255 6y ago
  I'm not cashing out, I'm staying in the Ethereum ecosystem for good. And no they're not worthless. USDC for example, is literally exchangeable for $1. I can literally take out a six figure loan against crypto holdings and buy a house with it. I can also pay off high interest credit card debt and earn yield at the same time. All the other tokens are liquid and exchangeable 24/7.
  - jude- 6y ago
    > USDC for example, is literally exchangeable for $1. Thank you for reaffirming my point! The purpose of defi is to re-distribute dollars from people buying in to people cashing out, while providing literally no other goods or services. It's not like people want these tokens for other purposes -- you buy them so you can sell them to subsequent participants. Despite the deceptive machinations of defi, the act of selling out leaves a paper trail that exposes you to liability for income taxes, capital gains taxes, and (if you wrote the token code) securities regulations. But I have some good news: if you live in the US, you at least have until May 17 to file your quarterly estimated taxes.
    - chrisco255 6y ago
      > The purpose of defi is to re-distribute dollars from people buying in to people cashing out Not at all. You didn't read my post above did you? Let me ask you, if you want to be a market maker for the NASDAQ, can you do so with $1K in capital? Can you do it 24/7 from any country in the world? No? Can you loan money to someone in Thailand in 15 seconds? Can you borrow money from a pool of lenders from 84 different countries? No? Can you build an app that plugs into your bank, NASDAQ, and a video game API without paying anyone any service or API fees? No?? Well you don't get DeFi. So you should study both the traditional existing system as well as this new one so you can see quite clearly why this system exists and what problems it solves. Buddy, I'm not worried about taxes on profits vs. losses. It's no different than stock trading. No one has ever pretended there isn't a paper trail: of course there is! It's an open blockchain. But you're running with your pet theory for why it exists straight over a cliff.
      - deleted 6y ago
        [deleted]
      - jude- 6y ago
        Boy, did that touch a nerve! Hate to break it to you, buddy, but you can't do these things with defi tokens either. > Let me ask you, if you want to be a market maker for the NASDAQ, can you do so with $1K in capital? Can you do it 24/7 from any country in the world? If you're implying that NASDAQ won't let me be a market maker with $1k capital, then why should I believe that they'll do it if I offer $1k-equivalent of defi tokens instead? Also, I can do this today. I'd start a market maker company with my funds and with funds from other like-minded people. > Can you loan money to someone in Thailand in 15 seconds? Show me a defi protocol that lends money, and I'll show you a protocol that only permits over-collaterialized loans, backed by other defi tokens that are just as limited. Also, yes -- I can lend money to people in Thailand in 15 seconds. I simply invest my money in a local bank that will do it for me. > Can you borrow money from a pool of lenders from 84 different countries? Absolutely. Do you understand how banking works? > Can you build an app that plugs into your bank, NASDAQ, and a video game API without paying anyone any service or API fees? I don't know if you've ever tried to actually write software before, but I can say with 100% confidence that defi isn't going to open up my bank's APIs, NASDAQ's APIs, and video games' APIs to me. That's because these entities make money by charging for API access, and the existence of defi isn't going to change this. Even if each of these entities were realized as defi contracts, the underlying blockchain miners still charge me a fee to mutate state within them. > Buddy, I'm not worried about taxes on profits vs. losses. It's no different than stock trading. Then you clearly do not understand how tax law or finance works. I humbly suggest you get familiar with it, and quickly, lest you end up with completely-avoidable penalty fees (or in a jail cell).
smaryjerry 6y ago
The defi thing really gets me confused as someone who works with loans and finance. What I have seen in defi is basically a borrower provides 100% collateral for the privilege of paying interest on it. That’s something no business would ever touch in the real world, unless they thought their “investment” in the collateral would exceed their interest rate. That works for borrowers as long as token prices keep going up, but not if they go down. That is why anyone would put up 100% collateral for a loan of the same amount.. but the thing is people do this even in stable coin which confuses me even further. Am I missing something important?
- vmception 6y ago
  Mmm yeah you’re missing a lot. These are just collateralized loans that are automated. Nobody here would touch your businesses “in the real world” because it would take like 90 days to get any liquidity with those processes, compared to 15 seconds (1 block). There is nothing mysterious about a collateralized loan with a conservative loan to value ratio. The first thing you got wrong is that most services have a low LTV not 100%. Usually between 25-55%. Businesses in the real world do touch that. The other thing you’re missing is who what and why. These aren't businesses these are basically self-replicating robot toll booths who are doing what lending businesses also try to do: pool liquidity and in some cases reinvest that greater liquidity. When borrowers deposit collateral they are typically passing through a smart contract that then adds their deposit to a liquidity pool that the market can access. It requires confidence in these smart contracts that the collateral will remain available but that confidence is generally there. The market typically taps these liquidity pools for easier trading with lower spreads at larger amounts or for the repo market (flash loans). Lenders are repaid usually in the asset they lent, as well as a project’s token which amplifies yield. The risk isnt contigent on the projects token existing or going up, which I think you missed. For some platforms that is true but that is usually yield farming, but if you think a market need is unfulfilled just launch another version. Typically earning or otherwise having enough of the project’s token allows people to vote on controlling some parameters, such as the interest rates provided or augmented by how much of the project token or the use of which liquidity pools or eligible assets in the system. Back to the borrowers and lenders, yeah they can get and give personal loans for discretionary spending at market provided interest rates even in stablecoins.

vmception 6y ago

I’m glad you wrote this, my favorite part coming up is when they pretend a MySQL database would be better for cross chain yield farming

jude- 6y ago

The unspoken truth here is that defi tokens all worthless until you cash out, and that leaves a paper trail. Hope you paid your taxes on those trades!

chrisco255 6y ago
I'm not cashing out, I'm staying in the Ethereum ecosystem for good. And no they're not worthless. USDC for example, is literally exchangeable for $1. I can literally take out a six figure loan against crypto holdings and buy a house with it. I can also pay off high interest credit card debt and earn yield at the same time. All the other tokens are liquid and exchangeable 24/7.
- jude- 6y ago
  > USDC for example, is literally exchangeable for $1. Thank you for reaffirming my point! The purpose of defi is to re-distribute dollars from people buying in to people cashing out, while providing literally no other goods or services. It's not like people want these tokens for other purposes -- you buy them so you can sell them to subsequent participants. Despite the deceptive machinations of defi, the act of selling out leaves a paper trail that exposes you to liability for income taxes, capital gains taxes, and (if you wrote the token code) securities regulations. But I have some good news: if you live in the US, you at least have until May 17 to file your quarterly estimated taxes.
  - chrisco255 6y ago
    > The purpose of defi is to re-distribute dollars from people buying in to people cashing out Not at all. You didn't read my post above did you? Let me ask you, if you want to be a market maker for the NASDAQ, can you do so with $1K in capital? Can you do it 24/7 from any country in the world? No? Can you loan money to someone in Thailand in 15 seconds? Can you borrow money from a pool of lenders from 84 different countries? No? Can you build an app that plugs into your bank, NASDAQ, and a video game API without paying anyone any service or API fees? No?? Well you don't get DeFi. So you should study both the traditional existing system as well as this new one so you can see quite clearly why this system exists and what problems it solves. Buddy, I'm not worried about taxes on profits vs. losses. It's no different than stock trading. No one has ever pretended there isn't a paper trail: of course there is! It's an open blockchain. But you're running with your pet theory for why it exists straight over a cliff.
    - deleted 6y ago
      [deleted]
    - jude- 6y ago
      Boy, did that touch a nerve! Hate to break it to you, buddy, but you can't do these things with defi tokens either. > Let me ask you, if you want to be a market maker for the NASDAQ, can you do so with $1K in capital? Can you do it 24/7 from any country in the world? If you're implying that NASDAQ won't let me be a market maker with $1k capital, then why should I believe that they'll do it if I offer $1k-equivalent of defi tokens instead? Also, I can do this today. I'd start a market maker company with my funds and with funds from other like-minded people. > Can you loan money to someone in Thailand in 15 seconds? Show me a defi protocol that lends money, and I'll show you a protocol that only permits over-collaterialized loans, backed by other defi tokens that are just as limited. Also, yes -- I can lend money to people in Thailand in 15 seconds. I simply invest my money in a local bank that will do it for me. > Can you borrow money from a pool of lenders from 84 different countries? Absolutely. Do you understand how banking works? > Can you build an app that plugs into your bank, NASDAQ, and a video game API without paying anyone any service or API fees? I don't know if you've ever tried to actually write software before, but I can say with 100% confidence that defi isn't going to open up my bank's APIs, NASDAQ's APIs, and video games' APIs to me. That's because these entities make money by charging for API access, and the existence of defi isn't going to change this. Even if each of these entities were realized as defi contracts, the underlying blockchain miners still charge me a fee to mutate state within them. > Buddy, I'm not worried about taxes on profits vs. losses. It's no different than stock trading. Then you clearly do not understand how tax law or finance works. I humbly suggest you get familiar with it, and quickly, lest you end up with completely-avoidable penalty fees (or in a jail cell).

smaryjerry 6y ago

The defi thing really gets me confused as someone who works with loans and finance. What I have seen in defi is basically a borrower provides 100% collateral for the privilege of paying interest on it. That’s something no business would ever touch in the real world, unless they thought their “investment” in the collateral would exceed their interest rate. That works for borrowers as long as token prices keep going up, but not if they go down. That is why anyone would put up 100% collateral for a loan of the same amount.. but the thing is people do this even in stable coin which confuses me even further. Am I missing something important?

vmception 6y ago
Mmm yeah you’re missing a lot. These are just collateralized loans that are automated. Nobody here would touch your businesses “in the real world” because it would take like 90 days to get any liquidity with those processes, compared to 15 seconds (1 block). There is nothing mysterious about a collateralized loan with a conservative loan to value ratio. The first thing you got wrong is that most services have a low LTV not 100%. Usually between 25-55%. Businesses in the real world do touch that. The other thing you’re missing is who what and why. These aren't businesses these are basically self-replicating robot toll booths who are doing what lending businesses also try to do: pool liquidity and in some cases reinvest that greater liquidity. When borrowers deposit collateral they are typically passing through a smart contract that then adds their deposit to a liquidity pool that the market can access. It requires confidence in these smart contracts that the collateral will remain available but that confidence is generally there. The market typically taps these liquidity pools for easier trading with lower spreads at larger amounts or for the repo market (flash loans). Lenders are repaid usually in the asset they lent, as well as a project’s token which amplifies yield. The risk isnt contigent on the projects token existing or going up, which I think you missed. For some platforms that is true but that is usually yield farming, but if you think a market need is unfulfilled just launch another version. Typically earning or otherwise having enough of the project’s token allows people to vote on controlling some parameters, such as the interest rates provided or augmented by how much of the project token or the use of which liquidity pools or eligible assets in the system. Back to the borrowers and lenders, yeah they can get and give personal loans for discretionary spending at market provided interest rates even in stablecoins.