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> Yes you can provide liquidity for eur-usd if you jump through all the hoops. The emphasized part is important. Most people either can't or don't know how to
by dkshdkjshdk 5y ago
> Yes you can provide liquidity for eur-usd if you jump through all the hoops.
The emphasized part is important. Most people either can't or don't know how to jump through these hoops. Is it even worth it to jump through these hoops, when I only have 100 USD to "invest"? Entities like Uniswap make the process much easier and widely-accessible, which makes a big difference (particularly if you live outside the developed world).
Furthermore, you did not respond to what I asked: which institution do I need to contact for this? My bank?
> A quick google search will show you that lots of savings accounts have positive yields. Rates have been low cause of fed action but banks have provided positive returns in savings accounts since like forever ago.
This comment is rather US-centric. My experience where I am right now (outside of the US) is that interest rates currently are either negative (yes, you have to pay money to the bank to park your money there; example: [0]) or basically zero (an interest rate of 0.01% might not even cover the "maintenance fees" of your account, let alone losses due to inflation, particularly if you are not rich... might as well just stash the cash under my mattress and keep the maintenance fees to myself).
So, yeah... this is what entities like Uniswap provide that traditional financial institutions don't. Among other things:
* Capacity to borrow, lend, buy and sell "crypto-assets" or whatever you want to call them (most traditional financial institutions will not touch them with a 10-feet pole, for obvious reasons);
* Capacity to do those things with minimum friction/overhead, from anywhere in the world, at any time (no KYC, no gatekeepers);
* Exchange and interest rates that are actually decided by the market, rather than centrally planned (by your bank and central banks), which leads to reasonable interest rates for borrowing/lending (i.e. positive rates).
Of course, you can argue that some of these "features" are "anti-features" (e.g. no KYC = no friction, but it also means that perhaps money laundering could take advantage of it). Either way, it seems clear to me that Uniswap et al. enable you to do things that you (or, at least, "most people") simply cannot do within the traditional financial system; you may not see too much value in these things, and even be generally suspect of "cryptocurrencies", but it seems complicated to argue that Uniswap does not bring anything new to the table.
The proof is in the pudding... if Uniswap was not useful (beyond what traditional financial institutions already provide), you wouldn't see so many people flocking to it.
[0] https://www.nationalbanken.dk/en/marketinfo/official_interestrates/Pages/default.aspx https://www.nationalbanken.dk/en/marketinfo/official_interes...
- rank0 5y agoI appreciate the effort you put into your response! I think the conversation has diverged quite a bit from my original point. I’m not even trying to argue that uniswap is not useful or an improvement. Instead I’m pointing out that when we compare defi protocols to the traditional system, the core services are largely the same. Defi is an attempt to allow anyone to participate in the roles which are usually accessible only for institutions. That doesn’t mean those roles are just now being invented by uniswap/aave/whatever. Unrelated Opinion: defi’s practical utility comes from circumventing regulation and adding leverage to a crypto position. (Eg no KYC, selling AAPL tokens, borrow tether against an ETH position to buy more ETH)
- dkshdkjshdk 5y ago> I’m not even trying to argue that uniswap is not useful or an improvement. Sorry, I misread what you wrote, then. > Instead I’m pointing out that when we compare defi protocols to the traditional system, the core services are largely the same. Sure, I don't disagree. Why reinvent the wheel if it has already been invented? But... just because the wheel has already been invented, doesn't mean that inventing a "tire" is not novel (because a tire is just a fancy wheel, after all, no?). My point: in many ways, defi is replicating "service-types" that already existed in the traditional financial system (as you say); on the other hand, it is not replicating the exact same services (note: my bank does not allow me to borrow BTC from them) and in the same exact way. In a nutshell, defi is a "copy" of the traditional financial system the same way that "a tire is a copy of a wheel" (i.e. they are clearly not the same thing, and a tire is an innovation over a wheel, but they can also be thought as being "more or less the same thing", since they both are used to make cars move). > Defi is an attempt to allow anyone to participate in the roles which are usually accessible only for institutions. More than that. Even an institution cannot convince a bank to give them a USD loan using BTC as collateral. > That doesn’t mean those roles are just now being invented by uniswap/aave/whatever. Agreed. The same way that, when Dunlop and Goodyear invented tires, they did not try to claim that they had invented wheels. I am not sure you'll find anyone trying to argue that (e.g. that AAVE invented "loaning against a collateral"). > Unrelated Opinion: defi’s practical utility comes from circumventing regulation and adding leverage to a crypto position. (Eg no KYC, selling AAPL tokens, borrow tether against an ETH position to buy more ETH) Not necessarily just that. Even if I have no problems with any regulation that needs circumventing (i.e. I'm not doing anything illegal), and have no need to borrow crypto-assets, the traditional financial system (currently) provides no way to lend crypto-assets. If, for some reason, you have 100 ETH, you're going to use Uniswap et al., and not the traditional financial system (since that's not even an option, currently).