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DeFi is terrible. I spent a lot of effort digging into the DeFi ecosystem but it's either scams or pointless. I've seen one or two interesting ideas like e.g. t

DeFi is terrible. I spent a lot of effort digging into the DeFi ecosystem but it's either scams or pointless. I've seen one or two interesting ideas like e.g. these decentralized hedge fund things, but 100% of them are money losers relative to just holding eth - and that's without factoring in all the wasted money in gas fees. DeFi is DOA.

rawtxapp 5y ago
Maker is pretty useful for getting collateralized loans, compound is pretty useful for generating yield by lending to others, uniswap is freaking amazing as a dex and you can trade anything by creating liquidity pools without permission, aave is very useful for arbitraging market inefficiencies away risk-free, so on and on. Gas fees are going to become minimal with layer 2. If you dig enough, you'll see a lot of very useful and important projects being built by some very capable engineers. This kind of comment reminds me of when people were predicting that internet was going to be a useless thing[1]. 1: https://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306 https://www.newsweek.com/clifford-stoll-why-web-wont-be-nirv...
fossuser 5y ago
To me this is like complaining about webvan in the 90s and missing the forest through the trees. DAOs, and AMMs are interesting - there's a lot of potential in leveraging DeFi to make systems that can work in ways better than existing legacy tech, it's just hard and people don't have it already figured out to the point where looking at it makes it obvious. General public state is a new thing and how it can be used is being figured out (oracles, programmable money, etc.). When something is new it looks more 'pointless' and toy-like. It takes a while for its value to become truly obvious to everyone (and it requires some people to see that value early).
arcticbull 5y ago
DeFi is broadly speaking a decentralized 2008. The leverage and liquidations are IMO part of the reason for the magnitude of the draw-down in the last month, and why there's a lot more room to the downside. There's reasons why we have regulations and laws governing investment. Because without them we had the Great Depression. I believe the great financial speed-run has hit Mid-1929. Before the Securities Act, Securities Exchange Act, Regulation S and Regulation T, before the SEC, CFTC and FDIC. A world of unrestricted margin, wildcat banks, hucksters, shills, snake-oil salesmen, and some, I assume, are good people. Crypto is what the stock market would look like if everyone at the SEC decided to take a few months vacation at once, a financial version of The Purge.
- fossuser 5y ago
  Yeah - this is definitely something I wonder about: https://twitter.com/zachalberico/status/1390331653541687299?s=20 https://twitter.com/zachalberico/status/1390331653541687299?... If you create a system without a central authority able to correct for incentive failures of system design, you can end up trapped by the incentives themselves. [0] That can lead to bad outcomes we already see in existing systems (NIMBY housing, partisan politics, etc.) 2008 loans to save the system were wildly successful, in DeFi - there is no authority that can jump in with liquidity temporarily to save the system. Maybe some consensus could be reached, but it definitely seems like there's big future risk in this area. [0]: Moloch basically: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://slatestarcodex.com/2014/07/30/meditations-on-moloch/
- hanniabu 5y ago
  It's not defi that's the issue, it's leverage and under collateralized positions
  - deleted 5y ago
    [deleted]

rawtxapp 5y ago

Maker is pretty useful for getting collateralized loans, compound is pretty useful for generating yield by lending to others, uniswap is freaking amazing as a dex and you can trade anything by creating liquidity pools without permission, aave is very useful for arbitraging market inefficiencies away risk-free, so on and on. Gas fees are going to become minimal with layer 2. If you dig enough, you'll see a lot of very useful and important projects being built by some very capable engineers. This kind of comment reminds me of when people were predicting that internet was going to be a useless thing[1]. 1: https://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306 https://www.newsweek.com/clifford-stoll-why-web-wont-be-nirv...

fossuser 5y ago

To me this is like complaining about webvan in the 90s and missing the forest through the trees. DAOs, and AMMs are interesting - there's a lot of potential in leveraging DeFi to make systems that can work in ways better than existing legacy tech, it's just hard and people don't have it already figured out to the point where looking at it makes it obvious. General public state is a new thing and how it can be used is being figured out (oracles, programmable money, etc.). When something is new it looks more 'pointless' and toy-like. It takes a while for its value to become truly obvious to everyone (and it requires some people to see that value early).

arcticbull 5y ago

DeFi is broadly speaking a decentralized 2008. The leverage and liquidations are IMO part of the reason for the magnitude of the draw-down in the last month, and why there's a lot more room to the downside. There's reasons why we have regulations and laws governing investment. Because without them we had the Great Depression. I believe the great financial speed-run has hit Mid-1929. Before the Securities Act, Securities Exchange Act, Regulation S and Regulation T, before the SEC, CFTC and FDIC. A world of unrestricted margin, wildcat banks, hucksters, shills, snake-oil salesmen, and some, I assume, are good people. Crypto is what the stock market would look like if everyone at the SEC decided to take a few months vacation at once, a financial version of The Purge.

fossuser 5y ago
Yeah - this is definitely something I wonder about: https://twitter.com/zachalberico/status/1390331653541687299?s=20 https://twitter.com/zachalberico/status/1390331653541687299?... If you create a system without a central authority able to correct for incentive failures of system design, you can end up trapped by the incentives themselves. [0] That can lead to bad outcomes we already see in existing systems (NIMBY housing, partisan politics, etc.) 2008 loans to save the system were wildly successful, in DeFi - there is no authority that can jump in with liquidity temporarily to save the system. Maybe some consensus could be reached, but it definitely seems like there's big future risk in this area. [0]: Moloch basically: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://slatestarcodex.com/2014/07/30/meditations-on-moloch/
hanniabu 5y ago
It's not defi that's the issue, it's leverage and under collateralized positions
- deleted 5y ago
  [deleted]