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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, an
by 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 agoYeah - 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 agoIt's not defi that's the issue, it's leverage and under collateralized positions
- deleted 5y ago[deleted]