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>So code isn't the law? Code is law. This law was just written incorrectly. This is a known risk; it's the reason why defi interest rates are similar to junk b

>So code isn't the law? Code is law. This law was just written incorrectly. This is a known risk; it's the reason why defi interest rates are similar to junk bonds.

automatic6131 5y ago
Yes, let's turn the [financial|legal](delete as appropriate) system into an obfuscated C competition. Last place prize is: [lose your life savings|spend life in prison].
- beambot 5y ago
  Curious. I would claim that our current finance and legal system frequently does the very same for the impoverished or disenfranchised... Underbanked get hammered by fees with no safety net for emergency expenses. And large portions of our population get saddled with poor legal representation resulting in de facto indentured survitude in for-profit prisons.
  - pavel_lishin 5y ago
    That's a fair criticism of the current system, but not a good justification for introducing another shitty, broken system as an alternative.
    - sneak 5y ago
      You don’t need a justification for giving people more choices that they’re free to ignore if they don’t like the terms or circumstances. More options are better. Nothing about DeFi or cryptocurrencies invalidates or prevents people from continuing to bank as usual. The whole alternative system is opt-in.
fennecfoxen 5y ago
I don’t understand why anyone, even an enthusiast, would dare to touch cryptocurrency lending with a forty-nine-and-a-half-foot pole. There’s no technical measure that can force me to pay back the coins I borrowed if I don’t have them. If you wanted to enforce being paid back in the real world legal system you’d be much better served with normal lending systems, know your customers, and report them to credit authorities. And if it’s not one of those “stablecoins” you’re borrowing something that could conceivably be worth 10x more in a year; that sounds like financial suicide. What do you possibly gain from engaging with all this? Maybe if I built a defi lending platform myself so I could take a lot of loans from my customers and then default. That’d work just fine. Otherwise, run for the hills.
- yokem55 5y ago
  Because the only way to get a loan is to put up collateral that is locked into a contract. And that collateral can only be extracted if you pay back the loan. So, if you value the collateral less then your debt, then, sure, walk away. But if the value of that collateral falls to less then the liquidation threshold (an amount some percentage greater then the value of your debt), your debt will be paid back by a liquidation bot and the the liquidator will take your collateral for themselves.
  - UncleMeat 5y ago
    There is a huge problem with the collateral model: liquidity. If you put up $X in FOO_COIN as collateral and FOO_COIN starts tanking in value, the contract is supposed to auto-liquidate once it hits a certain point. But there is absolutely no guarantee that this can find a buyer. So the "guaranteed" collateral recovery is not exactly guaranteed.
    - bhaak 5y ago
      How is that different to traditional finance? Evergrande almost went belly-up as the prices of their real state fell sharply because they sold so much of it to cover their credits. The financial crisis from 2007 was because the collaterals were nowhere as sound as they were sold for. Don’t get me wrong I think it’s mostly a house of cards but crypto finance is just traditional finance on steroids IMO.
      - UncleMeat 5y ago
        > How is that different to traditional finance? There are a lot more backstops. Traditional finance can have this problem, but we can install human systems to limit the blast radius of things. As you say, it is traditional finance on steroids. Crypto enthusiasts seem to think it is the opposite. People tell me that defi loans are "zero risk" because of the automatic collateral systems and I just laugh and laugh.
        5y ago
sremani 5y ago
If Code is law, the compiler is the judge.
canjobear 5y ago
If the code is the law how can it be incorrect? It can only be incorrect by comparison with some other law (like "the code writer's intentions"), in which case you are effectively making that the true authoritative law, rather than the code.

>So code isn't the law? Code is law. This law was just written incorrectly. This is a known risk; it's the reason why defi interest rates are similar to junk bonds.

automatic6131 5y ago

Yes, let's turn the [financial|legal](delete as appropriate) system into an obfuscated C competition. Last place prize is: [lose your life savings|spend life in prison].

beambot 5y ago
Curious. I would claim that our current finance and legal system frequently does the very same for the impoverished or disenfranchised... Underbanked get hammered by fees with no safety net for emergency expenses. And large portions of our population get saddled with poor legal representation resulting in de facto indentured survitude in for-profit prisons.
- pavel_lishin 5y ago
  That's a fair criticism of the current system, but not a good justification for introducing another shitty, broken system as an alternative.
  - sneak 5y ago
    You don’t need a justification for giving people more choices that they’re free to ignore if they don’t like the terms or circumstances. More options are better. Nothing about DeFi or cryptocurrencies invalidates or prevents people from continuing to bank as usual. The whole alternative system is opt-in.

fennecfoxen 5y ago

I don’t understand why anyone, even an enthusiast, would dare to touch cryptocurrency lending with a forty-nine-and-a-half-foot pole. There’s no technical measure that can force me to pay back the coins I borrowed if I don’t have them. If you wanted to enforce being paid back in the real world legal system you’d be much better served with normal lending systems, know your customers, and report them to credit authorities. And if it’s not one of those “stablecoins” you’re borrowing something that could conceivably be worth 10x more in a year; that sounds like financial suicide. What do you possibly gain from engaging with all this? Maybe if I built a defi lending platform myself so I could take a lot of loans from my customers and then default. That’d work just fine. Otherwise, run for the hills.

yokem55 5y ago
Because the only way to get a loan is to put up collateral that is locked into a contract. And that collateral can only be extracted if you pay back the loan. So, if you value the collateral less then your debt, then, sure, walk away. But if the value of that collateral falls to less then the liquidation threshold (an amount some percentage greater then the value of your debt), your debt will be paid back by a liquidation bot and the the liquidator will take your collateral for themselves.
- UncleMeat 5y ago
  There is a huge problem with the collateral model: liquidity. If you put up $X in FOO_COIN as collateral and FOO_COIN starts tanking in value, the contract is supposed to auto-liquidate once it hits a certain point. But there is absolutely no guarantee that this can find a buyer. So the "guaranteed" collateral recovery is not exactly guaranteed.
  - bhaak 5y ago
    How is that different to traditional finance? Evergrande almost went belly-up as the prices of their real state fell sharply because they sold so much of it to cover their credits. The financial crisis from 2007 was because the collaterals were nowhere as sound as they were sold for. Don’t get me wrong I think it’s mostly a house of cards but crypto finance is just traditional finance on steroids IMO.
    - UncleMeat 5y ago
      > How is that different to traditional finance? There are a lot more backstops. Traditional finance can have this problem, but we can install human systems to limit the blast radius of things. As you say, it is traditional finance on steroids. Crypto enthusiasts seem to think it is the opposite. People tell me that defi loans are "zero risk" because of the automatic collateral systems and I just laugh and laugh.
      - 5y ago

sremani 5y ago

If Code is law, the compiler is the judge.

canjobear 5y ago

If the code is the law how can it be incorrect? It can only be incorrect by comparison with some other law (like "the code writer's intentions"), in which case you are effectively making that the true authoritative law, rather than the code.