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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
by 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.
- bhaak 5y agoCrypto finance and especially DeFi is tiny compared to traditional finance. The blast radius is still small without the regulations. But the regulations will come. Crypto finance is going down the same path that traditional finance did just in a period of a few years than a century. Everybody who claims there's "zero risk" is either lying or blind to the risks. You can't get those large yields with zero risk.