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Is DeFi what we're officially calling cryptocurrencies now? A quick Google search looks like that's the case but I don't know if DeFi covers anything else that
by jimbob45 5y ago
Is DeFi what we're officially calling cryptocurrencies now? A quick Google search looks like that's the case but I don't know if DeFi covers anything else that I haven't thought of.
- hammock 5y agoDeFi is not cryptocurrency, it's a specific use case of cryptocurrency.
- jimbob45 5y agoFeel free to expand on why that is. I'm genuinely asking - this is the first time I've heard that portmanteau.
- nprz 5y agoIt's a collection of protocols use to loan and trade cryptocurrencies. The goal of DeFi is to replicate all the services a bank could offer, but through decentralized apps running on the blockchain.
- newacc9 5y agoGenerally, its loans that are over-collateralized with crypto-assets. Use case being: I need cash now but I think ETH will go up and I don't want to sell mine, instead I borrow stablecoin against my ETH using a DeFi app (probably on ethereum).
- the_optimist 5y agoDo you have an example of collateral management in this context?
- newacc9 5y agoIts all automated, so it depends on the contract, I assume if the USD value of ETH drops too much, the borrower gets margin called.
- the_optimist 5y agoCan you reference a specific margin call mechanism?
- newacc9 5y agoI found this for Compound. The liquidation mechanism is in section 11. https://zengo.com/understanding-compounds-liquidation/ https://zengo.com/understanding-compounds-liquidation/
- hammock 5y agohttps://en.wikipedia.org/wiki/Decentralized_finance https://en.wikipedia.org/wiki/Decentralized_finance As cryptocurrency replaces government-issued money, defi replaces traditional financial institutions/services.
- bonzini 5y agoThen they also need to comply with the KYC and reporting requirements placed on traditional financial institutions/services, which exist for a reason.
- deleted 5y ago[deleted]
- int_19h 5y agoOne could argue that at least some of those requirements in effect (if not by design) protect the established position of traditional centralized finance, and prevent decentralization, allowing the existing blend of concentrated political and economic power to maintain its stronghold on society at large. So, for those who believe in decentralization, the reason may not be a valid justification. Of course, at that point, one also shouldn't be surprised that pushing back against centralization is criminalized by those who benefit from it. But even so, they don't need to comply - they can accept that what they're doing is illegal, but continue doing it because it's morally right.
- idrios 5y agoI think there's a difference in that a cryptocurrency can still be centralized, such as a government that creates its own crypto and manages it through its own exchange.
- jgoldshlag 5y agoDeFi also includes the various crypto-adjacent scams, can't leave those out!
- serverholic 5y agoYes freedom means good people can do good things and bad people can do bad things. It's almost impossible to craft laws that only restrict the bad people without reducing the freedom of good people.
- jcpham2 5y agoI’d say cryptocurrecy has created DeCentralized Finance would be more accurate one enables and furthers the other. DEXs, DAOs, stuff like what AAVE and DAI stablecoin. There are instruments on instruments cross referencing each other creating entirely new instruments. Maybe a defi ecosystem empowered by cryptocurrency but one doesn’t necessarily equal the other. The picture is much much larger now with the meta verse angle.