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One purpose is to self govern and share the profits from trading, instead of giving banks and brokers those profits. That's already good enough.

by 1ark 5y ago

hanniabu 5y ago
That's still only one of many, but those that want to remain ignorant will continue to handwave, find some excuse to dismiss it, and go on reading articles from other ignorant people about how there's no purpose so they feel good about themselves.
- latchkey 5y ago
  Don't be so bitter. The more people in the pool, the more diluted all that fat interest gets. While it needs to grow, it is also a bit of fight club. Let it grow organically. The more that people throw shit against it, the stronger it gets. I wouldn't expect bitcoin to replace something as large as gold, without a huge fight. It has to win on its own merits. Really, it is the story of bitcoin from day one. Those who got in early got all the rewards. Those who didn't... well... will pay nearly any price for it.
skybrian 5y ago
Considering that trades are now free at major brokerages, this doesn’t seem very interesting? (Meanwhile, trades on blockchains are often expensive.)
- 1ark 5y ago
  Yes, trades on Ethereum and Bitcoin can be expensive, but there are other chains with subsecond finality and fees in cents. On a TradFi brokerage it is not possible to take part of in their market making. As your collateral is used for investing and not liquidity in the market making. Free? I only know of Robinhood and that's only for US, and you get frontrun anyway. If you are interested in holding equities only for value appreciation then I can understand DeFi not sounding that interesting. But if you are into saving, lending, leverage or market making then it should at least tickle curiosity.
  - skybrian 5y ago
    Charles Schwab started offering free trades two years ago and the other major brokerages matched it. Free trades are just expected now. (I don’t know about outside the US.) More: https://www.nerdwallet.com/best/investing/free-stock-trading https://www.nerdwallet.com/best/investing/free-stock-trading Also I recommend subscribing to Matt Levine’s email newsletter. He covers stuff like this and is also very funny.
  - PretzelPirate 5y ago
    > but there are other chains with subsecond finality and fees in cents. We should be careful with these claims in this context. The layer 1s that have sub-second finality tend to be heavily centralized either relying on a very small pool of DPoS-backed and I slash able validators, or a completely centralized protocol component (relay) that is a trusted component of the system. They get low fees and speed by keeping central control, but unlike the large brokers we’d traditionally use. The difference is that they don’t protect their users or have any consumer protections while still having the same ability to censor you or extract value from you. Layer 2s can solve this, but they currently have training wheels on which give operators a high level of control (in some cases, they can freeze assets). Once training wheels are off, layer 2s will give us low fees and fast finality while users are still protected from having their assets frozen or stolen.
  - gruez 5y ago
    How competitive are the fees/spreads on difi? On gemini, the maker/taker fees are 0.25%/0.35% respectively, and the spread is less than $5 (bid: 58486.47, ask: 58490.85). >Free? I only know of Robinhood and that's only for US, and you get frontrun anyway any sources for this? AFAIK they make money off the bid-ask spread, but you're guaranteed at least the NBBO.
    - anonymoushn 5y ago
      Defi fees can be cheaper than the very worst cex fees such as the ones you quoted, but only if you are trading huge size or not trading on Ethereum mainnet. Trading on Ethereum mainnet means the fixed fee of $100+ will probably dominate the exchange fee. Robinhood Crypto does not guarantee you the NBBO because the NBBO doesn't exist.
- hanniabu 5y ago
  > Meanwhile, trades on blockchains are often expensive. This is quickly being solved with modular blockchain architectures. If you haven't read about zkrollups yet I suggest looking into that. While still in early stages transaction throughput on Ethereum has scaled from ~13 tx/s to ~2500 tx/s with rollups.
  - anonymoushn 5y ago
    First you pay hundreds to bridge to a rollup, then you don't get to interact with any defi protocols since they're all on mainnet.
    - yokem55 5y ago
      The "hundreds to bridge" is a worst case figure that most folks would only do if they had to bridge in the midst of a crash and needed to add capital to avoid liquidation on an L2 position. If you time it right it's more like $40-50. Not great, obviously, but it isn't "hundreds". And ultimately, the problem goes away when centralized exchanges provide direct on-ramps to L2's -- which is already happening with some smaller exchanges.
      - nightpool 5y ago
        If you're paying $40-$50 dollars per trade, how is that "solving the problem of expensive transfers"?
        yokem55 5y ago
        It's a one time bridge. Bridge once, and then the transactions with the funds you have on l2 can be traded or borrowed against for vastly cheaper then mainnet. If you want or have a need to add more funds to trade with, then it's an additional bridging fee, but not every tx is $40-50.
        skybrian 5y ago
        It seems like there’s an underlying assumption that you’re going to trade often. Paying a one-time fee and making it up in volume doesn’t seem very appealing for people who don’t trade that much anyway? Is this just for day traders?
- throw0101a 5y ago
  > Considering that trades are now free at major brokerages Those "free" trades may be costing people more than having a 'traditional' fee, and claiming otherwise will get you fined for false advertising as Robinhood found out: > The Securities and Exchange Commission today charged Robinhood Financial LLC for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders. Robinhood agreed to pay $65 million to settle the charges. * https://www.sec.gov/news/press-release/2020-321 https://www.sec.gov/news/press-release/2020-321 Further, I'm not sure 'free' trades may not be a good thing: it's long been observed that the more active a person is in trading, the less they tend to generally make compared to market averages. Some friction in trading seems to be a good idea as it forces one to actually consider the action you're about to take and whether it's actually a good move.
  - nightpool 5y ago
    PFOF is one of those things that sounds obviously sketchy, but in reality it's just a simple consequence of "information is worth money". You're not losing money from payment for order flow—Robinhood can provide both price improvement over the national exchanges and get paid for it. PFOF isn't "coming out of" the bid/ask spread, it's a reflection of the fact that getting more retail users onto the stock market is valuable for those who want to bid against them.
    - camgunz 5y ago
      PFOF is valuable, and warehouses collect market maker fees. Just this alone gives them a huge advantage against retail investors, but combined with equipment, infra, and hiring capability it's basically no contest. The thing retail is supposed to get out of the deal is NBBO, but Robinhood was fined millions for not even providing that. The dynamic here is to pull in tons more retail investors, all of whom are at a disadvantage compared to firms. Robinhood is a gambling app marketed as an investment app, and we should start regulating it as such.
      - 5y ago
- Scoundreller 5y ago
  > Considering that trades are now free at major brokerages, this doesn’t seem very interesting? Free might be too expensive. We don’t need to stop there. They might be making enough money to pay us. Just like Facebook and google are free, they could pay us to use them with the profit they make from us. I deal with a credit union and they pay me $5/yr for having an account (well, I did buy a $5 share to become a member).
  - lotsofpulp 5y ago
    > Free might be too expensive. We don’t need to stop there. They might be making enough money to pay us. Why does one of the brokerages not pay us then? Did they all sit at a meeting and discuss with each other that they should compete until it is free, but to cease competing after that?
    - quickthrowman 5y ago
      IKBR will pay you a portion of the interest they earn lending out securities if you let them lend yours out.
LatteLazy 5y ago
How does decentralised finance achieve that? Surely a decentralised market has just as much need for Market Makers, speculation, prop trading and liquidity providers as a centralised one? Those are exactly the jobs banks (and hedge funds etc) currently do right? I'm not trying to be difficult, I'm honestly asking, has someone changed market structures in a way to eliminate those functions? Things like timed, incremental markets and filling all orders at vwap have been suggested and sometimes tried in the non-crypto space, but I don't think it's ever worked...
- 1ark 5y ago
  Anyone can be a liquidity provider in an automated market maker, AMM. So that is what has changed. It has not completely eliminated needs for arbiters to balance the pools, but a great deal, and HFT is not really possible.
throwvirtever 5y ago
> share the profits from trading The purpose of trading is to get money, not to share it.

One purpose is to self govern and share the profits from trading, instead of giving banks and brokers those profits. That's already good enough.

by 1ark 5y ago

One purpose is to self govern and share the profits from trading, instead of giving banks and brokers those profits. That's already good enough.

hanniabu 5y ago

That's still only one of many, but those that want to remain ignorant will continue to handwave, find some excuse to dismiss it, and go on reading articles from other ignorant people about how there's no purpose so they feel good about themselves.

latchkey 5y ago
Don't be so bitter. The more people in the pool, the more diluted all that fat interest gets. While it needs to grow, it is also a bit of fight club. Let it grow organically. The more that people throw shit against it, the stronger it gets. I wouldn't expect bitcoin to replace something as large as gold, without a huge fight. It has to win on its own merits. Really, it is the story of bitcoin from day one. Those who got in early got all the rewards. Those who didn't... well... will pay nearly any price for it.

skybrian 5y ago

Considering that trades are now free at major brokerages, this doesn’t seem very interesting? (Meanwhile, trades on blockchains are often expensive.)

1ark 5y ago
Yes, trades on Ethereum and Bitcoin can be expensive, but there are other chains with subsecond finality and fees in cents. On a TradFi brokerage it is not possible to take part of in their market making. As your collateral is used for investing and not liquidity in the market making. Free? I only know of Robinhood and that's only for US, and you get frontrun anyway. If you are interested in holding equities only for value appreciation then I can understand DeFi not sounding that interesting. But if you are into saving, lending, leverage or market making then it should at least tickle curiosity.
- skybrian 5y ago
  Charles Schwab started offering free trades two years ago and the other major brokerages matched it. Free trades are just expected now. (I don’t know about outside the US.) More: https://www.nerdwallet.com/best/investing/free-stock-trading https://www.nerdwallet.com/best/investing/free-stock-trading Also I recommend subscribing to Matt Levine’s email newsletter. He covers stuff like this and is also very funny.
- PretzelPirate 5y ago
  > but there are other chains with subsecond finality and fees in cents. We should be careful with these claims in this context. The layer 1s that have sub-second finality tend to be heavily centralized either relying on a very small pool of DPoS-backed and I slash able validators, or a completely centralized protocol component (relay) that is a trusted component of the system. They get low fees and speed by keeping central control, but unlike the large brokers we’d traditionally use. The difference is that they don’t protect their users or have any consumer protections while still having the same ability to censor you or extract value from you. Layer 2s can solve this, but they currently have training wheels on which give operators a high level of control (in some cases, they can freeze assets). Once training wheels are off, layer 2s will give us low fees and fast finality while users are still protected from having their assets frozen or stolen.
- gruez 5y ago
  How competitive are the fees/spreads on difi? On gemini, the maker/taker fees are 0.25%/0.35% respectively, and the spread is less than $5 (bid: 58486.47, ask: 58490.85). >Free? I only know of Robinhood and that's only for US, and you get frontrun anyway any sources for this? AFAIK they make money off the bid-ask spread, but you're guaranteed at least the NBBO.
  - anonymoushn 5y ago
    Defi fees can be cheaper than the very worst cex fees such as the ones you quoted, but only if you are trading huge size or not trading on Ethereum mainnet. Trading on Ethereum mainnet means the fixed fee of $100+ will probably dominate the exchange fee. Robinhood Crypto does not guarantee you the NBBO because the NBBO doesn't exist.
hanniabu 5y ago
> Meanwhile, trades on blockchains are often expensive. This is quickly being solved with modular blockchain architectures. If you haven't read about zkrollups yet I suggest looking into that. While still in early stages transaction throughput on Ethereum has scaled from ~13 tx/s to ~2500 tx/s with rollups.
- anonymoushn 5y ago
  First you pay hundreds to bridge to a rollup, then you don't get to interact with any defi protocols since they're all on mainnet.
  - yokem55 5y ago
    The "hundreds to bridge" is a worst case figure that most folks would only do if they had to bridge in the midst of a crash and needed to add capital to avoid liquidation on an L2 position. If you time it right it's more like $40-50. Not great, obviously, but it isn't "hundreds". And ultimately, the problem goes away when centralized exchanges provide direct on-ramps to L2's -- which is already happening with some smaller exchanges.
    - nightpool 5y ago
      If you're paying $40-$50 dollars per trade, how is that "solving the problem of expensive transfers"?
      - yokem55 5y ago
        It's a one time bridge. Bridge once, and then the transactions with the funds you have on l2 can be traded or borrowed against for vastly cheaper then mainnet. If you want or have a need to add more funds to trade with, then it's an additional bridging fee, but not every tx is $40-50.
        skybrian 5y ago
        It seems like there’s an underlying assumption that you’re going to trade often. Paying a one-time fee and making it up in volume doesn’t seem very appealing for people who don’t trade that much anyway? Is this just for day traders?
throw0101a 5y ago
> Considering that trades are now free at major brokerages Those "free" trades may be costing people more than having a 'traditional' fee, and claiming otherwise will get you fined for false advertising as Robinhood found out: > The Securities and Exchange Commission today charged Robinhood Financial LLC for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders. Robinhood agreed to pay $65 million to settle the charges. * https://www.sec.gov/news/press-release/2020-321 https://www.sec.gov/news/press-release/2020-321 Further, I'm not sure 'free' trades may not be a good thing: it's long been observed that the more active a person is in trading, the less they tend to generally make compared to market averages. Some friction in trading seems to be a good idea as it forces one to actually consider the action you're about to take and whether it's actually a good move.
- nightpool 5y ago
  PFOF is one of those things that sounds obviously sketchy, but in reality it's just a simple consequence of "information is worth money". You're not losing money from payment for order flow—Robinhood can provide both price improvement over the national exchanges and get paid for it. PFOF isn't "coming out of" the bid/ask spread, it's a reflection of the fact that getting more retail users onto the stock market is valuable for those who want to bid against them.
  - camgunz 5y ago
    PFOF is valuable, and warehouses collect market maker fees. Just this alone gives them a huge advantage against retail investors, but combined with equipment, infra, and hiring capability it's basically no contest. The thing retail is supposed to get out of the deal is NBBO, but Robinhood was fined millions for not even providing that. The dynamic here is to pull in tons more retail investors, all of whom are at a disadvantage compared to firms. Robinhood is a gambling app marketed as an investment app, and we should start regulating it as such.
    - 5y ago
Scoundreller 5y ago
> Considering that trades are now free at major brokerages, this doesn’t seem very interesting? Free might be too expensive. We don’t need to stop there. They might be making enough money to pay us. Just like Facebook and google are free, they could pay us to use them with the profit they make from us. I deal with a credit union and they pay me $5/yr for having an account (well, I did buy a $5 share to become a member).
- lotsofpulp 5y ago
  > Free might be too expensive. We don’t need to stop there. They might be making enough money to pay us. Why does one of the brokerages not pay us then? Did they all sit at a meeting and discuss with each other that they should compete until it is free, but to cease competing after that?
  - quickthrowman 5y ago
    IKBR will pay you a portion of the interest they earn lending out securities if you let them lend yours out.

LatteLazy 5y ago

How does decentralised finance achieve that? Surely a decentralised market has just as much need for Market Makers, speculation, prop trading and liquidity providers as a centralised one? Those are exactly the jobs banks (and hedge funds etc) currently do right? I'm not trying to be difficult, I'm honestly asking, has someone changed market structures in a way to eliminate those functions? Things like timed, incremental markets and filling all orders at vwap have been suggested and sometimes tried in the non-crypto space, but I don't think it's ever worked...

1ark 5y ago
Anyone can be a liquidity provider in an automated market maker, AMM. So that is what has changed. It has not completely eliminated needs for arbiters to balance the pools, but a great deal, and HFT is not really possible.

throwvirtever 5y ago

> share the profits from trading The purpose of trading is to get money, not to share it.