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Defi protocols are incredibly powerful tools; the only thing preventing me from never using a bank again is not being able to pay for goods directly with stable

by w_TF 5y ago

Defi protocols are incredibly powerful tools; the only thing preventing me from never using a bank again is not being able to pay for goods directly with stable coins. It's obvious the vast majority of people maligning them have never used them.

jsemrau 5y ago
The on- and off-ramps into the cryptoverse are still really clunky. But I think we left the point of no return so it will only be a question of time until that is solved as well.
latchkey 5y ago
Consider this; other countries are more advanced than yours. While China offered a centralized solution to p2p payments, the concept of paying for everything digitally is already ingrained into their culture. Stable coins are not far off from that. Instead of getting a "cash rebate" by giving up all of our information to credit card companies (they are making a whole lot more than they are giving back), we should be collecting interest on our holdings and spending it more anonymously. Most people won't need credit when they have collateral. That seems like a more entertaining future.
- hanniabu 5y ago
  It has nothing to do with digital. We could pay with credit cards and that's digital enough. The issue is the government seizing your assets, banks deciding to freeze your bank accounts, all the gatekeeping, all the rent seeking fees, all the institutional red tape, etc. For example if I wanted to take out a loan, it'd take me days to weeks, high interest rates, and may not even get approved. With defi I can take out a loan in just a few minutes, no permission needed. Also put aside your privilege and realize not everyone is in a first world country privy to the banking many take for granted.
  - hermes8329 5y ago
    So you get a loan and what if you just walk off with the cash? What piece am I misunderstanding that has enforcement for repayment?
    - shane_b 5y ago
      Liquidation. Most (all?) crypto loans are collateralized for the concerns you mention. If asset value drops to debt value plus a buffer, it’s liquidated. Someone else pays your debt and gets your assets. To pay back, you simply repay the same amount of the coin you borrow, lowering liabilities. You get to keep what you borrowed in the case of liquidation but your assets are gone.
      - scient 5y ago
        So you take the money, walk away and someone else pays for it?
        shane_b 5y ago
        No, you pay for it with your assets. Someone else pays to settle your debt and get your assets. Example. You have $1000 btc deposited in a lending platform, you can borrow up to 80%. You borrow $800 usd. You keep the usd no matter what. If btc drops to $850 then someone pays $800 (usd debt) and gets btc worth $850. The buffer is so assets never drop below debt value.
        nightpool 5y ago
        .... so you can... never borrow more than you already have? that seems like the exact opposite of a loan. Why not just keep the $1000 yourself and spend $800 of it? If you can't pay yourself back, then you're only out $800 instead of the $1000 in your example.
        shane_b 5y ago
        Most threads about wealthy complain they don’t have to sell for capital gains but average person does. This is exactly that vehicle for anyone. You could spend $800 but your total capital is $1000 vs $1800. In my example, you would only be out $200 because you have $800 usd and the btc was $1000 when you put it in. Even if you go get a loan from a bank, you need 20% equity and either collateral (this case) or co sign or proof of income. All collateral just the same. It’s just risked out to be possible to borrow many multiples due to the stability of real estate collateral. In business loans, you have to put in 20% and the assets of the purchase are collateral. It’s the same but crypto doesn’t have debt collectors since it’s not an org. Instead the collateral has to be in the system directly so they can automate liquidation.
  - nightpool 5y ago
    How do DeFi protocols handle loan defaults and repayment? shane_b describes in a sibling comment a scheme where your loan is over collateralized, but that doesn't make any sense—why take out a loan if you already have the money and could just "loan it to yourself" at 0% interest? How do DeFi loaning protocols handle Sybil attacks?
jollybean 5y ago
"It's obvious the vast majority of people maligning them have never used them." No, it's only obvious that people haven't thought through their supposed solutions. If all we had was Defi, someone would have this glorious notion of inventing a regular centralized system and we'd all be the richer for it. Our monetary system works pretty well. Some things are a bit tricky, but otherwise it's fine.

by w_TF 5y ago

jsemrau 5y ago

The on- and off-ramps into the cryptoverse are still really clunky. But I think we left the point of no return so it will only be a question of time until that is solved as well.

latchkey 5y ago

Consider this; other countries are more advanced than yours. While China offered a centralized solution to p2p payments, the concept of paying for everything digitally is already ingrained into their culture. Stable coins are not far off from that. Instead of getting a "cash rebate" by giving up all of our information to credit card companies (they are making a whole lot more than they are giving back), we should be collecting interest on our holdings and spending it more anonymously. Most people won't need credit when they have collateral. That seems like a more entertaining future.

hanniabu 5y ago
It has nothing to do with digital. We could pay with credit cards and that's digital enough. The issue is the government seizing your assets, banks deciding to freeze your bank accounts, all the gatekeeping, all the rent seeking fees, all the institutional red tape, etc. For example if I wanted to take out a loan, it'd take me days to weeks, high interest rates, and may not even get approved. With defi I can take out a loan in just a few minutes, no permission needed. Also put aside your privilege and realize not everyone is in a first world country privy to the banking many take for granted.
- hermes8329 5y ago
  So you get a loan and what if you just walk off with the cash? What piece am I misunderstanding that has enforcement for repayment?
  - shane_b 5y ago
    Liquidation. Most (all?) crypto loans are collateralized for the concerns you mention. If asset value drops to debt value plus a buffer, it’s liquidated. Someone else pays your debt and gets your assets. To pay back, you simply repay the same amount of the coin you borrow, lowering liabilities. You get to keep what you borrowed in the case of liquidation but your assets are gone.
    - scient 5y ago
      So you take the money, walk away and someone else pays for it?
      - shane_b 5y ago
        No, you pay for it with your assets. Someone else pays to settle your debt and get your assets. Example. You have $1000 btc deposited in a lending platform, you can borrow up to 80%. You borrow $800 usd. You keep the usd no matter what. If btc drops to $850 then someone pays $800 (usd debt) and gets btc worth $850. The buffer is so assets never drop below debt value.
        nightpool 5y ago
        .... so you can... never borrow more than you already have? that seems like the exact opposite of a loan. Why not just keep the $1000 yourself and spend $800 of it? If you can't pay yourself back, then you're only out $800 instead of the $1000 in your example.
        shane_b 5y ago
        Most threads about wealthy complain they don’t have to sell for capital gains but average person does. This is exactly that vehicle for anyone. You could spend $800 but your total capital is $1000 vs $1800. In my example, you would only be out $200 because you have $800 usd and the btc was $1000 when you put it in. Even if you go get a loan from a bank, you need 20% equity and either collateral (this case) or co sign or proof of income. All collateral just the same. It’s just risked out to be possible to borrow many multiples due to the stability of real estate collateral. In business loans, you have to put in 20% and the assets of the purchase are collateral. It’s the same but crypto doesn’t have debt collectors since it’s not an org. Instead the collateral has to be in the system directly so they can automate liquidation.
- nightpool 5y ago
  How do DeFi protocols handle loan defaults and repayment? shane_b describes in a sibling comment a scheme where your loan is over collateralized, but that doesn't make any sense—why take out a loan if you already have the money and could just "loan it to yourself" at 0% interest? How do DeFi loaning protocols handle Sybil attacks?

jollybean 5y ago

"It's obvious the vast majority of people maligning them have never used them." No, it's only obvious that people haven't thought through their supposed solutions. If all we had was Defi, someone would have this glorious notion of inventing a regular centralized system and we'd all be the richer for it. Our monetary system works pretty well. Some things are a bit tricky, but otherwise it's fine.