5 ms·

> but I'd like to point out that MakerDAO is down 70% YTD, Aave is down 60%, Uniswap is down 60%, etc, etc. The health of the protocols is only very marginally

> but I'd like to point out that MakerDAO is down 70% YTD, Aave is down 60%, Uniswap is down 60%, etc, etc. The health of the protocols is only very marginally connected to the value of the tokens that govern them. Even if the $UNI token went to zero, the liquidity pools and swap contracts would still work fine. $MKR and $AAVE are a little more complicated because if the governance tokens got too cheap, the protocols could be hijacked and some of the lending parameters could be set to 'broken' values, resulting in liquidations that didn't need to happen. But as of now, the protocols are still working as designed.

vkou 4y ago
That's wonderful. But what are all these loans used for? Arbitrage? Trading other coins around? It's turtles all the way down - there's nothing that generates value at the bottom.
- dcolkitt 4y ago
  We could easily put real economic assets and loans on-chain. The legal frameworks exist On-chain yields are now low enough and “real-world” interest rates high enough that there’d be demand. Delaware courts can and have enforced corporate entities governed by software. The problem is that all of this is currently illegal, because The SEC and Gary Gensler have made zero effort to build a regulatory framework for securities as tokens.
  - nradov 4y ago
    That is entirely hypothetical and there is zero benefit to putting real economic assets and loans on-chain.
  - vkou 4y ago
    We could, and we could also build cars that run on peanut butter. We don't, because there is no point to it, because it costs too much, and because it solves problems that have already been solved. It's not going to magically make inflation or interest rates go away. You are correct that the legal system would still be around, and will still be able to do pretty much everything that it's doing now. It's not illegal, because it's not actually in the realm of the SEC. What you describe - the background implementation of finance isn't an investment, it's just boring clerical work. [1] If there were a better way to do it with blockchains, people would adopt it. Unfortunately, blockchains do not solve the hard problems in this space, but they do make the easy problems both hard and expensive. [1] Yes, it's regulated, but the regulation allows for improvements. The regulation isn't the problem - getting everyone's workflows that are accustomed to how this clerical work is done is the problem! Nobody will switch to a system that's not better, and blockchains are not a better system for this [2]. [2] And if they were, no currently existing blockchain would be a better system for this. If stock clearing or whatever would somehow work better through a blockchain[3], there's no reason to do it on a blockchain that has already been pre-mined, and is being traded around by speculators. Why pay them a first-movers tax, when you can just fork and spin up your own? The hashing power of anything but BTC and maybe the ETH networks isn't sufficient to prevent attacks on something as important as this - so the existing coin ecosystems have zero value for this usecase. The organizations adopting this would have to control the hashing power, as well - and at that point, why pay third-parties for it? [3] It wouldn't.
- pxmpxm 4y ago
  I've yet to have success explaining that very ex nihilo problem to crypto people* - even if you build out all of the last 100 years worth of financial system innovation, at the very bottom all it's doing is very efficient price discovery of people's Pogs collection. It will all fold as such. * anecdotal, but there seems to a strong inverse correlation between crypto enthusiasm and education in economics or finance. Mostly libertarian leaning tech bros in my sample set.
  - tim333 4y ago
    US dollars are bits of paper you can exchange for stuff based on people's perception of their value. Cryptocurrency is virtual bits of paper that you can exchange for stuff based on people's perception of their value. There are some similarities there.
    - pxmpxm 4y ago
      Actually not quite - dollars themselves are worth nothing, same way meters, or liters are worth nothing. They purely a convenience unit of measurement, so that a baker selling bread to a plumber doesn't first have to find flour mill that needs plumbing services to make the transaction. Crypto is by design made artificially scarce, largely because people don't understand the first point. This is also why no one besides dark web ehm "shoppers" actually transacts with crypto.
      - whatisweb3 4y ago
        All currency is worth nothing until it is worth something, and even that will change over human history. Crypto is as artificially scarce as any currency, except the scarcity is baked into clear rules in the protocol that cannot be arbitrarily changed by a single centralized actor. Some people actually like this model.

vkou 4y ago

That's wonderful. But what are all these loans used for? Arbitrage? Trading other coins around? It's turtles all the way down - there's nothing that generates value at the bottom.

dcolkitt 4y ago
We could easily put real economic assets and loans on-chain. The legal frameworks exist On-chain yields are now low enough and “real-world” interest rates high enough that there’d be demand. Delaware courts can and have enforced corporate entities governed by software. The problem is that all of this is currently illegal, because The SEC and Gary Gensler have made zero effort to build a regulatory framework for securities as tokens.
- nradov 4y ago
  That is entirely hypothetical and there is zero benefit to putting real economic assets and loans on-chain.
- vkou 4y ago
  We could, and we could also build cars that run on peanut butter. We don't, because there is no point to it, because it costs too much, and because it solves problems that have already been solved. It's not going to magically make inflation or interest rates go away. You are correct that the legal system would still be around, and will still be able to do pretty much everything that it's doing now. It's not illegal, because it's not actually in the realm of the SEC. What you describe - the background implementation of finance isn't an investment, it's just boring clerical work. [1] If there were a better way to do it with blockchains, people would adopt it. Unfortunately, blockchains do not solve the hard problems in this space, but they do make the easy problems both hard and expensive. [1] Yes, it's regulated, but the regulation allows for improvements. The regulation isn't the problem - getting everyone's workflows that are accustomed to how this clerical work is done is the problem! Nobody will switch to a system that's not better, and blockchains are not a better system for this [2]. [2] And if they were, no currently existing blockchain would be a better system for this. If stock clearing or whatever would somehow work better through a blockchain[3], there's no reason to do it on a blockchain that has already been pre-mined, and is being traded around by speculators. Why pay them a first-movers tax, when you can just fork and spin up your own? The hashing power of anything but BTC and maybe the ETH networks isn't sufficient to prevent attacks on something as important as this - so the existing coin ecosystems have zero value for this usecase. The organizations adopting this would have to control the hashing power, as well - and at that point, why pay third-parties for it? [3] It wouldn't.
pxmpxm 4y ago
I've yet to have success explaining that very ex nihilo problem to crypto people* - even if you build out all of the last 100 years worth of financial system innovation, at the very bottom all it's doing is very efficient price discovery of people's Pogs collection. It will all fold as such. * anecdotal, but there seems to a strong inverse correlation between crypto enthusiasm and education in economics or finance. Mostly libertarian leaning tech bros in my sample set.
- tim333 4y ago
  US dollars are bits of paper you can exchange for stuff based on people's perception of their value. Cryptocurrency is virtual bits of paper that you can exchange for stuff based on people's perception of their value. There are some similarities there.
  - pxmpxm 4y ago
    Actually not quite - dollars themselves are worth nothing, same way meters, or liters are worth nothing. They purely a convenience unit of measurement, so that a baker selling bread to a plumber doesn't first have to find flour mill that needs plumbing services to make the transaction. Crypto is by design made artificially scarce, largely because people don't understand the first point. This is also why no one besides dark web ehm "shoppers" actually transacts with crypto.
    - whatisweb3 4y ago
      All currency is worth nothing until it is worth something, and even that will change over human history. Crypto is as artificially scarce as any currency, except the scarcity is baked into clear rules in the protocol that cannot be arbitrarily changed by a single centralized actor. Some people actually like this model.