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HN commenters pretty often ask what is a good use case of blockchains or cryptocurrencies. Well, the failures you are seeing now are not in the blockchain nati

by pa7x1 4y ago

HN commenters pretty often ask what is a good use case of blockchains or cryptocurrencies. Well, the failures you are seeing now are not in the blockchain native finance. They are failures of traditional finance in an unregulated industry. Celsius, BlockFi, Crypto.com, FTX... are corporations with opaque balance sheets operating in a poorly regulated sector. While all of that crap built on greed is imploding you have DeFi (short for decentralized finance, i.e. Finance primitives built on-chain) working just as intended and with 0 risk of contagion, by design. What we are seeing is once again that traditional final is very brittle and requires very strict regulation to hope nothing breaks, when not outright requiring to be saved by socializing the losses (2008). Blockchains solve this, they do. And we are seeing a magnificent stress test of it.

cuteboy19 4y ago
What defi provides is completely useless in 99% of cases. You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan? And of course such loans are ""safe"" because they are not loans at all.
- pa7x1 4y ago
  > What defi provides is completely useless in 99% of cases. What DeFi provides are the foundations of a publicly verifiable financial system. So either you ascribe that financial systems are useless or that public verification is useless. For the first case I will refer you to the history of the Amsterdam Stock Exchange and the economic and welfare growth that it spurred, for the second one I will refer you to 2008 and what just happened with FTX. > You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan? Someone that needs 5 dollars? The specific numbers are irrelevant, in fact. They are just a consequence of whatever parameters are set to ensure the safety of the loan. If your question is why do we need to constraint in any margin collateral requirements, after everything that has happened during the last 20 years... I don't know what to say to you.

by pa7x1 4y ago

cuteboy19 4y ago

What defi provides is completely useless in 99% of cases. You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan? And of course such loans are ""safe"" because they are not loans at all.

pa7x1 4y ago
> What defi provides is completely useless in 99% of cases. What DeFi provides are the foundations of a publicly verifiable financial system. So either you ascribe that financial systems are useless or that public verification is useless. For the first case I will refer you to the history of the Amsterdam Stock Exchange and the economic and welfare growth that it spurred, for the second one I will refer you to 2008 and what just happened with FTX. > You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan? Someone that needs 5 dollars? The specific numbers are irrelevant, in fact. They are just a consequence of whatever parameters are set to ensure the safety of the loan. If your question is why do we need to constraint in any margin collateral requirements, after everything that has happened during the last 20 years... I don't know what to say to you.