5 ms·

Why can't exchanges operate without putting customers funds at risk and leveraging crypto for collateral... Seems silly buy is there no exchange that is happy

Why can't exchanges operate without putting customers funds at risk and leveraging crypto for collateral... Seems silly buy is there no exchange that is happy to just make a transaction fee?

Gigachad 4y ago
Because everyone in the crypto space is a scammer or a moron.
- radicaldreamer 4y ago
  Coinbase seems to be the exception here
  - pavlov 4y ago
    Coinbase has racked up $2 billion in losses for 2022 already, so I’m not sure about the “not morons” part. At this rate a bankruptcy is not out of the question.
    - radicaldreamer 4y ago
      That loss is due to R&D and headcount spend though, they're not using customer funds to make crypto bets.
      - papa-whisky 4y ago
        I think the point is that coinbase is struggling to compete when there are tons of exchanges out there offering low/no fees and ludicrous interest payments on coins kept on the exchange. Even if those other 'exchanges' do all seem to be turning out to be ponzi schemes... For whatever reason people keep flocking to the next one.
        deleted 4y ago
        [deleted]
        rightbyte 4y ago
        I have realized that being a ponzi scheme is a feature not a bug in the crypto space. A chicken race to pull out as late as you dare.
  - xwdv 4y ago
    There’s still time.
marban 4y ago
That was the official plan.
simsspoons 4y ago
The dexes are fine?
- tsimionescu 4y ago
  Do any of them operate with dollars or euros?
- joosters 4y ago
  The ones that haven't (yet) been hacked, anyway... Besides, which ones really are decentralized? Can you name one that doesn't have a central control point? Most have an update system, allowing one person to either completely modify the smart contract code or to enable/disable trading.
  - easrng 4y ago
    AFAIK Uniswap doesn't have an upgradeability proxy, they just deploy new versions and the old ones stay up. That's only true if you aren't using a L2 though, all the current L2 implementations are upgradable.
    - joosters 4y ago
      Looks like you're right - Uniswap v1 is still usable, they had 'proxy' contracts that could redirect users to more recent versions, but you can, if you choose, interact directly with the original version - it wasn't turned off. However, since the liquidity all moved into the later versions, there's only about 1/1000th of the trading left in the original. (and you get to keep/be exploited by all the unpatched bugs, yay!) Uniswap v1 volume: $144k, v2: $111,784k
- RC_ITR 4y ago
  The dexes are scams. Liquidity providers have very little incentive to actually provide liquidity (most just don’t understand their risk profile) “Impermanent loss” is just losing to arbitrage. It’s a necessary feature of being an LP. People just don’t notice how much they are losing b/c the prices are so volatile. The ruse won’t last forever.
narrator 4y ago
Because they think they are banks and all banks fractionally reserve. Fractionally reserving is not a law of nature, it's a scam that only works because the fed can print money as needed to bail out banks when there's a bank run. If you can't just print money whenever, it always fails.
- csomar 4y ago
  That's a misconception. Banks don't fraction-reserve out of thin air. They need a collateral (which is why banks require it for a loan).
  - narrator 4y ago
    Credit cards are collateral free. In contrast, when people get medical bills they also owe debt, but the hospital didn't create any money.
    - csomar 4y ago
      I don't think so, the bank will need to collateralize these debts somehow (ie: Lenders). The yield on CC debt is high. For medical bills, that's a false and yet correct analogy. The hospital did, in theory, create money out of thin air (at least from an accounting perspective). In this case, it is the hospital (ie: The investor) who will go under if the patient does not pay her bill. And that's fine. Investors are in it for yield which carries risk. This is different from putting money on an exchange or a bank. You are looking here for a store, unless you willingly signed up for some yield thing.
      - narrator 4y ago
        The bank created money because the borrower can use the money to settle other debts. When the creditor that the debtor repays with the credit card deposits those payments in bank accounts they become bank deposits in other banks. The hospital patient cannot settle debts with his medical care that he received or deposit it in a bank.
justin_oaks 4y ago
"We're making good money, but we could make MORE money" says crypto exchange operators. ... and Microsoft and Apple incorporating ads into their paid products ... and Google updating Google TV with ads where there were none before ... and laptop companies filling their laptops with bloatware ... and plenty of others
seydor 4y ago
why can't banks do that? because it can't work, even though economists have convinced the world that it can, and supplicate the losses by stealing taxpayer money or making wars crypto is supposed to be one bank for every person. don't know how we get there, but we are learning that traditional bank/exchanges should not exist
- valdiorn 4y ago
  You have drawn a very incorrect conclusion from this whole process.
JumpCrisscross 4y ago
> Why can't exchanges operate without putting customers funds at risk In finance, bad actors outcompete good ones absent regulation. The game is one of confidence and compounding. Until the music stops, venues promising higher returns bleed well-run ones dry. Add to that crypto’s Gresham’s law-esque selection for gamblers, and you wind up with little market space for well-run exchanges. (Which have never been exchanges, but quasi broker-banker-money market funds.)
- dmitriid 4y ago
  > In finance, bad actors outcompete good ones absent regulation. Not just in finance. Everywhere. With crypto we just see all this happening real fast, in real time.
  - JumpCrisscross 4y ago
    > Not just in finance. Everywhere. It seems more prevalent in finance. In the real economy, consumers show scepticism. They’re trading money for a good or service they get at or shortly after the point of sale. Financial and insurance products are more difficult to diligence; you don’t know what you’re getting (or not) until long after purchase.
    - germinalphrase 4y ago
      Products can hide all sorts of “bad acting” in the supply/manufacturing chain. Companies that are willing and able to [use indentured servants, etc] will be able to sell a product cheaper than a competitor that holds themselves to higher standards. The appearance of ethics/morals might be a benefit, but true ethics/morals are often a cost.
    - lupire 4y ago
      That's because finance is virtualized, so it's more efficient to transact in than containers of goods. Amazon.com shows how the goods market is as bad it can be when transaction costs decrease.
bandrami 4y ago
Because there's no money to be made in just being a clearinghouse so nobody does that

Why can't exchanges operate without putting customers funds at risk and leveraging crypto for collateral... Seems silly buy is there no exchange that is happy to just make a transaction fee?

Gigachad 4y ago

Because everyone in the crypto space is a scammer or a moron.

radicaldreamer 4y ago
Coinbase seems to be the exception here
- pavlov 4y ago
  Coinbase has racked up $2 billion in losses for 2022 already, so I’m not sure about the “not morons” part. At this rate a bankruptcy is not out of the question.
  - radicaldreamer 4y ago
    That loss is due to R&D and headcount spend though, they're not using customer funds to make crypto bets.
    - papa-whisky 4y ago
      I think the point is that coinbase is struggling to compete when there are tons of exchanges out there offering low/no fees and ludicrous interest payments on coins kept on the exchange. Even if those other 'exchanges' do all seem to be turning out to be ponzi schemes... For whatever reason people keep flocking to the next one.
      - deleted 4y ago
        [deleted]
      - rightbyte 4y ago
        I have realized that being a ponzi scheme is a feature not a bug in the crypto space. A chicken race to pull out as late as you dare.
- xwdv 4y ago
  There’s still time.

marban 4y ago

That was the official plan.

simsspoons 4y ago

The dexes are fine?

tsimionescu 4y ago
Do any of them operate with dollars or euros?
joosters 4y ago
The ones that haven't (yet) been hacked, anyway... Besides, which ones really are decentralized? Can you name one that doesn't have a central control point? Most have an update system, allowing one person to either completely modify the smart contract code or to enable/disable trading.
- easrng 4y ago
  AFAIK Uniswap doesn't have an upgradeability proxy, they just deploy new versions and the old ones stay up. That's only true if you aren't using a L2 though, all the current L2 implementations are upgradable.
  - joosters 4y ago
    Looks like you're right - Uniswap v1 is still usable, they had 'proxy' contracts that could redirect users to more recent versions, but you can, if you choose, interact directly with the original version - it wasn't turned off. However, since the liquidity all moved into the later versions, there's only about 1/1000th of the trading left in the original. (and you get to keep/be exploited by all the unpatched bugs, yay!) Uniswap v1 volume: $144k, v2: $111,784k
RC_ITR 4y ago
The dexes are scams. Liquidity providers have very little incentive to actually provide liquidity (most just don’t understand their risk profile) “Impermanent loss” is just losing to arbitrage. It’s a necessary feature of being an LP. People just don’t notice how much they are losing b/c the prices are so volatile. The ruse won’t last forever.

narrator 4y ago

Because they think they are banks and all banks fractionally reserve. Fractionally reserving is not a law of nature, it's a scam that only works because the fed can print money as needed to bail out banks when there's a bank run. If you can't just print money whenever, it always fails.

csomar 4y ago
That's a misconception. Banks don't fraction-reserve out of thin air. They need a collateral (which is why banks require it for a loan).
- narrator 4y ago
  Credit cards are collateral free. In contrast, when people get medical bills they also owe debt, but the hospital didn't create any money.
  - csomar 4y ago
    I don't think so, the bank will need to collateralize these debts somehow (ie: Lenders). The yield on CC debt is high. For medical bills, that's a false and yet correct analogy. The hospital did, in theory, create money out of thin air (at least from an accounting perspective). In this case, it is the hospital (ie: The investor) who will go under if the patient does not pay her bill. And that's fine. Investors are in it for yield which carries risk. This is different from putting money on an exchange or a bank. You are looking here for a store, unless you willingly signed up for some yield thing.
    - narrator 4y ago
      The bank created money because the borrower can use the money to settle other debts. When the creditor that the debtor repays with the credit card deposits those payments in bank accounts they become bank deposits in other banks. The hospital patient cannot settle debts with his medical care that he received or deposit it in a bank.

justin_oaks 4y ago

"We're making good money, but we could make MORE money" says crypto exchange operators. ... and Microsoft and Apple incorporating ads into their paid products ... and Google updating Google TV with ads where there were none before ... and laptop companies filling their laptops with bloatware ... and plenty of others

seydor 4y ago

why can't banks do that? because it can't work, even though economists have convinced the world that it can, and supplicate the losses by stealing taxpayer money or making wars crypto is supposed to be one bank for every person. don't know how we get there, but we are learning that traditional bank/exchanges should not exist

valdiorn 4y ago
You have drawn a very incorrect conclusion from this whole process.

JumpCrisscross 4y ago

> Why can't exchanges operate without putting customers funds at risk In finance, bad actors outcompete good ones absent regulation. The game is one of confidence and compounding. Until the music stops, venues promising higher returns bleed well-run ones dry. Add to that crypto’s Gresham’s law-esque selection for gamblers, and you wind up with little market space for well-run exchanges. (Which have never been exchanges, but quasi broker-banker-money market funds.)

dmitriid 4y ago
> In finance, bad actors outcompete good ones absent regulation. Not just in finance. Everywhere. With crypto we just see all this happening real fast, in real time.
- JumpCrisscross 4y ago
  > Not just in finance. Everywhere. It seems more prevalent in finance. In the real economy, consumers show scepticism. They’re trading money for a good or service they get at or shortly after the point of sale. Financial and insurance products are more difficult to diligence; you don’t know what you’re getting (or not) until long after purchase.
  - germinalphrase 4y ago
    Products can hide all sorts of “bad acting” in the supply/manufacturing chain. Companies that are willing and able to [use indentured servants, etc] will be able to sell a product cheaper than a competitor that holds themselves to higher standards. The appearance of ethics/morals might be a benefit, but true ethics/morals are often a cost.
  - lupire 4y ago
    That's because finance is virtualized, so it's more efficient to transact in than containers of goods. Amazon.com shows how the goods market is as bad it can be when transaction costs decrease.

bandrami 4y ago

Because there's no money to be made in just being a clearinghouse so nobody does that