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>20% inflationary APY with an algorithmic "stable"coin Was a reference to terra and the anchor protocol. And while it's true that its flaws were less obvious t
by charleslmunger 3y ago
>20% inflationary APY with an algorithmic "stable"coin
Was a reference to terra and the anchor protocol. And while it's true that its flaws were less obvious than some truly stupid tokens from 2016, I don't think that's a fair characterization of the problem. In some ways it was actually a more obvious failure than dumb 2016 tokens. If I announce a perpetual motion machine, you don't need to actually analyze its schematic to know that it can't work the way I say. The same is true of a self balancing token pair scheme. A high school economics class is all that's required to understand why it can't work.
An overcollateralized loan is traditional lending. It's a software-implemented mortgage. How reliable it is is dependent on the risk profile of the backing assets and the creditworthiness of the borrower. A liquid market is a workable but imperfect way to assess value. It cannot measure risk - the information simply is not there. Volatility is not risk.
As for what portion was baseless... I think that's a fundamentally subjective question. From my perspective, the vast, vast majority in both years was baseless. I look at the entire cryptocurrency space as a place where interesting tech could have found value, but it's so infested with fraud and speculation that it can't.
- ETH_start 3y agoWe can agree to disagree. A significant fraction of the successful 2016 capital raises had almost nothing in the way of a plan for how to achieve their goals, and were set up to make it trivial for the fund soliciters to scam the investors. Having anonymous project leads makes an investment proposal indisputably worse, and that was case for many of the early token sales, to give one example of a feature that investors demonstrably learned to avoid. Terra had actual development, a viable ledger, actual deployed dApps, and decent wallet software and consensus infrastructure integration, in being a Cosmos blockchain app. Terra was bad, but when the totality of the projects is examined, nowhere near as bad as what was once common. >An overcollateralized loan is traditional lending. It's a software-implemented mortgage. How reliable it is is dependent on the risk profile of the backing assets and the creditworthiness of the borrower. The protocols that now constitute DeFi primitives survived completely unscathed in the recent crash, while numerous centralized lenders both inside and outside crypto became insolvent. When loan contracts are enforced transparently and in accordance with terms that are immutably encoded, there is virtually zero risk of fraud and mistakes.
- charleslmunger 3y ago>When loan contracts are enforced transparently and in accordance with terms that are immutably encoded, there is virtually zero risk of fraud and mistakes. Like solend? https://app.realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxPMnXJUZ1Hn/proposal/HuaL6cDtuNtfnJgvwMnYiZDHVCoLAuDtVFgJD8kYChJ4 https://app.realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5...
- ETH_start 3y agoSolend is not anywhere close to being a "DeFi primitive". Those would be: * Uniswap V1/V2 * MakerDAO * Aave * Compound * Curve They're immutable, heavily audited, and been subject to intense live-testing in an adversarial environment, where billions of dollars worth of digital assets have been locked by them for years, which has acted as an effective bounty for every hacker in the world.