The Metaverse

toko

toko

Well-known member
a lot of Bitcoiners in 2019 had the same critique of defi you have. but so far history has vindicated defi. defi has suffered massive market drawdowns, blackswans, forced cascading liquidations, but has always bounced back and proved itself resilient. Its quite remarkable, the volatility of crypto has actually made defi much more more resilient to exogenous events than traditional finance. If the stock market were to drop by half in a month, without serious government intervention the ponzi would collapse. both are ponzis but at least mine is better designed.
 
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Clinamenic

Clinamenic

Binary & Tweed
I also think a major risk crypto is the matter of liquidity, and how the prices of many of the assets (especially the small cap ones) are precariously propped up on illiquid market conditions, i.e. exchanges maybe not having enough in their trade pools, or at least not enough to handle dumps that are common in rug pulls. I could be off base, but I suspect these issues are prevalent in crypto, albeit less so in the major assets.
 
Clinamenic

Clinamenic

Binary & Tweed
toko said:
a lot of Bitcoiners in 2019 had the same critique of defi you have. but so far history has vindicated defi. defi has suffered massive market drawdowns, blackswans, forced cascading liquidations, but has always bounced back and proved itself resilient. Its quite remarkable, the volatility of crypto has actually made defi much more more resilient to exogenous events than traditional finance. If the stock market were to drop by half in a month, without serious government intervention the ponzi would collapse. both are ponzis but at least mine is better designed.
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Yeah well put, and I too find it remarkable how resilient the crypto market at large is.

I think a major part of this, and maybe you'll agree, is the culture of crypto retail investors, even degen culture. I think there is an argument to be made that the hodl mentality bolsters the integrity and resilience of the market, the whole diamond hand standard.
 
Clinamenic

Clinamenic

Binary & Tweed
Another reason why overcollateralized loans, while arguably capital inefficient, are the best course of action in such volatility. I'm under the impression that there will always be people seeking highly leveraged positions, but I'm glad their positions aren't jeopardizing the deposits of lenders, as least not so much as operations of traditional lending institutions seem to.
 
toko

toko

Well-known member
Yeah that's true. Although I think defi eventually evolves only over collaterlized loans. One basic issue is that it locks out those without capital from borrowing. That means we can't make defi loans as accessible as they should be. ofc uncollateralized loans are really just collaterlized by the borrowers income so it's possible to do if we can reliably bring future income on-chain.
 
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Clinamenic

Clinamenic

Binary & Tweed
toko said:
Yeah that's true. Although I think defi eventually evolves only over collaterlized loans. One basic issue is that it locks out those without capital from borrowing. That means we can't make defi loans as accessible as they should be. ofc uncollateralized loans are really just collaterlized by the borrowers income so it's possible to do if we can reliably bring future income on-chain.
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Yeah thats an interesting point, how future income can be represented on-chain. Perhaps if/when smart contract payrolls become the status quo, they may form the basis for tokenizing future income.
 
Clinamenic

Clinamenic

Binary & Tweed
Clinamenic said:
Yeah thats an interesting point, how future income can be represented on-chain. Perhaps if/when smart contract payrolls become the status quo, they may form the basis for tokenizing future income.
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In this case, the collateral would ultimately be the funds in the treasury wallet of the employer, from which the payroll contracts disburse funds on a predictable basis.
 
Clinamenic

Clinamenic

Binary & Tweed
So arguably future income can be tokenized by this kind of upstream deferral, maybe even all the way to a token's issuer.
 
Clinamenic

Clinamenic

Binary & Tweed
Clinamenic said:
So arguably future income can be tokenized by this kind of upstream deferral, maybe even all the way to a token's issuer.
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But it may still require that funds be reserved for usage by these contracts, and maybe locked as far as the wallet owner is concerned. Hmm, not sure if there is ultimately a way around this issue of capital inefficiency / capital requisite for loans.

It's a fascinating situation though. Maybe these kind of speculative loans (that currently require credit scores) can find an equivalent in crypto, in terms of issuing new token supplies? Otherwise, I don't see a way to issue loans that aren't collateralized - or at least, how an uncollateralized loan would be formatted in terms of risks, as far as the loaner is concerned.
 
luka

luka

Well-known member
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woops

woops

is not like other people
luka said:
Edmund keeps turning up at work with a thermos full of hot water he's forgot to put the teabag in it's really funny.
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at least it's a step up from forgetting the thermos altogether which i've also done load's of times.
 
mixed_biscuits

mixed_biscuits

_________________________
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woops

woops

is not like other people
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