The Metaverse

[Clinamenic]

but they must be able to do something with these token

They may charge interest on DAI borrowers, but I'm not sure. As to what they do with the collateral, this is what I meant by how overcollateralized loans can be capital inefficient.

 

[Clinamenic]

yes but at some point they must interface with "the real world"

I think MakerDAO may be a testament otherwise, banking more on the trust that is placed in these assets, trust that is ultimately grounded in computational integrity.

 

[toko]

They may charge interest on DAI borrowers, but I'm not sure. As to what they do with the collateral, this is what I meant by how overcollateralized loans can be capital inefficient.

i think they were referring to holder of dai

 

[Clinamenic]

This is at the heart of web3 zeal, as announced by Bitcoin. That trust can be sublimated into open source code.

 

[toko]

yes but at some point they must interface with "the real world"

yes, a big issue which can only be done once crypto is supported by pos systems. this is a WIP see stuff like solana pay for payments via stables.

 

[Clinamenic]

i think they were referring to holder of dai

Oh well in that case the sky is the limit. Its an asset any developer can integrate into their code. Borrow against it, buy stuff with it, add it to a DAO treasury, earn interest on it, etc.

 

[vimothy]

basic story is: I have crypto asset worth X. I go to stable coin issuer. borrow X in stable coin. they have matching X assets and liabilities. I cash out to tune of X. I now have X dollars. Yeah?

 

[toko]

no less then X, all loans are over collaterized. so realistically it will be three quarters to a half of X. if your asset loses value you lose your asset. the real scammy part is that if you don't liquidated you made your asset liquid without selling. but rich people with stocks do the same thing already so its really just bad tax code.

 

[vimothy]

thats a detail thp

 

[Clinamenic]

basic story is: I have crypto asset worth X. I go to stable coin issuer. borrow X in stable coin. they have matching X assets and liabilities. I cash out to tune of X. I now have X dollars. Yeah?

I don't think MakerDAO gives 100% loan to value, so if your collateral is worth X, you'd get N% of X in stablecoins, which you could go exchange for dollars, but you'd only be able to get your collateral back, i.e. your full funds, by returning N% of X in stablecoins.

I could be wrong, as again I've never interacted with MakerDAO directly, but I assume their LTV isn't 100%. There may also be other stablecoin issuance protocols that do things differently.

 

[vimothy]

my bank prbs does teh same anyway

 

[Clinamenic]

my bank prbs does teh same anyway

You mean re: overcollateralized loans?

 

[Clinamenic]

I mean, as a lender, I think I'd prefer the borrower deposit more than 100% collateral, even if I'm still gonna charge interest.

 

[vimothy]

but that's literally the point of banks, the only diff is (for now) they dont accept your crypto asset as collateral

 

[Clinamenic]

Especially if the collateral is a volatile as ETH.

 

[vimothy]

you can't avoid this

 

[vimothy]

it's prior to any considerations like security

 

[Clinamenic]

but that's literally the point of banks, the only diff is (for now) they dont accept your crypto asset as collateral

But with banks, and correct me if I am assuming this is more of a standard practice than it is, the actual loans aren't always collateralized, yet alone overcollateralized.

Plus, with crypto lending platforms, there is the simple benefit of 5-8% interest on your assets, which you can routinely cash out to dollars if you so choose.

 

[Clinamenic]

Thats why in crypto, credit scores aren't even a thing, at least from what I've seen. Reputation as a borrower is moot when the loan is overcollateralized.

 

[vimothy]

liquidity has to come from somewhere