You could keep your exposure to the crypto. For instance you can sell 1 ether for 2500 DAI (haircut to the original value), move those DAI to a centralized exchange, sell for cash, do something with the cash, and eventually convert back to 2500 DAI and buy back your ether. Important thing is you kept exposure to the price of ether and didn't sell, just loaned it out. You can always buy it back at the price you collateralized it.
If the price went up since you took out the loan, you benefited. You're over collatralized so you'll always want to buy back, unless its below your collateralized value, in which case it would have been liquidated anyway
There are other aspects to defi other than lending, such as liquidity providing, governance token issuance, etc.
For the loans part, you are right there is no use other than to speculate on crypto assets. An overcollaterallized loan is essentially just selling some coins for cash while simultaneously taking a leveraged long position to maintain your exposure.
If you noticed an arbitrage opportunity which required a substantial initial fund but could be executed as a single transaction, a flash loan could let you do that, and I think that’s kinda neat.
Seems like it should make some things more efficient? That is, if the things that the arbitrage is about have any actual meaning to them.
May be it can lead to a new way of doing things, but you cannot reset existing power structures. They will always hold the most power one way or the other.
You cannot fix a broken system that profits the existing powers. The best you can hope for is to develop something so much better than the existing system that it makes the existing system obsolete.
Bitcoin comes up a lot in cigar shops ... Earlier this week I spent 2hrs talking to a bc miner; I found this guy more reasonable than some. The conversation eventually opened up to several people and was quite pleasant. Takeaways:
- miner agreed bc is not currency
- Miner agreed that software is not a constant of nature. If I want to fork bc at current block and change bc supply from 21mm to 10 billion and offer miners 30% premium over classic bc ... Nothing stops me.
- for a random person such a move may be dubious ... But not if Goldman Sachs or the nyse did it. Thus the value of classic BC can radically change if serious competition arises. Such competition might push down classic bc to dollar value. As such the claim bc isn't deflationary I find iffy at best
- in classic bc as things stand now ... What happens when all 21 million coins are mined? At that point all miners can do is take a percentage of money they mine. If the transaction is too small they might say screw it.
If they only work on big transactions it'll be for the relatively more affluent ppl buying rolexes, art, and yatchs.
- miner agreed bc is too slow ... It can't compete with cc rates. There is operational inertia to increased use
- Miner said it costs ~$15k to mine a coin. At current bc to USD there's lots of profit for him
Some other things that we could not agree on:
- miner made classic claim that bc is no different from usd; fiat USD is not asset or gold backed like bc. However he agreed bc isn't currency. So no crisp conclusion arose here. My stand however was that bc would have come and gone except that people believe it's valuable --and-- they can convert it to real bonafide fiat currency. If either one of those fail bc is noise; nobody would care. It's not clear here why bc to USD is possible. Where's the cause and where's the effect? Is it that bc is something (cause) and converting to USD is effect? Or rather did ppl merely believe bc is valuable (no cause) and the fact those same ppl accepted usd for bc and vice versa was the effect that caused bc to seem important? I think it's the latter case in which case bc is a shell game, a elaborate multi-level marketing game.
- on the question of what happens if a Goldman Sachs gets into the game ... The miner implied (I inferred) that it'd be good for much the same reason. While miners like him might get a hit in short term because ppl flock to a serious crytpo player GS, it'd actually be good long term because the GS brand gives gravitas to crypto that bc by itself doesn't have. Here again cause and effect is subtle.
- fiat usd is a reserve currency and integrated into the us economy and world economy at fantastically higher numbers and complexity. It has had to respond to economic cycles, fiscal problems, stock market crashes and numerous other pressures. Bc has none of this. The idea that bc would survive as-is with a fixed 21 million bc in the real world ... is pretty silly. Bc isn't the locked in deflationary currency that could survive as is not subject to external pressures claimed.
Finally:
- it's worth pointing out bc isn't as anonymous as claimed
- miners are fairly centralized. And here problems with block sizes and other aspects of running the block chain have arisen between users and miners
> Miner agreed that software is not a constant of nature. If I want to fork bc at current block and change bc supply from 21mm to 10 billion and offer miners 30% premium over classic bc ... Nothing stops me.
To make a change to the actual behavior (such as to make new money or move money without authorization)--as opposed to merely the order of events (which is important, of course: it allows you to change which of two parties got money if someone tried to send money to both and only had enough for one)--requires the users to all buy into your new fork, not merely the miners; this is something many people seem to get wrong, but it is the most important property to understand: the rules are the rules and no one can change them without pretty extreme buy-in (which does happen, but is quite difficult to pull off).
Bitcoin is by far the least interesting cryptocurrency at this point.
What people miss about cryptocurrency is the basics. It's a way to create a secure, public, auditable ledger that prevents cheating. It's mathematically and technologically superior digital money. In very obvious ways.
[+] [-] oblobl1|4 years ago|reply
[+] [-] bko|4 years ago|reply
If the price went up since you took out the loan, you benefited. You're over collatralized so you'll always want to buy back, unless its below your collateralized value, in which case it would have been liquidated anyway
[+] [-] tofurocks|4 years ago|reply
[+] [-] drdeca|4 years ago|reply
Seems like it should make some things more efficient? That is, if the things that the arbitrage is about have any actual meaning to them.
[+] [-] newyankee|4 years ago|reply
[+] [-] lowkey|4 years ago|reply
[+] [-] scrubs|4 years ago|reply
- miner agreed bc is not currency
- Miner agreed that software is not a constant of nature. If I want to fork bc at current block and change bc supply from 21mm to 10 billion and offer miners 30% premium over classic bc ... Nothing stops me.
- for a random person such a move may be dubious ... But not if Goldman Sachs or the nyse did it. Thus the value of classic BC can radically change if serious competition arises. Such competition might push down classic bc to dollar value. As such the claim bc isn't deflationary I find iffy at best
- in classic bc as things stand now ... What happens when all 21 million coins are mined? At that point all miners can do is take a percentage of money they mine. If the transaction is too small they might say screw it. If they only work on big transactions it'll be for the relatively more affluent ppl buying rolexes, art, and yatchs.
- miner agreed bc is too slow ... It can't compete with cc rates. There is operational inertia to increased use
- Miner said it costs ~$15k to mine a coin. At current bc to USD there's lots of profit for him
Some other things that we could not agree on:
- miner made classic claim that bc is no different from usd; fiat USD is not asset or gold backed like bc. However he agreed bc isn't currency. So no crisp conclusion arose here. My stand however was that bc would have come and gone except that people believe it's valuable --and-- they can convert it to real bonafide fiat currency. If either one of those fail bc is noise; nobody would care. It's not clear here why bc to USD is possible. Where's the cause and where's the effect? Is it that bc is something (cause) and converting to USD is effect? Or rather did ppl merely believe bc is valuable (no cause) and the fact those same ppl accepted usd for bc and vice versa was the effect that caused bc to seem important? I think it's the latter case in which case bc is a shell game, a elaborate multi-level marketing game.
- on the question of what happens if a Goldman Sachs gets into the game ... The miner implied (I inferred) that it'd be good for much the same reason. While miners like him might get a hit in short term because ppl flock to a serious crytpo player GS, it'd actually be good long term because the GS brand gives gravitas to crypto that bc by itself doesn't have. Here again cause and effect is subtle.
- fiat usd is a reserve currency and integrated into the us economy and world economy at fantastically higher numbers and complexity. It has had to respond to economic cycles, fiscal problems, stock market crashes and numerous other pressures. Bc has none of this. The idea that bc would survive as-is with a fixed 21 million bc in the real world ... is pretty silly. Bc isn't the locked in deflationary currency that could survive as is not subject to external pressures claimed.
Finally:
- it's worth pointing out bc isn't as anonymous as claimed
- miners are fairly centralized. And here problems with block sizes and other aspects of running the block chain have arisen between users and miners
[+] [-] saurik|4 years ago|reply
To make a change to the actual behavior (such as to make new money or move money without authorization)--as opposed to merely the order of events (which is important, of course: it allows you to change which of two parties got money if someone tried to send money to both and only had enough for one)--requires the users to all buy into your new fork, not merely the miners; this is something many people seem to get wrong, but it is the most important property to understand: the rules are the rules and no one can change them without pretty extreme buy-in (which does happen, but is quite difficult to pull off).
[+] [-] ilaksh|4 years ago|reply
What people miss about cryptocurrency is the basics. It's a way to create a secure, public, auditable ledger that prevents cheating. It's mathematically and technologically superior digital money. In very obvious ways.
[+] [-] MR4D|4 years ago|reply
[+] [-] Daishiman|4 years ago|reply
[+] [-] lowkey|4 years ago|reply
[+] [-] bob229|4 years ago|reply
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