Will DeFi Kill Banks?

[HappyGoLuckyLife]

12 hours ago, QPRFC said:

ICP Crypto is the future coin....believe me. 

Insane Clown Posse has a coin? ????

[fdsa]

2 hours ago, GrandPapillon said:

that's because there is nothing they can do a better, it's a pipe dream of frustrated GenY and GenZ, they will learn the hard way when they lose all their savings in that scam ????

the largest frustration of GenY or whoever also bought cryptos when they costed peanuts is how to cash out a large sum without having a tough questions by the banks and authorities.

that feel when "big guys" launder literally billions without any problems and your bank account gets blocked for $10k transfer from a cryptocurrency exchange :D

(I've found a way to cashout btw but won't share it here, sorry)

[rwill]

I own some crypto.  But there are problems with it.  It is too volatile to replace currency, except for maybe a stablecoin.  Then someone like Elon Musk has an oral fart and crypto crashes or soars.  One person should not be able to affect something like that.  Also there is a fee for every transaction you make, stuff like just moving it from one wallet to another.  Some of the fees are quite high.

Edited October 4, 2021 by rwill

[userabcd]

Defi in the news and title from CNBC website

 

''DeFi bug accidentally gives $90 million to users, founder begs them to return it''

[ThailandRyan]

10 minutes ago, userabcd said:

Defi in the news and title from CNBC website

 

''DeFi bug accidentally gives $90 million to users, founder begs them to return it''

To understand the quote you posted, which many will take out of context, one needs to actually read the article to see it was a reward for COMP, where the written upgrade caused the issue. 

 

It has happened in the past elsewhere and unfortunately folks who do not return the extra they were given will be Doxxed and be stuck with a hefty tax bill. Reminds me of those folks who had to much money deposited in their bank accounts by a banking error and the bank asked for the money back. 

 

Instead of being reported as far as the extra income the banks filed criminal charges against those people.

Edited October 4, 2021 by ThailandRyan

[Neeranam]

6 hours ago, fdsa said:

 

that feel when "big guys" launder literally billions without any problems and your bank account gets blocked for $10k transfer from a cryptocurrency exchange ????

(I've found a way to cashout btw but won't share it here, sorry)

Bitkub allows me 2 million baht a day. 

Binance has P2P. 

I can buy gold with my CDC debit card, getting 4% back. 

There are many off ramps these days. 

[sucit]

10 hours ago, lkn said:

This was in response to company promising 17.78% in interest rate, just transfer all your crypto to them, and no, they are not scammers, because the founder talks on YouTube…

He explains how they get those rates on YouTube.

 

Use coinbase. Check out how much they make in fees if you buy 10,000 in crypto (not that I do this). Realize every second there are hundreds of thousands in orders coming through.

 

where does coinbase get the crypto? Oh, they need to get it from an entity that stores loads of it, and loans it out. And back to those huge fees coinbase makes… it makes borrowing this crypto quite attractive and exchanges all over the world need it, along with etfs etc. I don’t think it’s gonna matter how well I explain it to you. 
 

Bitcoin gets about 5 or 6 points apy. The stats you are quoting upwards of 20% is a different mechanism that I know you won’t care to listen to or understand so I won’t even bother explaining it. 
 

I just find the entire situation dripping with irony, in that the only reason people don’t believe in this is because they have been getting screwed over by banks for decades… who load your money out and make say 15% and give you 0.01%. That’s your base case, and the simple truth is you do not realize how raped you have been getting… not the other way around. 

Edited October 4, 2021 by sucit

[Neeranam]

4 minutes ago, sucit said:

Bitcoin gets about 5 or 6 points apy. The stats you are quoting upwards of 20% is a different mechanism that I know you won’t care to listen to or understand so I won’t even bother explaining it. 

Dinosaurs have small ears. 

[lkn]

@Neeranam you started this thread with a question, and now you are name calling people who have a different view than yours, without having contributed anything of value yourself. Disappointing!

 

As for yield farming: Charles Ponzi also had an excellent explanation about how he was making his return (he was buying discounted postal reply coupons in other countries and redeeming them at face value in the U.S. as a form of arbitrage, and thus just needed a lot of liquidity to increase his profit). Stefan Qin, who was the scammer I mentioned above, who was sentenced a week ago for running a crypto investment fraud for 3 years, also had an explanation, BitConnect had an explanation, they all have somewhat plausible explanations.

 

But try to dig a little deeper, do a spreadsheet to see how this adds up, because most of the time, it does not. E.g. why would CoinBase go to some yield farmer to borrow coins at a double-digit percentage rate? Makes zero sense. Also, for your high volume, keep in mind that blockchains have extremely low throughput, e.g. bitcoin can only do 7 transactions per second.

 

As for banks: You can’t just take the worst credit card rate and assume every single dollar deposited into a bank, will give this yield. There are non-performing loans (which is a loss to the bank), majority of loans are secured, e.g. a house mortgage or a car loan, where the interest is much lower. Then you have reserve requirements, although currently suspended, but banks still need to have some cash for their ATMs or the interest free credit that most cards offer for the first month, that adds up to a lot of money lent out at 0%.

 

In today’s economic environment, it is near impossible to give a *secure* return of even just 4%.

 

I highly recommend this podcast: https://podcasts.apple.com/us/podcast/when-the-music-stops/id1568272504

 

Aviv Milner interviews a bunch of different people, including former and current crypto fans, and tries to answer “where is the value coming from” and “what can blockchain actually be used for”. There is one episode where he interviews a guy that comes on to warn about a ponzi he joined, and at the end of the interview, we learn that to try to compensate his friends, who lost money investing in this thing he recommended, he has found a new scheme to invest in, where they most likely will get their money back, because this time it will be different… hilarious!

 

There is also more than an hour long interview with a “blockchain expert” who has worked with blockchains for 5+ years, but struggle to answer even the simplest question about “why is this better than a standard database”.  Aviv Milner did an abridged 9 minute version of this episode where you just get all the non-answers, again, hilarious!

[Neeranam]

3 minutes ago, lkn said:

@Neeranam you started this thread with a question, and now you are name calling people who have a different view than yours, without having contributed anything of value yourself. Disappointing!

Whom did I call names?

 

[GrandPapillon]

13 minutes ago, lkn said:

 

 

There is also more than an hour long interview with a “blockchain expert” who has worked with blockchains for 5+ years, but struggle to answer even the simplest question about “why is this better than a standard database”.  Aviv Milner did an abridged 9 minute version of this episode where you just get all the non-answers, again, hilarious!

that's what I have been saying for years, blockchain technology is some kind "key-pair" or single-column database with no speed or redundancy advantage, let alone integrity and security advantage ????

 

I mean, why bother when the core technology brings absolutely nothing new, it's all hype and vaporware, perfect for a scam :)

 

[lkn]

14 hours ago, mjnaus said:

The TechCrunch article you're quoting is old (early last year if memory serve me right?) and Chai has since moved to settle ALL payments using Terra's blockchain. 

Do you have some good up-to-date information about how the system runs?

 

If user connect their bank account (as they mention), and merchant has a standard payment terminal, I have a hard time seeing how involving a blockchain makes things easier, cheaper, or faster.

 

I assume you are familiar with Ripple, they also mentioned blockchain heavily in their press releases, and did have their XRP token for international settlement, but the network they were actually trying to sell banks had nothing to do with blockchain, because of course, when you have trust, as you generally have between banks, you can just use a regular database.

 

14 hours ago, mjnaus said:

The fact that Chai is a venture backed company is completely irrelevant. You asked for a real life use case […]

Fair enough, I mentioned this in relation to DeFi, the topic is, if DeFi will kill banks, and CHAI is a company which provide a centralized solution where merchants trust CHAI (based on what I have been able to read about it so far).

 

But if they actually benefit from using trustless blockchain technology, then I am very interested to learn more about this.

 

And I mean benefit, as in, can do something more efficient than the existing system, not just benefit from the PR / hype, and more efficient would of course not just be about regulatory arbitrage, because I fully admit that trustless blockchain does have an advantage here.

 

[GrandPapillon]

10 hours ago, fdsa said:

the largest frustration of GenY or whoever also bought cryptos when they costed peanuts is how to cash out a large sum without having a tough questions by the banks and authorities.

that feel when "big guys" launder literally billions without any problems and your bank account gets blocked for $10k transfer from a cryptocurrency exchange ????

(I've found a way to cashout btw but won't share it here, sorry)

they "feel" is the key word here, because it's all a perception, not what really happens.

 

The "big guys" as you call them, face bigger and tougher questions by the authorities, you won't believe the amount of sh*t we have to report to the SEC and other regulatory bodies, it's crazy. The "small guys" have it easy, believe me. But eventually, it will get tougher for them too in this culture of "absolute transparency"

 

if you can cash out, do it now, because it's going to get tougher with years.

[lkn]

16 minutes ago, GrandPapillon said:

I mean, why bother when the core technology brings absolutely nothing new, it's all hype and vaporware, perfect for a scam ????

I have non-technical friends who are into crypto. When I explain to them *exactly* how a blockchain operaters, and all the problems, like transaction limit, the monotonically increasing database, that must be stored on your smartphone to be trustless, the many actual instances of majority attacks that have resulted in double spending, and why a transaction (for bitcoin) on average will take 15 minutes, but you should wait longer, to decrease the chance of it ending up in the shortest chain (and thus effectively reversed), that you must actually not only trust the people who wrote your wallet app 100% (to not steal your money, as there is no recourse), you must also trust that they are good enough programmers that there is no chance of anyone ever finding an exploit, etc. etc.

 

At first, they think I am explaining it wrong, because all this just sounds dumb ????

 

What they do not realize is, that they *think* they are part of the crypto system, but in practice, they are just trading on Binance or another exchange, which has a central database, and all the trades are not actually settled on the blockchain.

 

And then we get to Binance, all the various schemes done there to manipulate the price, not to mention Tether, the currency used instead of dollars, which is just printed without any proof of backing, so actually much worse and less transparent than the central banks that these people love to fault for all our societies problems.

 

[GrandPapillon]

people are stupid, and when they get greedy, they get both stupid and blind ????

 

Maybe Ponzi and Madoff were right at the end, take the money where it is, or someone else will take it ????

 

from the frying pan to the fire comes to mind, complaining banks are stealing your money and lose it all instead on some dodgy cryptos ????

[mjnaus]

11 minutes ago, lkn said:

Do you have some good up-to-date information about how the system runs?

 

This is a slightly simplified flow of transacting through Chai:

1. Consumer connects his/her bank account to Chai

2. He/she makes a purchase using the Chai app
3. Chai creates and manages a wallet for the consumer

4. Chai converts KRW into KRT (Terra's KRW stable coin)

5. Chai sends the KRT to the merchant

 

Once the KRT lands in the merchants wallet, they can then choose to convert it into KRW (using one of the many offramp partners) or hold onto the KRT.

 

As I mentioned before, the upside for the merchant is instant settlement (again, something legacy payment networks can not provide) at a fraction of the cost (with legacy networks, 2% is considered a "good" fee rate, Chai charges around .5%). Instant settlement and fees that approach 0% do not exist on legacy rails.

[mjnaus]

20 minutes ago, lkn said:

At first, they think I am explaining it wrong, because all this just sounds dumb ????

 

Lol. And you never considered the possibility that you don't know this stuff as well you think you do?

[GrandPapillon]

so the use case is for merchants to save "fees" but instead use a slow and insecure ledger system

 

the credit card "fees" are there for a reason, to pay for a complex network of payments. Yes it could be improved, but the cost of building an equivalent network would be that costly, so the "fees" are at a premium, but they bring so much convenience, that taking the network down would be far more damaging than the "5%" fee premium.

[lkn]

1 minute ago, mjnaus said:

Lol. And you never considered the possibility that you don't know this stuff as well you think you do?

Oh the irony… so you also think it actually sounds rather dumb, and I must be explaining it wrong?

 

Yes, there must be some “magic” ingredient in the blockchain I have missed, that can explain why “number go up”…

[GrandPapillon]

4 minutes ago, mjnaus said:

Lol. And you never considered the possibility that you don't know this stuff as well you think you do?

do you? ????

[TimBKK]

15 hours ago, lkn said:

.I just don’t see a world where normal people would prefer the wild west of finance over the established system, especially because, as we have seen, a trustless system attracts all the people that you can’t trust, so you have removed the guard rails, and also released the wolves…

 

Because the actions of banks and mortgage companies within the established financial system were a leading cause of the Great Recession, I can certainly understand why “normal people” would look to alternatives.  

[mjnaus]

5 minutes ago, lkn said:

Oh the irony… so you also think it actually sounds rather dumb, and I must be explaining it wrong?

 

Yep, gotta side with those give you the blank stares after your explanation. It does indeed sound rather dumb and not quite accurate. But hey, don't beat yourself up over it. It's complicated. And you should choose your audience (hint: discussing the merits of blockchain/crypto at the Sunday bridge club probably won't work ???? ).

 

Next time you struggle with your audience, find some folks half your age and tell 'em they can ditch their <deleted>ty legacy savings account earning them 0.2% and instead they can earn 10%+ on stable coin yields through DeFi. Pretty simple to wrap your head around and an rather easy sell.

[ThailandRyan]

Some people will never believe that Crypto is for real and that the numerous ETF's being sold by major banks and registered Crypto companies like Coin base and others are just a Ponzi scheme.  However, Crypto is moving forward and is not going to disappear anytime soon or in the future.  SEC Regulators are moving ahead in approving Bitcoin ETF's and others as we speak.  China has cracked down because they see it as a way to get their hands on all and with a digital Yuan will control their countrymen.

 

US Lawmakers See China's Authoritarian Crackdown on Crypto as Big Opportunity – Regulation Bitcoin News

 

Following the latest news of China’s crackdown on cryptocurrency, several U.S. lawmakers have shared their views on the situation.

Senator Pat Toomey from Pennsylvania said:

China’s authoritarian crackdown on crypto, including bitcoin, is a big opportunity for the U.S. It’s also a reminder of our huge structural advantage over China.

“Beijing is so hostile to economic freedom. They cannot even tolerate their people participating in what is arguably the most exciting innovation in finance in decades,” he added. “Economic liberty leads to faster growth, and ultimately, a higher standard of living for all.”

The pro-bitcoin senator from Wyoming, Cynthia Lummis, who has been trying to educate her colleagues in Congress that bitcoin is a great store of value, chimed in. Commenting on Toomey’s tweet, she wrote: “Gradually, then suddenly. Closer to the ‘suddenly’ phase by the day. Keep up the education on the Hill. It’s spreading.”

Congressman Tom Emmer from Minnesota opined: “Digital. Authoritarianism. China is forcing its citizens away from decentralized currency and onto the digital yuan so the CCP can track all money movements. You fear Big Brother? Then you should also fear what the Fed might be designing.” Federal Reserve Chairman Jerome Powell recently said that the Fed will soon publish a discussion paper on a central bank digital currency (CBDC). Emmer further stated:

 

Open. Permissionless. Private. If China bans it, you know it’s something worth fighting for.

 

U.S. Representative Warren Davidson from Ohio described: “America has an incredible opportunity to protect personal digital wallets, embrace true distributed ledger technology, and strengthen our advantage over China’s authoritarian Communist Party.”

Miami Mayor Francis Suarez, who is trying to make his city a bitcoin hub, stressed: “China banning bitcoin is a massive mistake with impacts that will be felt for generations. Their loss is our gain and America can and will lead the future by providing a clean power home for bitcoin miners and all who are building on/with/for bitcoin.”

[GrandPapillon]

2 minutes ago, ThailandRyan said:

SEC Regulators are moving ahead in approving Bitcoin ETF's and others as we speak. 

wrong again, every ETFs that promoted cryptos as the underlying assets were denied registration by the SEC, for that last 5 years,

 

some ETFs make the registration claim with a PR announcement, only to be denied a few months later ????

[TimBKK]

“Open. Permissionless. Private. If China bans it, you know it’s something worth fighting for.”

Words to live by.

[lkn]

21 minutes ago, mjnaus said:

As I mentioned before, the upside for the merchant is instant settlement (again, something legacy payment networks can not provide) […]

This I just don’t understand: I have been accepting payment cards online since 2004, and settlement has always been instant. And as a customer, I pay with ApplePay, and occasionally I’ve had my bank’s app open, and it live updates within a second to show the amount debited from my account. Likewise when I use my Wise card abroad (for the lower exchange rate), I get an instant notification each time I use this card, where I can see the exchange rate.

 

So the existing payment systems are, for all intents and purposes, instant.

 

Where there are delays are cross border transfers between banks (ignoring SEPA, i.e. instant transfers within EU).

 

G20 has created a task force to fix this, but it’s a mess and they have identified many issues, so it will take a long time for all financial institutions in the world to implement all the proposals (and law makers to harmonize regulation).

 

But blockchain won’t change/disrupt any of that: Blockchain is just adding a parallel system, but we already have a handful of parallel systems that works fine, e.g. using VISA/MasterCard abroad does provide instant settlement, so does transferring money from one PayPal user to another, regardless of where they are.

 

The problem is on and off ramps to the custom system. PayPal is probably the provider that provides the most ramps.

 

I know nothing about South Korea, but if they do not have an instant payment system for domestic transfers, I would be very surprised.

 

[Liverpool Lou]

On 10/1/2021 at 11:36 PM, GrandPapillon said:

here we go again ????

 

what are you going to promote this time? ????

His Albert Tatlock mantra!

[Liverpool Lou]

On 10/1/2021 at 10:37 PM, Neeranam said:

I think many Commercial Banks will disappear/go out of business. 

Any thoughts? 

Yes, no commercial banks run any risk of going out of business due to decentralised finance.    Have you got anything sensible/rational that would support your assertion?

[ThailandRyan]

The IMF believes in crypto as well.

 

https://www.moneycontrol.com/news/business/cryptocurrency/rapid-growth-and-increasing-adoption-of-crypto-assets-pose-financial-stability-challenges-imf-7534041.html

 

Crypto asset technologies have the potential as a tool for faster and cheaper cross-border payments.

Bank deposits can be transformed to stable coins that allow instant access to a vast array of financial products from digital platforms and allow instant currency conversion, said the IMF in its chapter titled The Crypto Ecosystem and Financial Stability Challenges.

Decentralised finance could become a platform for more innovative, inclusive, and transparent financial services, it added.

[mjnaus]

7 minutes ago, lkn said:

This I just don’t understand: I have been accepting payment cards online since 2004

Well, that's fantastic for you. My experiences were vastly different. When doing large volume processing in certain industries, everything involving getting merchant accounts, settlement is a complete and utter <deleted>show. The hoops some of my businesses have had to jump through to be able to take payments were bizar and nearly put my last company out of business. And this was a legit business, turning over north of $20mil per year. And when we were able to hold on to a merchant account for a longer period of time, settlement took days (best case scenario) or weeks (more typical).

So while it's great for you that did not experience any of that nonsense, that certain does not apply to everyone else. Having to literally beg some clerk on a powertrip at the bank to release some of our funds so we can make payroll is a reality for some businesses.