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Preston Byrne
Noble, but Ethereum's problem - and DeFi's problem - is that absent traditional, legal means of taking security, all secured transactions have to be 100% cash collateralized (or more, in the case of e.g. Dai), which is hugely inefficient from a cost of capital standpoint.
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Eric Conner Jan 19
I don’t disagree we have a way to go. That said, there is a way to enable things like trust and underwriting on the chain. I know is attempting it. Fwiw, my tweet wasn’t anti-bank. I actually think banks will embrace the tech some.
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Preston Byrne Jan 19
Didn't think it was anti-bank. I agree DeFi is gonna innovate some interesting things, was just making a comment on collateralization issues.
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Preston Byrne Jan 19
Replying to @prestonjbyrne
The reason, years ago, that I settled on permissioned chains as a financial industry solution is that DeFi can't compete with OldFi in cost of capital terms, but it utterly destroys OldFi in verifiability terms (thanks crypto!).
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Colin Platt #⃣🆙 Jan 20
Or MarFi.
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ΞTHeREAL Jan 20
What if the model for profiting were different such that the cost of collateralizing a MoE like a dollar coin is made up for through other, new, business models and new kinds of financial products? This doesn’t seem too far fetched from what we’ve seen even in the short history
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Simon Taylor Jan 20
Financial product innovation usually leads to more problems than solutions. The CDO and derivatives markets were sold as ending boom and bust. The only problem was they weren't transparent. They are capital efficient though.
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ΞTHeREAL Jan 20
I don’t claim to know what new DeFi products may exist in 10 yrs. it just seems wrong to write off the whole space because of drawbacks with the very first batch of products. The space doesn’t end with DAI. The internet didn’t make slow static web pages and call it a day
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Erasmus Elsner 🦊 Jan 20
Replying to @prestonjbyrne
again, these are not "loans" i feel like the DAI crowd needs to read up on the basics of maturity transformation
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Jonah Benton Jan 20
Replying to @prestonjbyrne
This is good insight but devil in details. What verifiability surface has to be exposed by a permissioned chain to distinguish it from a plain old DB? Ability to run an external read-only peer? Or chain has to be a third party hosted service? Or...?
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Brent Farese Jan 20
MarFi 😂
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Preston Byrne Jan 20
MotFi
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