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Utopia Talk / Politics / How Long Before You Admit You're Wrong?
nhill
Member
Sun Oct 24 11:11:31
Just curious. For the Sebs and Murders of the world.

At what point will you admit you're wrong about crypto?

Will it be when the gaming industry is powered by crypto?

Will it be when our finance system is powered by crypto?

Will it be when the majority of digital interactions take place in the metaverse (powered by crypto, of course)?

Will it be when every site you interact uses a web3 crypto wallet for authentication and interactivity?

Will it be when your insurance policy is powered by non-fungible tokens locked in a smart contract?

When will it be?

Notice that I didn't even use the word currency, yet. That should tell you how outdated your mental models are. :)
Habebe
Member
Sun Oct 24 11:14:00
We will see when this internet fad passes.
nhill
Member
Sun Oct 24 11:38:35
Lol, thinking the internet is a fad is an apt analogy to not seeing the potential of crypto.
nhill
Member
Sun Oct 24 11:47:51
Btw, this isn't a thread for convincing one way or another. I already know I'm right. Y'all can figure it out why on your own.

This is pure morbid curiosity. At what point will the luddites of this forum admit they are wrong?

:)
murder
Member
Sun Oct 24 12:52:58

"At what point will you admit you're wrong about crypto?"

"crypto" is pretty vague. Electronic payments are electronic payments. Tokens are tokens. There's nothing new there.

But fake money is fake money.

Habebe
Member
Sun Oct 24 12:55:48
The block chain tech is different from PayPal, it is something new.
nhill
Member
Sun Oct 24 12:56:20
It’s not vague if you understand technology, but thanks. That answers my question. :)
Habebe
Member
Sun Oct 24 12:57:22
Also all money is fake (fiat)
nhill
Member
Sun Oct 24 12:58:28
You have understood well, grasshopper. /\
murder
Member
Sun Oct 24 13:01:06

"Also all money is fake (fiat)"

Burn a million dollars and tell the federal government that it's OK because it's fake. ;o)

nhill
Member
Sun Oct 24 13:01:47
Cringe.
murder
Member
Sun Oct 24 13:02:28

"Also all money is fake (fiat)"

Grasshopper: If fiat money is fake, then why do all the cryptocurrency pumpers keep accepting it as payment?

nhill
Member
Sun Oct 24 13:03:57
Because it's all fake, anyways. Crypto, fiat, gold, or otherwise. Take the red pill, man.
Habebe
Member
Sun Oct 24 13:04:47
Wealth much like power lies where men belive it does.

What makes a USD worth anything? The collective beleif that its backed by the US government and that others will accept it as payment.

Something is worth whatever someone is willing to pay for it_Some Roman
nhill
Member
Sun Oct 24 13:13:10
When you strip everything else away the demand for USD is driven by it being the only way to settle debts with the United States government (i.e. taxes and bonds).

The USA being the seat of economic activity for the world makes it attractive as the world's reserve currency and means of transacting in the global financial system. We have the best credit score, so to speak. ;)

However, the world is now discovering that there are trustless (as in, not requiring trust) reserve currencies powered by transparent and auditable code. Bitcoin, which was worth under a single dollar for years, is now worth 60,000 or more of them. :)

The trend is inexorable. And I don't even care much about or own Bitcoin. I'm talking about crypto as a whole. Bitcoin is merely the most secure and safe store of crypto-based value at the moment.
nhill
Member
Sun Oct 24 13:15:27
Also, not sure why murder has such a hard-on for China.

USA has a vested interest in making crypto a success, as Chinese citizens are prevented from using it. The more successful crypto becomes, the less relevant China will be in the global economy.
murder
Member
Sun Oct 24 13:15:38

"What makes a USD worth anything?"

The US government and the US economy.


"The collective beleif that its backed by the US government and that others will accept it as payment."

It's not a belief. It's reality.

murder
Member
Sun Oct 24 13:18:41

"Bitcoin, which was worth under a single dollar for years, is now worth 60,000 or more of them."

60,000 what?

nhill
Member
Sun Oct 24 13:20:42
It's also a reality that people are able to pay with crypto for all their day-to-day needs and necessities. Is it less convenient? Depends on your location. But, for most places, it can be difficult (yet doable).

As each month goes by, I pay for more and more products and bills in crypto. Shit, even Paypal accepts it.

Next argument please.
murder
Member
Sun Oct 24 13:21:55

"Also, not sure why murder has such a hard-on for China."

I don't recall mentioning China.


"USA has a vested interest in making crypto a success, as Chinese citizens are prevented from using it. The more successful crypto becomes, the less relevant China will be in the global economy."

That is a nonsense statement.

nhill
Member
Sun Oct 24 13:21:58
60,000 what?

60,000 United States Trash Tokens. USD is a dumpster fire compared to Bitcoin. Reality. Might as well go live in Venezuela at this point with this rate of free handouts.
murder
Member
Sun Oct 24 13:24:09

"It's also a reality that people are able to pay with crypto for all their day-to-day needs and necessities."

No it's not. "Crypto" is accepted damn near nowhere as payment. And most of the places where it is supposedly accepted it's only accepted through a middleman that converts the cryptocurrency into real money for the business that is selling you whatever crap you're buying.
murder
Member
Sun Oct 24 13:25:00

"60,000 United States Trash Tokens."

60,000 what? Odd that you would value bitcoin in USD. lol :o)

nhill
Member
Sun Oct 24 13:25:06
> That is a nonsense statement.

China being locked out from accessing 2T of market capitalization is not a nonsense statement. USA citizens, companies, and funds becoming more wealthy than Chinese ones is what is happening, as they are stuck on their digital yuan and collapsing stock market.

Are you really this clueless? Do you need me to ELI5 everything?

Just take a macroeconomics YouTube course or something and come back with real assertions.
nhill
Member
Sun Oct 24 13:25:55
> 60,000 what? Odd that you would value bitcoin in USD. lol :o)

I didn't. I compared them illustrating why USD is the inferior asset. Durr.
nhill
Member
Sun Oct 24 13:26:59
> No it's not. "Crypto" is accepted damn near nowhere as payment. And most of the places where it is supposedly accepted it's only accepted through a middleman that converts the cryptocurrency into real money for the business that is selling you whatever crap you're buying.

Buddy, you can checkout with crypto on Paypal. Lol. "Damn near nowhere"

Can't invent this level of stupidity.
murder
Member
Sun Oct 24 13:28:45

"China being locked out from accessing 2T of market capitalization is not a nonsense statement."

Nobody would be locked out of anything. Currencies are exchanged every day. There are entire markets for that purpose.

nhill
Member
Sun Oct 24 13:30:52
> Nobody would be locked out of anything. Currencies are exchanged every day. There are entire markets for that purpose.

Clearly, you are behind the times. China straight up said they were going to start locking people up if anyone did anything related to crypto. That's why there's been a mass exodus of miners out of China and thousands of crypto services shut down.

That's real, quantifiable, economic activity moving out of China into the United States.

Surely you understand enough about macroeconomics to get that.
nhill
Member
Sun Oct 24 13:31:45
BTW, these crypto mining companies pay their taxes in United States Trash Tokens now. You should love it with your little fiat fetish.
Nimatzo
iChihuaha
Sun Oct 24 13:33:34
"Odd that you would value bitcoin in USD. lol :o)"

It is as odd as measuring the effect of automobile engines in "horse" powers. What is the argument here? That the world is still largely valued in USD? Ok, well you worry about where we are, leave where we are going to others.
murder
Member
Sun Oct 24 13:33:38

"Clearly, you are behind the times. China straight up said they were going to start locking people up if anyone did anything related to crypto."

They wouldn't be doing anything related to crypto. Someone would just be exchanging crypto into real money and doing business with Chinese firms in that currency.
murder
Member
Sun Oct 24 13:34:44

"BTW, these crypto mining companies pay their taxes in United States Trash Tokens now."

Of course they do. The US government doesn't accept monopoly money.

nhill
Member
Sun Oct 24 13:37:46
As I have provided many assertions which you have simply ignored, that tells me all I need to know. ;)

Next argument? Nah.

Gonna need the next arguer, now. Murder got slaughtered. :D
Seb
Member
Sun Oct 24 13:38:36
Nhill:

Don't really know where to begin with that.

Let's start off by casting your mind back to the bit, many months ago, when I said the only currency I saw as having much interest is Ethereum because of the ability to do smart contracts; but the limit being how a blockchain entry relates to tangible objects let's it down for body applications.

So far from updating *my* mental model, perhaps you need to update yours.

Secondly, my fossilised bunny rabbits in the precambrian is when someone generates a business model that it's executed on a blockhain that decisively produces value in a way that can't be done with a trusted system; and/or is able to outcompete conventional direct substitutes.

The more interesting question is - what's yours? I did ask you that and you never answered.

Are you going to be one of those people that believe your tech is always the thing if the future, it just hasn't happened yet? Or do you have a cut off point?
murder
Member
Sun Oct 24 13:44:03

Since fiat money is worthless, I can only assume that nhill doesn't care if he's paid for his services in USD, or hand drawn euros, or rubber checks.

It's all the same.

nhill
Member
Sun Oct 24 13:44:12
> Are you going to be one of those people that believe your tech is always the thing if the future, it just hasn't happened yet? Or do you have a cut off point?

I already addressed that. I predicted that the financial system will be over 50% in crypto by 2050. A famously conservative bet. But that's a very limited view into crypto (we were talking about DeFi in that thread).

So, to address your question more directly:

My cut off point will be when adoption is trending negatively. Right now, it's exponential. From gaming, to DeFi, to the metaverse, web3, etc. New services and *valuable* (remember authentication is 200B industry alone) use cases are coming out at a massive rate.
nhill
Member
Sun Oct 24 13:45:21
"Since fiat money is worthless, I can only assume that nhill doesn't care if he's paid for his services in USD, or hand drawn euros, or rubber checks.

It's all the same."

Fake != worthless.

Try again. Maybe something will stick.
murder
Member
Sun Oct 24 13:46:36

"Gonna need the next arguer, now. Murder got slaughtered."

You forgot "owned owned owned owned".



Dukhat
Member
Sun Oct 24 13:48:38
Trump and Crypto prove how powerful social media is. Stupid people in huge numbers only seeking to confirm their own biases.
nhill
Member
Sun Oct 24 13:49:24
"Let's start off by casting your mind back to the bit, many months ago, when I said the only currency I saw as having much interest is Ethereum because of the ability to do smart contracts; but the limit being how a blockchain entry relates to tangible objects let's it down for body applications."

We are in agreement that providing oracles into tangible objects will be a massive advancement in the space. It's being worked on, already.

BTW, there are many layer 1 blockchains that can execute smart contracts. Ethereum is the mack daddy for now, but I don't see it sustaining market share for much longer (2-3 years, perhaps).

That said, many chains are EVM-compatible, so Ethereum is the real innovator in the space!
nhill
Member
Sun Oct 24 13:50:34
> You forgot "owned owned owned owned".

OWNED!
murder
Member
Sun Oct 24 13:52:31

Not really. Most people in crypto realize that it's a scam just like most people knew that you couldn't keep flipping houses for ever more money.

They are just trying to profit from the scam before the collapse. No one wants to be middle class. They all want to be rich. They aren't picky about how they get there.

It's kind like when people were downloading songs for free back the dark ages. They knew they were stealing. They didn't care.

murder
Member
Sun Oct 24 13:53:08
^Dukhat
Nimatzo
iChihuaha
Sun Oct 24 21:10:29
Murder
http://www.youtube.com/watch?v=S-iahN-tDR4
nhill
Member
Sun Oct 24 21:47:47
Don’t worry, he’ll virtue signal his way out of his pure paper bag. LMAO
Nimatzo
iChihuaha
Sun Oct 24 21:58:37
How many Grade A world famous investors in crypto and defi will it take to convince people like Murder?

I heard Kevin O'leary (I love that show) in an interview with Cryptobanter, saying he spends 80% of his time now investigating crypto projects.

If you missed or fucked up during the IT boom, here is your chance. One is lucky to experience 1 techno boom in a life time, we have been given 2.
nhill
Member
Sun Oct 24 22:08:03
It's sad to see. I came here to help some old compadres see the future. Glad at least 1 member was able to benefit. Truly a once in a lifetime opportunity.
nhill
Member
Sun Oct 24 22:09:36
Imagine being able to invest in internet startups the same day in the 1990s. Without having to wait for IPOs and venture capital diluted listings. That's possible with crypto. And this is the first time investing has been mentioned in this thread. :)

That should give you a big clue about the full potential of crypto.
Nimatzo
iChihuaha
Sun Oct 24 22:15:23
smh
murder
Member
Mon Oct 25 07:33:12

There isn't a square inch of the internet where crypto isn't being pumped. Even tiny dying message boards.

The big surprise is that you've (seemingly) only hooked 1 fish.

Seb
Member
Mon Oct 25 10:40:53
Nim:
"How many Grade A world famous investors in crypto and defi will it take to convince people like Murder"

The logically correct answer to this must be no amount investors in tulips would indicate tulips were a good investment.

What is convincing is demonstrating whether or not cryptotokens have an intrinsic value or produce some kind of return.

Appeals based on "look, these people got rich" doesn't exclude the possibility they are just finding greater fools.
Nimatzo
iChihuaha
Mon Oct 25 10:55:58
I no longer entertain giving serious responses to people who make the tulip comparison. Thanks for the effort, but no thanks.
nhill
Member
Mon Oct 25 11:10:58
What exactly are you looking at for a return?

Right now, I can take my USD, tokenize it into USDC, and then lend it out to others (through a smart contract) for 31% APR.

The lending pool is managed automatically and it's not dissimilar to having a savings account with 31% APR (because I can take it in and out at will unless the lending pool is fully saturated).

This is one of dozens of examples of valuable financial products powered by cryptocurrency.

Do you also think traditional banks have no value and produce no return? Because the same argument applies both ways.
Seb
Member
Mon Oct 25 11:13:24
Nim:

Sloppy reasoning.



The point is not that crypto assets must be like tulips. The point is that your proposed measure would have suggested tulips were a sound investment. Or investing in a fund managed by Bernie Maddoff. Or buying into a MLMs.

tl;dr - stop proffering as proof of the soundness of Crypto investments criteria that, if applied to tulips, would have suggested tulips were a sound investment.

Then we can all move away from tulips.




"Thing X is a good investment"

"What is your proof"

"These people made loads of money"

"People have made loads of money with things that have turned out to be worthless
Nimatzo
iChihuaha
Mon Oct 25 11:16:47
Seb
Sloppy understanding.

You have been in these discussions long enough to be fully be aware that the look at all the old money interested in DeFi is the cherry on top, not the main point, I recently compared Soros as the 7th seal of the apocalypse, the tech savvy rich people go in years ago.

There are many many reasons for dismissing your asinine posts.
Nimatzo
iChihuaha
Mon Oct 25 11:21:17
"These people made loads of money"

My favorite phrase: "I didn't say that".

These "people" were already rich long before crypto was a thing, they may have gotten richer from crypto, but the point that you have tried so hard to not get, is that even the old fucks and their army of analysts see what is going on.
Dukhat
Member
Mon Oct 25 11:36:24
You don't actually know any of these analysts. Their value is in managing risk. Them joining is not because they see crypto as the future. The most parsimonious explanation is that they are experts at managing risk and the crypto market is large enough now with enough volume for them to make money.

Just like many in the know made out like bandits with subprime mortgages, they see enough volume and volatility to make money in crypto.

It doesn't speak to Crypto being sustainable long-term.

And it isn't because noone's going to bail out crypto if and when it falls.

Ride the wave if you must (I am as well sadly), but I don't use any of Nhil's shitty analysis to inform my decision-making. Supply and Demand is king in understanding markets and Nhil says nary a word about fundamental market forces shaping supply and demand; just a bunch of gobbledy gook I hear from the retards in IT.
nhill
Member
Mon Oct 25 11:47:53
> gobbledy gook I hear from the retards in IT.

Lies :) I pointed out projects with solid fundamentals here when there were only 300 other people in the world aware of them enough to see the potential (cool thing about the blockchain is that you can quantify this specifically).

Your retards in IT are talking about shitty meme coins and crusty old DeFi projects. They can't even read smart contract code.

I'm on the cutting edge, baby. My portfolio has outperformed your portfolio, so it's, quite literally, your loss.

One thing I love about this is I can specifically quantify how much smarter I am than Dukhat (I'm 10x smarter). It's all math, baby. :)
nhill
Member
Mon Oct 25 11:53:09
Never Forget. The Ultimate Dukhat Meme:

http://imgur.com/BBcQNHN
Seb
Member
Mon Oct 25 12:19:11
Nim:

Nope. My understanding is fine.

"How many Grade A world famous investors in crypto and defi will it take to convince people like Murder"

The logically correct answer to this must be no amount investors in tulips would indicate tulips were a good investment."

You have other criteria. I did not say otherwise. I simply said this was a useless criteria.

Don't use stupid criteria that would also support investment in tulips during tulip mania.
Seb
Member
Mon Oct 25 12:29:58
Nim:

"My favorite phrase: "I didn't say that"."

Indeed. And you still haven't addressed how you made a whole bout of personal judgements off your misreading of "particularly" for "most" - the sentence means dramatically different things.

Mice particularly scare elephants.
Mice mostly scare elephants.

First sentence is a statement about how elephants see mice and implies nothing about what else mice scare.
Second sentence is a statement about what mice scare.

In this case, Ok, you are correct, I misread - but it's besides the point really. Whether they were rich before hand or made rich by the investment, either criteria could be met by tulip bulb investors.

"even the old fucks and their army of analysts see what is going on"
There are plenty, probably more, who see what is going on and come to different conclusions. It proves nothing. Focus on fundamentals.
Seb
Member
Mon Oct 25 12:41:00
Nhill:

The rate of return isn't from the token though, its from whoever you lent the dollar to. The USDC is only ever worth a dollar*

The asset making a return is your loan itself. So the question is what added value does the crypto bring on that loan Vs other mechanisms of securing it.

Best I can see is reduced risk of non-payment if repayment can be executed by smart contract. However, the risk isn't normally that an individual refuses to repay, but that they are unable to, so it's only a relatively small slice of risk premium reduced. The next thing might be reducing opportunity for rent seeking or other overheads in the transaction, but actually there are plenty of other non-crypto ways of doing that already as discussed.

But that doesn't necessarily give you a calculable value for a token itself - the token is akin to the paper a contract might be written on.

*Arguably less if risk of default is factored in.
nhill
Member
Mon Oct 25 12:54:25
Okay. Lending out my USDC returns 31% APR. Did you just gloss by that? Why would anyone pay me that much to borrow USDC? Seems pretty high.

The product in question allows one to leverage their liquidity provider tokens (tokens that appreciate based on trading fees). Essentially, I can take my LP tokens and get 3-4x the trading fees (along with any other rewards commonly given out to liquidity providers as incentive to fill a particular pool).

It's a riskier play, as it depends on usage of the pair for conversions on Decentralized Exchanges, and, at times, the incentives (which are dynamically allocated to optimize pools).

Hence there's a smaller risk surface area by simply lending out for 31% APR to people that have the potential to use that lent token for higher rewards through trading fees and liquidity incentives.

You don't have to worry about default, everything is collateralized. As you said, it's a secured loan. The code will liquidate a portion of the collateral to pay off the loan if it is necessary.

Things are starting to get more interesting, here, huh? It goes much deeper. :) But let's keep it simple for now. Show me a service where you can accomplish this without cryptocurrency, please.
Seb
Member
Mon Oct 25 12:57:46
nhill:

"Lending out my USDC returns 31% APR"

No, I went into rather great detail into the difference between the medium of exchange and the asset.

When I lend you a dollar in the form of cash for exactly the same APR, it is not the case that my *dollar* has an intrinsic value, it is the loan itself.
nhill
Member
Mon Oct 25 13:02:54
Um, perhaps this is semantics, but who cares?

I lend you 1 USDC today, and it turns into 1.31 USDC next year at this time. I don't care about the token specifically (many are supported), I'm talking about the product itself.
nhill
Member
Mon Oct 25 13:13:21
But, if you want to dig further in the nitty gritty, it actually is a token. My USDC gets converted to bUSDC which appreciates at the market rate. I can convert it back to USDC whenever I want. A simplification:

1. I lend my 1 USDC to the lending pool and get 1 bUSDC back. Think of this as a receipt.
2. 1 year later I decide to take my money out of the lending pool. I convert my 1 bUSDC into 1.31 USDC.

If you're curious about the fundamentals, we can dive even deeper. This stuff gets convoluted fast, so I'm trying to avoid getting bogged down in the minutiae. But this is a decent approximation.

My question remains:

Even in this simplified form (trust me, it gets way cooler), where can I do this without cryptocurrency? Show me the service.
Seb
Member
Mon Oct 25 13:38:51
nhill:

"You don't have to worry about default, everything is collateralized. As you said, it's a secured loan. The code will liquidate a portion of the collateral to pay off the loan if it is necessary."

This sounds pretty similar to a CDO, just implemented in a smart contract.

The problem with CDO's wasn't the overheads or the contracting itself was too high an overhead; it was with the structure and value of the underlying assets.

Whether it is software running on a blockchain that liquidates a portion of the collateral (which in this case has to be, I guess, a bunch of crypto-assets) or whether that is a conventional contract being implemented seems kinda irrelevant to me. Now if there was a big problem with operators voluntarily refusing to honour loans they could, and/or inability to gets contracts enforced via courts, then there is marginal value add.

But when you say "31% return" you are not quoting a marginal value add, you are quoting the performance of the loan which could just as easily be constructed in other ways.

And the big risk isn't that contracts are voluntarily not enforced, it is default (particularly when the value of the collateral is less than the principle of the loan) which it is ultimately is no more able to resolve than traditional contracts.

This "you don't need to worry, the contracts are collateralised and secured" is no more true here than for CDOs.
Seb
Member
Mon Oct 25 13:51:32
nhill:

"I'm talking about the product itself"

I don't think that's semantics at all though.

There's no cash flow associated with a USDC in and of itself. The only thing that gives it value is the expectation it can be redeemed for one dollar or accepted in lieu of one dollar.

Instead we are talking about the value of the loan: the net present value of the cashflow associated with the loan.

If that loan could be arranged using entirely different mechanisms or traditional mecahanisms, it is no more meaningful to say that the value of the loan is attributed to the token and hence provides blockchain based systems with an intrinsic value than it does to say that because a conventional loan written on a bit of paper has a some value based on an expected 31%APR, that paper generally has an intrinsic value based on that.

Now if you can show that a certain type of loan agreement, when implemented in blockchain versus other methods, is in general/on average able to confer X% higher return for lenders or Y% lower risk etc. - that is a different kettle of fish.

To me the distinction is very far from semantics: they are different categories. It's the difference between a gold coin and a gold mine. A gold coin has some fixed value based on what you can trade it for (but arguably* no intrinsic value), versus a gold mine which may produce a certain amount of gold each year, and which we can therefore assign a net present value to.

*if we ignore industrial and aesthetic uses of gold to avoid complicating matters
Seb
Member
Mon Oct 25 13:53:01
nhil:

"1. I lend my 1 USDC to the lending pool and get 1 bUSDC back. Think of this as a receipt.
2. 1 year later I decide to take my money out of the lending pool. I convert my 1 bUSDC into 1.31 USDC."

This sounds entirely equivalent to buying a unit share in a fund.
nhill
Member
Mon Oct 25 14:02:08
Okay, so please point me to the service where I can buy a share in a CDO with a 30% or more APR.

Sounds easy. Not sure why people even bother with savings accounts when you put it this way!
nhill
Member
Mon Oct 25 14:04:13
Never mind the fact that you brushed over the unique value proposition this crypto lending pool (i.e. leveraging lp tokens) provides that makes the APR sustainable and low risk.

I'll let you ignore that one.

Just point me to the service so I can start CDOing!
nhill
Member
Mon Oct 25 14:08:40
> it is default (particularly when the value of the collateral is less than the principle of the loan) which it is ultimately is no more able to resolve than traditional contracts.

That's not possible from a protocol level. The code will automatically sell the collateral and repay the loan.

There is almost no default risk other than something like the relative collapse of USDC itself (or, more technically, the other side of the USDC LP), but let's stick to the product, not the ecosystem. It's over-collateralized and paid off automatically.
nhill
Member
Mon Oct 25 14:16:46
Relative *sudden* collapse that is. As in the price going down by 20% within a few seconds.

But even those cases have been stress tested and should be fine. Nice thing about decentralized exchanges is the order book is algorithmic, so it can't just suddenly change prices in one transaction like a traditional order book could (unless a single party owned the majority of the liquidity and decided to rug the pool, which does happen a lot on random scams, hence the need to do due diligence on the liquidity flows, as I've stressed here for months).
Seb
Member
Mon Oct 25 14:22:03
Nhill:

So, explain *why* it is you can't get that APR via conventional means.

What is it about crypto unlocks these massive returns and creates this amazing new source of value?

And what is it your liquidity pool is investing in that gives these returns?
Seb
Member
Mon Oct 25 14:23:36
Nhill:

"The code will automatically sell the collateral and repay the loan"

Surely this relies on the collateral being saleable at that price.
Seb
Member
Mon Oct 25 14:24:58
"Never mind the fact that you brushed over the unique value proposition this crypto lending pool"

Excuse me, I've repeatedly asked you to explain the unique value proposition. Instead you've simply quoted the returns.
nhill
Member
Mon Oct 25 14:53:30
I explained it above, do you want me to run through it again?

The product allows liquidity providers to leverage their liquidity tokens. Say, I want to leverage my $ETH-$USDC liquidity provider tokens. These are 50% ETH, 50% USDC wrapped into a token for a decentralized exchange to use as liquidity. The token providers get paid the exchange fees along with any incentives that may apply to that pool to encourage deep liquidity (the deeper the liquidity, the better the product as it reduces slippage for automated market making).

So I can use this product (the lending pool I've been talking about) to leverage my liquidity tokens and get 3x (up to 15x in some cases) the fees and rewards for providing said liquidity.

In order to do this, I borrow from the pool and pay the APR to the lender. Creates a symbiotic scenario where the liquidity provider profits more from trades made on a decentralized exchange, and the lender profits from allowing the provider to borrow his tokens to accomplish it. The lender takes on less risk, so the rewards are pretty straightforward.

That's very cool game theory. And only scratching the surface. :)

Quoting the APR is relevant because it's an efficient market. It's a high APR because the product is unique and useful. One never possible before cryptocurrency.

(vanilla lending pools, on the other hand, that are less unique because they don't work with LP tokens, usually only reward about 5-10%)
nhill
Member
Mon Oct 25 14:56:26
Again, this is only scratching the service. But you see how these decentralized exchanges can plug and play with these lending services and create a massive value add.

Because everything is developed on a common and secure standard, everything is composable! This service actually takes LP tokens from multiple decentralized exchanges (it's up to you to choose).

Beautiful separation of concerns and revolutionary composibility between services.
nhill
Member
Mon Oct 25 14:56:26
Again, this is only scratching the service. But you see how these decentralized exchanges can plug and play with these lending services and create a massive value add.

Because everything is developed on a common and secure standard, everything is composable! This service actually takes LP tokens from multiple decentralized exchanges (it's up to you to choose).

Beautiful separation of concerns and revolutionary composibility between services.
nhill
Member
Mon Oct 25 14:56:52
Oops, finger slipped and hit the reply button early (and twice, with a typo on composability).
Seb
Member
Mon Oct 25 16:15:35
nhil:

"The product allows liquidity providers to leverage their liquidity tokens. Say, I want to leverage my $ETH-$USDC liquidity provider tokens. These are 50% ETH, 50% USDC wrapped into a token for a decentralized exchange to use as liquidity. The token providers get paid the exchange fees along with any incentives that may apply to that pool to encourage deep liquidity (the deeper the liquidity, the better the product as it reduces slippage for automated market making)."

Ok, so let me walk through this to make sure I understand.

You lend some sum X to a liquidity pool in exchange for some share of the earnings of the liquidity pool. You then borrow some 3X from the pool, with some interest payable to the pool (lets say 5%).

You find some investment, say, that returns 15%?

You get (3X*1.15 - 3X*1.05)=3.3X you repay your outstanding principle (2X) and end up with 1.3X which is a 30% return (plus some share of the 5% return because you lent to the pool in the first place.

If this is not correct, spell it out in similar terms and specifics with dummy variables.

You mention these incentives - where and how are these incentives funded from?

Lets say whoever you loaned to defaults - doesn't give you your 15% - what happens now? Presumably the borrower hasn't put up collateral equal to the principle sum they are borrowing, otherwise they wouldn't need the loan.

It really just sounds like you are simply describing leveraging - which is also something you can do without a blockchain. Lehman brothers famously got to about x30 in supposedly low risked collateralised assets when it went tits up. It's hard/expensive for retail investors to get people to lend to them for investment, it is true - that is because something like 60% of retail investors lose money - and so far you haven't really articulated what the special sauce blockchain adds here - at least not specifically and explicitly.

And the big concern I would have is that the value of the stable coins may be overvalued, leading to inflated returns that may evaporate quite quickly (just like the 2008 crash).

But again, the value isn't in the coin itself is it, it's ultimately being generated by whatever it is that is generating the underlying 15% ROI - you are just using leverage to capture a greater share of that 15% return than your proportion of the investment would otherwise entitle you to. But again, not really clear that crypto coins are any better here than CDOs in reducing systemic risk created by leverage.
Seb
Member
Mon Oct 25 16:19:41
Errata:

*You get 3X*1.15 from your investment, pay interest to the lending pool of 5% 3X*(1.15-0.05)=3.3X. You repay your outstanding principle (2X) and end up with 1.3X, which is a 30% return on what you originally lent the liquidity pool, plus some share of the 5% return you paid to the pool, because you lent to the pool in the first place.
nhill
Member
Mon Oct 25 18:33:56
We are talking about two separate concepts.

The lending pool and the liquidity provider pool are separate.

Liquidity provider:

You provide two (or more, but usually two) cryptocurrencies and bond them together 50/50. They are used as liquidity for decentralized exchanges. You earn fees proportion to your contribution. E.g. if you provide 1% of the pool, you get 1% of the exchange fees.

The incentives usually come from the protocol, either in the form of their own token or tokens they have in their treasury. Some have a "liquidity generation event" where people will bond liquidity pairs and lock them up forever in return for future distributions or votes in the DAO. There's many different methods. But ultimately the rewards come from the people creating and seed investing in the protocol and are given away as incentives for people choosing their service over an alternative.

Lending Pool:

No, this isn't traditional leveraging. What you are describing is leveraging backed by USD to obtain magnified appreciation potential, not leveraging a crypto in it's own terms.

When you use this type of 3X leverage, if the crypto goes up 5%, you don't get 15%. It goes up 5%, because you're putting up crypto for crypto. Your collateral rises and decreases at the same rate as your loan.

What you do get is 3X more trading fees and liquidity incentives (if a pair has incentives-- it's not a given).

The cool thing about this is that leverage is put into the liquidity provider tokens (after all, that's where the rewards are), so it actually deepens the liquidity at the decentralized exchange.

Again, a symbiotic relationship. Not everyone wants to play the fee and yield game by being a liquidity provider. It takes skill and management, and you have to deal with impermanent relative loss in value between the two pair tokens (because the LP pool needs to stay balanced 50/50). Many would prefer to simply loan out the crypto token and see it appreciate.

This gives people a way to contribute to decentralized liquidity without having to take on a lot of risk. The extra liquidity prevents slippage and allows for larger position sizes.

It's a beautiful system, and not present at all outside of crypto. So, you can go ahead and mint your crypto card, as this meets your requisite. :)

Also, there's more. This is only the base level. There's composition on top of this level where things get truly magical. :D
nhill
Member
Mon Oct 25 18:59:06
There's no variables in play here, because X=X. It's not about putting 1X in and getting 3.3X back out on a 15% capital appreciation.

It's about reaping the fees and rewards due to the usage of decentralized exchanges, while also providing deeper liquidity to the exchanges at the same time.

Quite literally, everyone wins:

1. The trader get less slippage.
2. The liquidity provider gets 3X more profit on fees/incentives.
3. The lender gets a steady capital appreciation.

This is the magical game theory of crypto. People coming up with services that feed into each other and benefit both worlds.

It's the promise and premise of open-source software, Stallman style, manifesting before our very eyes. My smart contract can take the result of your smart contract (let's say, the bUSDC receipt) and do something with it, should I want to make a service on top of yours. Everything gets tokenized and the tokens are decentralized, scalable, secure, and interoperable.

The implications of this are mind-blowing. As more things are interoperable through blockchain tech (and these chains also are interoperable with each other through smart contracts, btw), the more potential is unlocked. I could take my item I earned in a video game and put it in a smart contract to mint a similar item in another game.

Everything interoperable by default. The premise of the world wide web and Tim Berners-Lee vision achieved at a more fundamental level than he ever imagined. All valuable data is tokenized, secured, and interoperable.

Anyone not able to see the potential of this has a distinct lack of creativity.

Cryptocurrency is a bigger innovation than the internet itself.
smart dude
Member
Tue Oct 26 00:26:47
I'm pretty sure bunny rabbits didn't exist in the Precambrian. I would imagine the lagomorphs appeared during the Paleogene like most mammals. I think Seb flunked biology.
Nimatzo
iChihuaha
Tue Oct 26 00:31:57
Rabbit fossil in the Precambrian is a famous utterance by the Biologist J. B. S. Haldane of a evidence than would fatally undermine his confidence in evolutionary theory. Seb used it correctly.
smart dude
Member
Tue Oct 26 00:35:59
Also crypto people are annoying, no offense to nhill. It's like when your friend buys a new grill or starts going to the gym for the first time, it's ALL THEY EVER TALK ABOUT. You're not necessary wrong, you're just INSUFFERABLE.
Nimatzo
iChihuaha
Tue Oct 26 00:45:28
It's true.

Nimatzo
iChihuaha Wed May 05 09:13:42
Hood
I get your point, there are those people in literally anything, when crossfit came around, there was a bunch of Crossfit cultists. There are those people in bitcoin as well.
Seb
Member
Tue Oct 26 02:37:21
Smart dude:

"I would imagine the lagomorphs appeared during the Paleogene like most mammals"

So if you did find them, incontrovertibly, in precambrian strata, that would imply something dramatically wrong in our understanding?
nhill
Member
Tue Oct 26 02:41:51
No offense taken.
Nimatzo
iChihuaha
Tue Oct 26 03:07:18
The more important thing is that you were just given the proverbial rabbit. Now go buy some Solana or FTM and try it out.
jergul
large member
Tue Oct 26 03:57:14
We dont actually have to try it out. What I am actually taking a pass on is something that currently is unsuitable as a currency.

Appreciating currencies are horrible for modern economies.

Imagine if the US had its public debt in bit coins. How much would it owe now?
Nimatzo
iChihuaha
Tue Oct 26 04:07:40
It's not the currency part there is nothing to really try out there that is really a unique experience, but the DeFi part, the DAOs, the Dexes etc. the economy emerging around it, the services being provided the opportunities now oening up to people who in this world have to make a minimum buy of 1 million USD to enter some hedge fund. The are investment opportunitets behind doors, you and I don't even know there is a door there.

The way I view the tokens are something like holding shares in a company, just that you can do stuff with the tokens within the ecosystem, some of those thing you could already do with stocks today, like collaterize them and take out loans, others you can't. But it is a close enough to view them as stocks, there is no other way to directly invest in the technology, but the tokens :) the good thing is that once you do that, you try out the DeFi space.
Nimatzo
iChihuaha
Tue Oct 26 04:10:48
I would suggest solana or FTM, because then one can use experimental level money like hundreds of USD and not worry about 1 cent gas fees.
Nimatzo
iChihuaha
Tue Oct 26 08:26:57
Seb
"Focus on fundamentals."

Which part of cherry on top, don't you understand? Even in the discussions on crypto you have been involved in, the things we have talked about are the fundamentals, we keep telling you it is about the tech over and over. Most of the discussion I have with Nhill are about this stuff. But you decide to latch on to this like a crack addict.

It's this attitude you lumber around seb, we can never be friends as long as you keep twatsplaining things to me.
nhill
Member
Tue Oct 26 09:06:34
> Appreciating currencies are horrible for modern economies.

Cryptocurrency is a misnomer. Currency is the least interesting part of crypto.
Nimatzo
iChihuaha
Wed Oct 27 04:48:14
Seb
Are you going to respond to the things Nhill explained? Or was your rabbit fossils just more hollow* words?

*I mean insincere.
Dukhat
Member
Wed Oct 27 07:54:34
Can we have some actual modding where Nhil doesn't post this shit in multiple threads. He already has his main crypto thread.
Dukhat
Member
Wed Oct 27 07:54:40
ttt
Dukhat
Member
Wed Oct 27 07:54:44
ttt
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