curious to hear your thoughts on whether the market cap of a protocol can ever exceed the market cap of the chain it's built upon (i.e could DeFi eventually dwarf the market cap of ETH?)
All lending in crypto is over-collateralized. Rehypothecation is forbidden (only one entity has exclusive ability to liquidate the position). Is that good/bad/different/neutral compared to the fractional reserve system? The fractional reserve system makes sense if production causes actual wealth to be created to pay back the loan. Having to dig up gold to have enough money to pay for mining equipment to dig up gold doesn't make sense. Get a loan, dig up the gold, pay back the loan. But then if DeFi is using collateral that cannot be automatically liquidated/confiscated via smart contract... how does it work? I'll try to answer: to avoid having clown banks and clown managers to assess creditworthiness, automate collection and evaluation of off-chain data to automate decision making regarding collateral and liquidation (aka, Chainlink). How far can the Chainlink model go? Can it replace the clowns completely? Or is there a different way?
"An economy without credit can only increase spending (and thereby the counterparty’s income) with more production. This may not sound so bad, but imagine you could only buy a house with 100% down, or couldn’t go to college if you didn’t already have a high income to pay for tuition. Credit can be healthy if used to increase production and income to repay debt in the future."
Used to work in a debt financing banking role, so understand this concept well. But, I wonder, without credit, if the price of these goods (house, college) wouldn't just come down and become affordable / able to be saved for?
curious to hear your thoughts on whether the market cap of a protocol can ever exceed the market cap of the chain it's built upon (i.e could DeFi eventually dwarf the market cap of ETH?)
If fractional reserve banking in crypto looked like it did in the US during gold standard, what would the size of DeFi be?
All lending in crypto is over-collateralized. Rehypothecation is forbidden (only one entity has exclusive ability to liquidate the position). Is that good/bad/different/neutral compared to the fractional reserve system? The fractional reserve system makes sense if production causes actual wealth to be created to pay back the loan. Having to dig up gold to have enough money to pay for mining equipment to dig up gold doesn't make sense. Get a loan, dig up the gold, pay back the loan. But then if DeFi is using collateral that cannot be automatically liquidated/confiscated via smart contract... how does it work? I'll try to answer: to avoid having clown banks and clown managers to assess creditworthiness, automate collection and evaluation of off-chain data to automate decision making regarding collateral and liquidation (aka, Chainlink). How far can the Chainlink model go? Can it replace the clowns completely? Or is there a different way?
"An economy without credit can only increase spending (and thereby the counterparty’s income) with more production. This may not sound so bad, but imagine you could only buy a house with 100% down, or couldn’t go to college if you didn’t already have a high income to pay for tuition. Credit can be healthy if used to increase production and income to repay debt in the future."
Used to work in a debt financing banking role, so understand this concept well. But, I wonder, without credit, if the price of these goods (house, college) wouldn't just come down and become affordable / able to be saved for?