/biz/ - Business & Finance

>>17205604
DeFi

the whole market is desu. halving is in 3 months. all crypto is about to bull

>>17205604
because it dumped for the almost whole 2018~2019?

>>17205616
eli5 defi

>>17205719

literally every crypto have been up every week this year

>>17205604
It's pumping because the team is on the final stages of releasing phase 0 of ETH 2.0. Are you guys from this planet? Hello??

>>17205616
>Locking up money
is this the power of this technology.

>>17205604
What would people even talk about in crypto if it weren't for ETH? Dozens of chains want to kill it and are trailing ETH's shadow, and the rest of the chains are stagnant garbage that have a single use case and there's no further innovation coming out of it. Every year or two the crypto community gets hyped up by guess what? Something ETH is doing. Sit down. Be humble.

>>17206132
Nice blog retard

>>17205719
are you an idiot? defi is exactly what normal finance is (for example lending) but without centralized authority. that's all it is. no middleman. just you directly doing finance things with others.

>>17206723
to expand a bit - if they introduce privacy features on top of that - you'll be able to literally earn interest without any single government boomer or glownigger knowing about it.

Btc will collapse at the halvening if nothing changes

>>17206756
>to expand a bit - if they introduce privacy features on top of that - you'll be able to literally earn interest without any single government boomer or glownigger knowing about it.

Is this true?

>>17205604
Pent up energy needed a release.

>>17206871
>Is this true?
Yep.
>lock your money on a contract
>money generates interest
>payments sent to your wallet
>everything absolutely private

>>17205604
Maybe we will hit $1k again this year

>>17206911
>Maybe we will hit $10k this year
ftfy

>>17206723

How can you lend money to someone in a decentralized way? How do you know they will pay back?

>>17207214
Because in normal banking you need $1 deposited for every $10 lent out but in defi you have to deposit $3 for every $1 lent out.

>>17206723
So ? Crypto is only used for speculation it has no real use case

>>17206911
Eth is going to make a run at 1T this bull run and btc will make a run at 3T

>>17207371
T?

does owning eth 1.0 means you will own eth 2.0?

>>17207505
I want to know that as well

>>17206904
>money generates interest

How if there's no middleman?

>>17207555
magic

>>17205604
Should I fomo, or should I wait for a dip? Anyway I cant afford more than 2 ETH, so I will take 7 LTC.

>>17207582
No seriously I'd like to know. Is there a forward curve for ETH? Are there contracts that automatically buy or sell futures to give you interest?
t.boomer stepping out of the smg thread to see what's going on with defi

>>17207555
>How if there's no middleman?
You don't need a middleman to issue loans.

>>17205604
because eth2 soon

>>17205719
You put collateral in smart contract, then borrow against it. If the value of your collateral drops below a certain point (ie. threatens to drop below the value of your debt), anyone can call a function on the contract to liquidate your loan, which means they buy enough of your collateral (at a discount) in order to pay off your debt, and usually part of your collateral is taken as a liquidation penalty.

And then you have money market dapps where you deposit coins and earn an interest rate or borrow and pay an interest rate. The rates adjust automatically according to the formula in the smart contract, based on the system-wide supplied and borrowed amounts.

Examples:

https://oasis.app (this is the most important dapp in DeFi right now. It is the source of DAI, which is a decentralized USD equivalent)

https://compound.finance (this is the most popular money market on Ethereum)

To see a bunch of DeFi apps, check out https://defipulse.com

>>17206383
Nah he's right, stay mad nocoiner. You're going to miss out on one hell of a moon mission.

>>17207371
T?

>>17207725
Trillion
One trillion dollars market cap

>>17207660
Sure, but then it means there's a default risk. Or am I missing something?

>>17207638
>Anyway I cant afford more than 2 ETH, so I will take 7 LTC.
Anon, just buy 2 ETH. Don't buy LTC man honestly, you are going to regret it if you do lol, it is a dead project.

>>17207754
Read this: >>17207687

>>17207754
if you borrow against a stable coin like DAI, which is pegged at $1, you can assume a default risk of 0

>>17207738
So you're estimating a $9000 Eth this next run?

>>17207807
Yes, that could be the top next year.

>>17207687
If you lock a collateral and borrow money, then I hope you're borrowing more than your collateral. Otherwise what's the point of borrowing money? Why would I borrow less money than what I'm locking?

>>17205604
So it can dump
All these shitholes are useless and theres no adoption

>>17207959
>All these shitholes are useless and theres no adoption

who the fuck cares you gigantic faggot, I'm riding the wave making bank, fuck if I care whichever shitcoin will be at the top in 20 years because of "muh adoption", I'm getting my lambo EOY

>>17207893
> Why would I borrow less money than what I'm locking?

Usually, people use it to make leveraged trades. They borrow a stablecoin then use it to buy a volatile asset to go long, or they borrow a volatile asset and sell it for a stablecoin to go short.

Other reasons why you would use it are if you need money but you don't want to sell your volatile asset because you think it will go up in price, or you need money but don't want to sell your volatile asset because it would incur capital gains tax (loans are not considered taxable income in most countries).

>>17207505
>>17207548
Yes. You'll be able to convert your ETH 1.0 to ETH 2.0 on a 1:1 basis (or some other mechanism that achieves that result).

>>17207645
There are two major types of DeFi currently.
One is lending and borrowing.
You can borrow token X with token Y as collateral.
You can be a lender and provide X.
X is usually a stablecoin like DAI or USDC and Y is usually ETH.

The value of Y is larger than X (115%-150% depending on the dapp). When it falls below the border value the collateral is automatically sold at a discount to pay the debt.

All logic is executed by a smart contract, the only external input are token prices.

Why would people borrow - currently, almost exclusively to go margin long or short on something. It's margin trading except on-chain.

Another type is uniswap. This one is completely self-contained, no need for external prices. You provide liquidity for token pairs and get paid trading fees (0.3% out of each trading transaction). Effectively, you're earning money on volatility.

This one is kind of complex, read this:
https://medium.com/@pintail/understanding-uniswap-returns-cc593f3499ef

I'm currently earning money on both types. I'm getting 7.5% APR on DAI (usd stablecoin) which is nice.

>>17208090
adding onto this, the idea is that in time there will be synthetic assets on blockchains that are of equivalent value to all real world assets
gold, silver, every stock, every index fund, etc...

so you can make leveraged trades on any asset that exists
this already via synthetix (fiat currencies, cryptocurrencies, commodities)

>>17207505
Eth1 is going to merge completely with eth2, same tokens

>>17208090
Oh ok this makes sense then. That's even quite "smart" if I may say. One thing though, the collateral that you lock up, is it locked up as in noone is taking a rosk on the other side? Or is there a time limit that if you don't buy your collateral back the market maker gets your collateral? Otherwise what happens to all the "lost" collaterals? Also whats the stable coin/collateral ratio? How is this rate decided without any middleman? Sorry for asking all of this, it begins to look like spoonfeeding, I think I'll readup on this looks pretty cool

>>17208506
Your debt goes up with interest, so eventually your collateral becomes automatically liquidated if you don't pay.

>>17208193
Ok thanks will definetly read. Still don't get what's in for the lender if the collateral isn't sold at a discount but will read to understand

>>17208550
Lender gets interest.
Collateral is sold at a discount in order to ensure it's sold fast. The surplus left after paying the debt goes back to the borrower.

>>17208531
Ok but who gets your collateral in that case? Is there a lender on the side of every debt? If yes, is he paid in fees or does he just hope you'll get liquidated?

REEEEEEEEEEEEEEEE

>>17208569
Ok, are these interest taken out of your collateral? So your collateral diminishes with time?

>>17208584
Lets say the price of ETH is $301 and the collateral ratio is 200% for simplicity.
You borrowed $150 using 1 ETH as collateral.
The price falls down to $299/ETH.
The ratio is now 199.33%.

Someone sees this and calls the smart contract offering to buy 0.517ETH for $150 (price - $290/eth, discount).
The lender gets back his $150.
You get what's left of your collateral.

It's simplified and details depend on the particular dapp.
>>17208616
It's not taken. Collateral is not touched except during liquidation. The interest is just added to your debt - what you have to pay to get back your collateral.

People asking questions need to realize it's different for each dapp.

For MakerDAO, there is no counterparty supplying the borrowed asset because the borrowed asset (DAI) is generated by the act of borrowing. This is how all DAI in existence were created. When DAI is paid back, it's destroyed.

When a MakerDAO liquidation happens, collateral worth OVER 100% (currently I believe it's 113%) is sold at a discount (currently, I think 3%) for DAI to pay off the debt, then any DAI left over from this sale is used to buy and burn MKR. That extra amount of the collateral that was sold (13% in our example) is called the liquidation penalty. It serves both as a buffer so that the price of the collateral doesn't drop too fast before the sale can take place, and also as a penalty to discourage users from allowing their loans to approach insolvency.

For Compound, there is a counterparty (all lenders of the asset you're borrowing, and really the system as a whole) that is supplying the borrowed asset, so there is a little more risk compared to MakerDAO. There's also more risk because MakerDAO is a level-1 app (it creates the asset) whereas Compound is a level 2 app (it merely uses the asset), so when you use Compound, you're trusting both MakerDAO's contracts AND Compounds contracts.

>>17209094
> collateral worth OVER 100%

over 100% of the debt, that is.

>>17207413
Trillion

>>17206756
There already is privacy on Ethereum. Check out https://tornado.cash

>>17208716
Ok thanks, seems a bit harsh to get liquidated for a $2 move but I'll assume that was just an example.
>>17209094
Thanks. In that case what maker does seems mor innovative than compound, for compound you still need a market maker. both are very interesting though as they seem to get rid of the middleman

>>17209298
>Ok thanks, seems a bit harsh to get liquidated for a $2 move but I'll assume that was just an example.
There's the minimum collateral level and that's it, you can start with 500% if you want

It's nice to be inquisitive and all, but this thread is mostly instructive for a different reason.

There are faggots in this thread right now who are still not sold on DeFi presumably because they don't autistically understand every little detail of it. They require anons to answer their "hard hitting questions" before they might become sold on it (as if nerds 100x smarter than they are have not thought about all this shit already).

There is an important lesson here, particularly for the faggots who are always late to everything. Learn to spot trends and understand concepts at a high level. DO NOT be one of these faggots asking to be spoonfed the details of the mechanism that makes some tech work. These are implementation details that you do not need to understand for any use case that will ever be useful to you (eg: getting rich from it, or even using it).

>>17205868
it is when you compound the interest

>>17205604
>>17209676
>>17209298
is 32 enough to make it? have 1.8btc and wondering if ETH will produce better returns

I'm a bit nervous about the corrections that will follow this massive move across the whole market. We may not correct as deep as June 2019 or Jan 2018 since we're at the beginning of a bull market not the end of one. Nonetheless it will be fairly brutal. 20-30% dumps at least once this party stops. There will be more alt seasons and pumps moving forward but just for the short term future I foresee a serious dump across the board. Everything is so overbought.

>>17209676
People who think defi will make a bit of fucking difference are turbonormie reddit retards.

Do you really think normal people are going to go through the hassle and fees of moving their funds into crytpo, along with all the systemic risk that entails, for slightly higher interest rates that decrease as more people take advantage of them? Do you think shitcoin gamblers are going to be satisfied earing 4% on their DAI on compound while bearing the risk of maker's protocol becoming inosolvent.

Wishful thinking Imo. that being said pooled liquidity is the killer app of the blockchain ATM, it's jsut not all that useful.

>>17209676
I'm retarded but even I know defi is a big deal. I bought a bunch of eth and some maker last year and I have some of my cash as dai.

I still don't know how to actually generate profit with it though. Got about 20k worth of ETH and 2k worth of maker. Kind of just waiting for someone to make an easy guide.

>>17210077
did you see the run up to 20K? were you around for that? were there many "deep" corrections? i think not...

>>17210101
>NGMI the post
cringe & roomtemperatureIQpilled

>>17210136
Based

>>17210077
You should be. I totally agree.

>>17210258
Yes and yes?! There were multiple 20-30% corrections on BTC at least. China fud, Korea fud....Check the chart.

>>17210262
Lmfao OK faggot I was margin trading on nuo and opening cdps 6 months before you ever heard the term

have a top 100 snx wallet btw. too bad you fags are always late to the party and buying all the bullshit people sell you cause you want it to be true

>>17210320
Once we have a lower high and bearish divs on the altcoin market cap and or total marketcap and or BTC. I will risk off. Still I'm only 30% alts atm so not too exposed.

>>17210334
It doesn't matter. You are wrong and extremely retarded.

>>17209676
I don't want to speak for everyone but while I agree I was late on defi, Ithink it is retarded to advise people not to research before investing. Since I've heard of defi I've found it fascinating to understand how it works, but also essential in order to use it and to invest in it. That's whatwill make you hold even during bad times and that's also what make you sell if the tech becomes obsolete or something does not work. What you are advocating for can easily lead you to buy total scams because a fake nerd told you that big blocks are good or hashgraphs are the future. I mean, you browse biz, you should know you always need to make your own opinion on this kind of stuff

>>17210376
wow great argument anon

can't wait to go earn 3.5% on my dai while paying coinbase fees greater than what I'll earn on interest and exposing myself to broader crypto risk thank you for convincing me

always remember /biz/ the people giving you advice are much dumber than you are

>>17205604
I want to know where these billions of dollars are coming from to pump everything. It's surely not coming from anyone on /biz and from new investors that work regular jobs. Billions of dollars don't come from normies and not right now. I guarantee most of this is coming from either stablecoins unloading or arbitration from bots. Who the fuck is putting there millions of dollars in vaporware like Link?

>>17210389
There's useful research (eg: the aforementioned spotting trends/understanding concepts at a high level) and there's useless research (eg: imagining your 95 IQ questions on a Ugandese shitposting forum might poke a hole in the 160 IQ nerd's system, like there's even a hint of a chance you've understood something or identified a flaw that no one else before you has).

>>17210434
>more disgraceful and embarrassing retardation
You are simply not worth responding to.

>>17210551
>my response to your facts is that you're not worth responding to

LMFAO the absolute state of desperate MKR bagholders. Keep shilling maybe one day people will decide to open some Fulcrum trades and get absolutely REKT by a shithouse product that's inferior to every CEX out there.

Just speaking the truth anon. Defi is not all that useful except in limited contexts that are too hard for normies to get anyway.

>>17210522
Ok last reply. Asking question doesn't necessarily mean looking for flaws. People are just trying to understand how it works. Also, all the questions in this thread are extremely high level (how a loan works, when does the liquidation happens, whos holding the risk, what's the reward...). If you think this is technical you're the rtarded one.

>>17210689
You actually don't need to know any of that shit to know DeFi is a big deal, but in any case these are questions you should be asking a search engine. Now stop being fucking late to everything and try to make money for once, please.

>>17205604
MOOOOON IT

>>17209676
>nerds 100x smarter than they are
this is how xrp holders actually think of themselves