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23627402 No.23627402 [Reply] [Original]

Explain DeFi to me.

So I get that basically DeFi works like a bank except that instead of lending or giving money from or to a bank you yourself are a bank and can lend or take money from other people.

Now here's my question: If I lend someone say a Bitcoin, how do I make sure I get it back? Yeah yeah smart contract something, but if the one borrowing it doesn't have it anymore how do I get it back?
Same way other way round: What's preventing me from borrowing a Bitcoin and never give it back?

>> No.23627461

>>23627402
>What's preventing me from borrowing a Bitcoin and never give it back?
Nothing. DeFi is a scam

>> No.23627480

>>23627461
Exactly. It has been attempted before. Failed.

>> No.23627491

>>23627461

So how is it still a thing. How can I not just take every Bitcoin that's being lended and just Sack them

>> No.23627593

>>23627402
You only lend against collateral. When we have a repocoin that you can mortgage your car with we can lend against car collateral.

>> No.23627692

>>23627402
do it and bitpoilce will be on ur door

>> No.23627764

the only reason people even pay back loans is the threat of getting ur ass raped in jail. "DeFi" LMAO

>> No.23627820

collateral? You literally CANNOT get a loan anywhere in defi without putting up usually at least 25% MORE than what you're asking for. Go ahead, don't pay it back faggito.

Then there is exactly the case of whales doing such a thing on AAVE (?) where they didn't pay back the collateral because they knew the tokens they "borrowed" would rise. This is also known as a gamble, which you hopefully do not need me to define.

>> No.23628064

>>23627820
So it has 0 utility other than leverage for trading

>> No.23628156

>>23628064
There's a million use cases. You can hold BTC and get a loan in USD if you think the price rise of BTC will outpace the interest on your loan. You also don't pay tax on the loan unlike if you cash out the BTC.

>> No.23628293
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23628293

>>23628064
wat? pls think.

>> No.23628741

>>23627491
Because you need to keep crypto as collateral and only allowed to borrow an amount equal to a percentage of the collateral, like 40% or 60% increases the more you pay back.

It can get hacked, collateral can be stolen btc. It's not exploit-proof.

>> No.23629242

>>23627820

What's the point then

>> No.23629282
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23629282

>>23628156
If you cash out usd you don’t pay tax in most jurisdictions. Crypto to crypto is not a taxable event if you don’t cash out to actual USD (not USDT OR DAI).

If you cash out, you also don’t have to pay aave fee and you have no risk of liquiditation.

Literally no upside for defi, buy usdt then sell back to btc, why loan?

>> No.23629375
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23629375

>>23629282
>Crypto to crypto is not a taxable event if you don’t cash out to actual USD
The IRS would like to know your location