Reflections on the rise of DEFI

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

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With these words the first Bitcoin Block was created, offering many of us in the modern age the first chance at “Hard Money” … and more importantly, digitally native hard money. Things have been frenetic since then… Blockchain solutions coming out on a full spectrum from “Almost a Bank” with a few entities in the world able to run a miner / node to widely decentralized and community driven blockchains.

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Blockchains since 2010 have almost taken the last 200 years of banking “innovation” and compressed it in to a single decade. We started with hard money you held the keys, you held the coins. It was functionally quite similar to gold. We have rapidly adopted all of the “innovations” of the last 100 years of banking, and made everyone their own bank. Re-Hypothication… i deposit my usdt to yearn for yield, i deposit the resulting yield producing coins to abracadabra, i print MIM, i swap that for usdt, I increase my yearn vault and wash, rinse, repeat. My $10K becomes $90K of liquidity value earning interest across multiple platforms. Hear me out… I don’t mean to entirely oppose all of this. Defi is an innovation because in 2008 we were all doing this without our knowledge or consent… they benefited and we lost. At the very least, the rewards and consequences are now going to those to took the risk, I’d like to caution everyone though…. in 2008 the whole house of cards collapsed. The banks only profited because they could keep the benefits and socialize the costs. in Defi… you can’t do that. We’re building all the same systems that collapsed, and we don’t have a government to pay us back.

Be your own bank, yes… but be a better bank than we had before. it only worked for them because you bailed them out, and no one is lining up to bail you out when that algo stablecoin loses its peg and it all falls down.

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5 thoughts on “Reflections on the rise of DEFI”

  1. One could also start to see that parts of the system get alternative ways of financing. Imagine the events industry for example. Pre financing large events (paying the venue, a band, and other stakeholders) allowing for many small investors seeking a certain amount of risk, to invest. It would be an alternative to a bank, so not a replacement. That might help to start this change in decentralized finance.

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  2. I understand you know what you are saying and that’s why the ramble but that doesn’t compare the bank to Defi. Keep your money in the bank but others will defi and I am one of them. The same thing I am doing with cross-chain platform and waiting for projects like Equilibrium which has low risk with defi and synthetic market.

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  3. >Blockchains since 2010 have almost taken the last 200 years of banking “innovation” and compressed it in to a single decade.

    Banking was mainstream for much of those 200 years. Crypto I have to worry about where I store it. Only a few exchanges offer insurance/guarantees on my coins like Coinbase. Most do not.

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