I have the same question too. Beyond speculation/greed, what are real world use cases of blockchain that can't be done with existing/mature tech? Nano seems nice for instant fee-less transfer. Other than that?

Take for instance, my cousin's husband in India, who currently holds a bunch of black money in either INR or in gold, can buy stablecoins such as DAI, then park it in various DeFi solutions to earn a nice return on it. So not only he is gaining an exposure in Dollar instead of a highly inflationary currency like INR, he is also able to make it work instead of burying it in a bag until he needs it.

Before you start with the morality of the situation, just ignore that. You wanted to see a real use case, and I am telling you about it.

As it turns out, not everyone shares your moral code, or lives in the similar legal system which allows them the similar property rights.

Replace that person with a Venezuelan whose currency is completely destroyed and Venezuelan Americans are trying to provide their families with money.

Ok, that makes sense. I need to read up on DeFi, don't know much about it.

Borrowing, lending, decentralized exchanges, innovations like flash loans that are just not possible in current financial system.

The sky is the limit in terms of innovations possible, it's literally some code running on the global computer that is Ethereum.

How does borrowing work in an automated, trustless environment? Doesn’t someone have to decide whether you’re likely to pay back the loan with money you haven’t earned yet?

It's over-collaterized, so you put more crypto than the loan value.

You might say "why the hell would I do that?", in order of importance: 1) you hold on to your asset's appreciation, 2) access the liquidity, 3) avoid capital gains tax.

So the killer use case is a scheme to avoid capital gains taxes? Sounds about right.

You realize elites are already doing this with USD. It's not unique to crypto.

I think in the past someone mentioned about under-collaterized loan. It's based on your reputation. The idea is you use your Ethereum account to do activities. Based on these activities, people could give you a loan. Such activities can be something like answering questions (imagine Stackoverflow but the authentication runs on Ethereum).

Okay, but it seems like the reputation evaluation isn’t automated, so this is more like fundraising?

You can do loans with no collateral at all if you use flash loans.

Okay, but that seems like a pretty small niche? Most people don’t borrow just to save money on taxes on their cryptocurrency gains.

They might borrow to hold on to their asset's appreciation.

You could lock in the gain by selling at the current price, so that still sounds like tax avoidance. Or possibly leverage, if you think the price will go up more?

Yes, you could leverage, you could hedge yourself by buying stocks. Or you could just spend the money on whatever else you want.

Look up Aave it’s Open Source, I was surprised at first but it seems to work. Also flash loans are an interesting new financial tool previously not available for individuals.

You have to put down collateral. Same idea as reverse mortgages on houses, or taking out an RSP-backed LOC.

Not only are all those things possible (other than decentralized, because that has a high cost and no tangible benefit) in the normal banking system but there's apps for them already. And they are from regulated companies and you have legal protections.

Flash loans aren't really; nobody will lend you money against zero collateral that you pay back instantaneously after a transaction, because in the traditional banking system there's always a risk of default and a transaction cost for enforcing your rights in case of default. With a flash loan the whole transaction fails if at the end of the transaction you don't have sufficient funds to pay it back, while you're guaranteed payback if it succeeds.

A flash loan is a loan you pay back immediately...

So you're right, this isn't a thing that exists today outside of crypto because it's not needed outside of crypto. Someone who can pay a loan back as part of the same transaction in which the loan is issued is not a default risk, and in the real world you just don't bother with the loan: you just pay for the underlying transaction directly.

Maybe people are tired of getting an anal probe just to open an account and move money/ complete financial transactions today?

One, IMO, is a provably fair casino (Blackjack, Poker, etc.) that is decentralized and unregulatable.