DeFi and the “digital asset” felony hidden in the infrastructure bill

Re:DeFi and the “digital asset” felony hidden in the infrast... by jimbob45 on Thursday November 04, 2021 @03:39PM (#29111614)

Is DeFi what we're officially calling cryptocurrencies now? A quick Google search looks like that's the case but I don't know if DeFi covers anything else that I haven't thought of.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by hammock on Thursday November 04, 2021 @03:47PM (#29111712)

DeFi is not cryptocurrency, it's a specific use case of cryptocurrency.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by jimbob45 on Thursday November 04, 2021 @03:49PM (#29111730)

Feel free to expand on why that is. I'm genuinely asking - this is the first time I've heard that portmanteau.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by nprz on Thursday November 04, 2021 @03:51PM (#29111754)

It's a collection of protocols use to loan and trade cryptocurrencies. The goal of DeFi is to replicate all the services a bank could offer, but through decentralized apps running on the blockchain.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by newacc9 on Thursday November 04, 2021 @04:08PM (#29111943)

Generally, its loans that are over-collateralized with crypto-assets. Use case being: I need cash now but I think ETH will go up and I don't want to sell mine, instead I borrow stablecoin against my ETH using a DeFi app (probably on ethereum).

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Re:DeFi and the “digital asset” felony hidden in the infrast... by the_optimist on Thursday November 04, 2021 @04:15PM (#29112027)

Do you have an example of collateral management in this context?

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Re:DeFi and the “digital asset” felony hidden in the infrast... by newacc9 on Thursday November 04, 2021 @04:50PM (#29112399)

Its all automated, so it depends on the contract, I assume if the USD value of ETH drops too much, the borrower gets margin called.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by the_optimist on Thursday November 04, 2021 @05:23PM (#29112706)

Can you reference a specific margin call mechanism?

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Re:DeFi and the “digital asset” felony hidden in the infrast... by newacc9 on Thursday November 04, 2021 @05:36PM (#29112813)

I found this for Compound. The liquidation mechanism is in section 11.

https://zengo.com/understanding-compounds-liquidation/

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Re:DeFi and the “digital asset” felony hidden in the infrast... by hammock on Thursday November 04, 2021 @04:17PM (#29112048)

https://en.wikipedia.org/wiki/Decentralized_finance

As cryptocurrency replaces government-issued money, defi replaces traditional financial institutions/services.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by bonzini on Thursday November 04, 2021 @05:03PM (#29112510)

Then they also need to comply with the KYC and reporting requirements placed on traditional financial institutions/services, which exist for a reason.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by int_19h on Thursday November 04, 2021 @07:49PM (#29113860)

One could argue that at least some of those requirements in effect (if not by design) protect the established position of traditional centralized finance, and prevent decentralization, allowing the existing blend of concentrated political and economic power to maintain its stronghold on society at large.

So, for those who believe in decentralization, the reason may not be a valid justification. Of course, at that point, one also shouldn't be surprised that pushing back against centralization is criminalized by those who benefit from it. But even so, they don't need to comply - they can accept that what they're doing is illegal, but continue doing it because it's morally right.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by idrios on Thursday November 04, 2021 @03:50PM (#29111739)

I think there's a difference in that a cryptocurrency can still be centralized, such as a government that creates its own crypto and manages it through its own exchange.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by jcpham2 on Thursday November 04, 2021 @03:54PM (#29111785)

I’d say cryptocurrecy has created DeCentralized Finance would be more accurate one enables and furthers the other. DEXs, DAOs, stuff like what AAVE and DAI stablecoin.

There are instruments on instruments cross referencing each other creating entirely new instruments.

Maybe a defi ecosystem empowered by cryptocurrency but one doesn’t necessarily equal the other. The picture is much much larger now with the meta verse angle.

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Re:DeFi and the “digital asset” felony hidden in the infrast... by jgoldshlag on Thursday November 04, 2021 @03:53PM (#29111779)

DeFi also includes the various crypto-adjacent scams, can't leave those out!

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Re:DeFi and the “digital asset” felony hidden in the infrast... by serverholic on Thursday November 04, 2021 @04:04PM (#29111900)

Yes freedom means good people can do good things and bad people can do bad things. It's almost impossible to craft laws that only restrict the bad people without reducing the freedom of good people.

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