Okay, these loans that are backed with real world assets are just traditional finance right? We were discussing loans that are granted automatically to anyone without requiring an approval, remember:
> How I can take out a collateralized loan, anywhere in the world, without having to ask for approval?
Re:Rarbg Is No More
by whimsicalism on Thursday June 01, 2023 @05:19PM
(#36157486)
Is it traditional finance if it is a backing loan for dollar-pegged assets that can be held by anyone in the developed world (ie. rather than rely on your rapidly decreasing Naira - buy some Dai from a local dealer and you have a stable store of value backed by a global basket of assets)? And if the entities granting the loans are anonymous decentralized collectives?
I agree that the overcollateralized loans backed by crypto are less useful unless you want to be investing crypto, which is what I mentioned at the beginning of my comment. I am not the commentator who said the thing about anywhere in the world without approval.
A loan agreement that is enforced by courts of justice is traditional finance certainly.
Loans in decentralised finance use smart contracts, instead of relying on the legal system.
> Loans in decentralised finance use smart contracts, instead of relying on the legal system.
Code over law.
1. There is no restriction that the asset being borrowed and the collateral are in the same asset class - loans can be extended based on whatever criteria the DAO in charge of the Dai votes on. There are a number of loans backed by real property investments in the US, see [0] under RWA. There are a number of loans also backed by large holdings in US bonds.
2. Dai is pegged to the dollar. It can be instantly exchanged with the dollar at a number of onramps. It is not equivalent to holding volatile crypto like ethereum.
[0]: daistats.com