Crypto Utopia Cracking?

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Financial system that is internet-native and the traditional intermediaries and trust mechanisms in today’s financial system if you want securities or insurance like products you and that whole system relies on all parties in defi, the idea is to do all of the same blockchain-based “smart contracts” replace defi can be thought of as a blanket term for version of wall

Street, where central counterparties deals exclusively in crypto assets, with crypto they aim to do this without a lot of the red decentralizing finance, they argue might fix in part by erasing the power that big wall while defi has been generating a lot of press, value locked is around 40 billion dollars combined the 52nd largest bank in the united now i should note that the

Size of the defi value locked six months ago was over 100 billion dollars. more transparent than the traditional financial they pitch the idea of a utopian financial because those layers just add costs and inefficiency. if you make a mistake and transfer the wrong – you are simply out of luck – it was additionally, they argue that there are lots and these systems are

By no means as cheap and efficient as they claim to be. reputation for being the wildest part of cryptos worth hundreds of millions of dollars as people in today’s video we will look at a few examples defi protocols had to step in and take control, crypto in general is much more centralized than you might expect. systems are likely to ever become truly decentralized but,

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Before i get to all of that, let me quickly ok, so last weekend, users of solend, a lending taking control of the wallet of its largest the reason given was that the protocol operators margin position that was putting solana – the if the price of that token fell much more contract would automatically start liquidating market liquidity and cause huge losses for according

To the operators, the ripples through to avoid this, they decided to amend the smart the whale’s position and start liquidating the market hit the margin trigger and the automated selling began. of its decentralized autonomous organization requesting emergency powers. to protecting user funds, transparency, and to create new position limits to mitigate i guess the

Takeaway from that situation is when you don’t like the outcome, and then “due to hostile market conditions, bancor’s i guess something impermanent might be temporarily when things go well, you get a share of the losses,” – which are just losses in the real world. thus, i guess the losses are impermanent because i’m not sure that there is anywhere else you a

Piece of paper saying that you had lost gladly accept that piece of paper as being but anyhow – that is how things work in this day and age. could keep printing these tokens – which but most importantly – this week we learned goes down, they could print more bnt to make holders whole for the loss. this isn’t precisely the same as the terra anyhow, last week, citing

“Hostile market i guess when losses are rare, these rare loser but in “hostile market conditions” – loser tokens become plentiful… actually ponzi schemers, maybe they’re just not very smart. and, finally, maker dao, a collective that to be pegged to the dollar — voted to freeze of the latter’s exposure to another struggling lending platform, celsius. fun of-

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And of course that is my job here… are fewer middlemen, greater inclusion and lower transaction costs for everyone. and re-learning all of the lessons, of traditional finance. this isn’t necessarily a bad thing, as speedrunning that you might make different, interesting but often this approach has just shown that are done and that most people have simply forgotten

What those reasons were. are a function of government regulations, specifically accept higher costs in exchange now, to a certain extent, the emergency plans the last few weeks were a vindication for projects were much more centralized than their marketing indicated. amongst a few big players that could possibly a recent report from the bank for international could ever

Expand into an adequate monetary they argue that in the real world, it’s spell out what actions should be taken in allows firms to deal with this “contract incompleteness”. central entities are just needed to resolve disputes. of payments tend to lead to a greater concentration of computing power. for some defi believers, the unplanned moves are good as they just

Wash out the people but for others, this is simply reality reasserting itself in the marketplace. as the underlying transaction ledger for bitcoin is as decentralized as its biggest proponents suggest. they found that 60 percent of bitcoin traffic providers and that around four and a half so this decentralized industry is a lot more centralized than many people think.

Well, concentration can allow for possible it raises the risk that a small number of additionally, large validators could deliberately trades between their own wallets in order another big issue highlighted is that validators now, front-running does also occur in traditional rent-seeking behaviors like this are just the defi industry is of course aware of this protocols,

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In particular to rein in collusion, have gained momentum. history shows that new and innovative technologies it is quite possible that new ideas that come defi might eventually play an important role in our mainstream financial system. products in defi and almost all of their challenges reasonably serve as a compass for future regulation. let me know your thoughts in

The comments section below. don’t forget to check out today’s video see you next week, bye.

Transcribed from video
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