A smart contract.
edit: if you want more detail -
https://medium.com/coinmonks/what-is-liquidation-in-defi-lending-and-borrowing-platforms-3326e0ba8d0
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If anyone here has actively used the eth network, you should check:
Free token to claim. Not worth that much unless you were pretty active (itâs based on eth gas fees spent). Probably need at least 1 million of the coins to cover the gas to claim and sell.
There are also uncollateralized loans such as flash loans that you have to pay back within the same block in order for it to actually work. Something like:
/start block
borrow $X of Y currency
[do some stuff (e.g., arbitrage)]
repay $X of Y currency + %fee
/end block
If the repayment doesnât happen then the contract didnât execute and you didnât do any stuff. However, your next question may be something like âbut what if a hacker finds weak code to exploit with the [do some stuff] section and uses an extremely large loan to steal a bunch of money?â That would be a very good question.
Decentralized lending protocol Cream Finance has been hit by a major flash loan attack. The assailant borrowed $2 billion from Aave and made off with over $136 million worth of Ethereum-based tokens.
Actually my next question would be: I need collateral in the form of crypto upfront?
No, itâs an unsecured loan. You are paying back all of the funds you borrow within the same block as a matter of code. If your contract doesnât pay back the loan within the same block then nothing happens.
https://www.coindesk.com/learn/2021/02/17/what-is-a-flash-loan/
*You would still have to pay gas to execute the transaction, but there is no collateral on the loan. You pay gas whether the flash loan fails or not. IOW you canât fire off infinite flash loans at zero cost to you (in case you were wondering).
Is DeFi lending and borrowing biased against poor people?
I donât understand the use cases for this
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I can see this being a way for angel investors to extend microloans to the third world. Iâm a little hazy on this being feasible for commercial/consumer loans.
Arbitrage is the best example.
Insane to me how folks come into a fun thread and just shit all over it.
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Iâve never tried it but if youâre poor and donât have any crypto assets then i suppose you wonât be getting a loan. If youâre real life poor but crypto rich then I would imagine you could get whatever youâre looking for as long as you have the collateral
Can someone point me to the Discord?
You have an incredibly narrow view of crypto. Itâs not going to be a way to go to the shop and buy groceries - well it might be that too, but thatâs not the point. The point is that crypto is to money and finance what the internet was to information. Itâs a platform enabling new structures and new means of cooperation to be built on it. Itâs those things that will mean that the currency is in demand, not just that people prefer using it to USD.
One thing that I think has a big future is DAOs. One going on at the moment is BlockbusterDAO, a distributed effort to buy the Blockbuster brand and reimagine it as a streaming service. Imagine people having an idea and raising money for it democratically, through nerd enthusiasm for a niche product, rather than have to convince venture capitalists. Look at how successful Kickstarter has been even though all you get for buying in early/for more money is bullshit inducements like a poster signed by the creators and crap like that. Imagine if instead what you got was voting rights in the organization, commensurate with your investments, and a share of the profits, all delivered across international boundaries and without the need for lawyers. Thatâs the kind of thing crypto is about. Saying âI could see it becoming moneyâ is like a Boomer looking at the early internet and being like âwell I guess I could see this becoming the new way my morning newspaper gets deliveredâ. Itâs like⌠yes, sure, that might happen, but viewing it as just a new way to deliver old capabilities is insanely limiting.
The issue here is that youâre looking at Bitcoin and being like âthat doesnât seem that usefulâ and looking at people selling each other pictures of cartoon apes and junk like that and concluding that this is all bullshit. This is like looking at people who were obsessed with text-based MMOs, or nerds getting married in EverQuest, or Usenet and being like âthis is all nerd shit for weirdos, this is never going anywhereâ. Irrational exuberance, cult-like enthusiasm, weird nerd shit that nobody cares about and so on were also features of the early internet, but it would have been a mistake to therefore underestimate the internet as a phenomenon. As the example of Amazon shows, itâs just really hard to predict what will make it and what wonât. I tend to agree that Bitcoin wonât make it in the long term, but I could be wrong. The equating of crypto with Bitcoin ITT is just evidence of how out of touch people are. Are you aware that Bitcoin is up 60% year-on-year while Ethereum is up 400%?
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This post is the largest collection of meaningless word salad Iâve read in years.
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I like how this post proved the entire point of the opposite argument and you thought it was in favor of yours
nobody uses text based MMOâs or everquest or usenet anymore (at least it sure as hell hasnât grown from there been forever since I heard any of that shit) and for the love of god the great big idea is resurrecting blockbuster to a much, much worse netflix? itâs dead move on and kickstarter, which for the most part is just people lighting money on fire because thatâs what people do.
Crypto isnât an innovation in finance whatsoever. Itâs worse in every regard. Other than skirting various laws anyway. Itâs been nearly 13 years. Which is forever in tech. Sure youâve convinced more people it will be the future, but when is it going to start?
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Pretty sure that was originally the point of cryptocurrency.
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Well⌠yeah? I mean here is my view of BTC from May, this view has not changed.
So I think BTC could collapse, although I think the cult aspect is not to be underestimated. People bought tulips and pets.com stock in search of a quick buck, but people hold Bitcoin in part for culture identity reasons. But the point is, text MMOs, EverQuest and Usenet all collapsed, but huge multiplayer games and social chatter on the internet exploded. Extreme negative views of crypto are like extreme negative views of the early internet as a platform.
It was originally the point of Bitcoin.
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How can a DAO be used by bad peopleâletâs say, white nationalistsâto do things they canât currently do or canât do so as well?
Not sure what the point of this question is, but I think itâs an interesting question. I could see real-world griefing becoming a thing. A white nationalist DAO could buy priceless Jewish artifacts for the sole purpose of publicly destroying them, for example. I mean, if you could contribute 50 bucks to an organization bound by its charter towards some action designed to make Joe Manchinâs life hell, I bet some people here would consider it.
Crypto advocates often concentrate on the good things that people like them might do with crypto and donât think out the bad things that people presumably not like them might do.
When social media started, Iâm sure people were excited about the fool things they could do and didnât spent much time thinking about the downsides.
Every time something new comes along, we should ask how this could affect the poor, how this could affect minorities, how this could affect the worst-off in society. I donât really see anyone doing that, but I might be looking in the wrong places.
Iâm not super-anti-crypto. Iâm a bit skeptical, but Iâm open-minded if I can have my concerns addressed. Whether it works or not is irrelevant. What matters to me is what the unintended consequences might be. We canât know the future, but our educated guesses can be more educated.
I might be dragged into deeper study of this space, if only to answer these questions.