The lending problem

[slaman29]

But you missed the entire point of my post, and the post I was responding to. At least business banks and development banks actually do give out money or capital for no collateral (they require a good business plan and an interview to determine you have a good business idea and the skills to make it work). So they are actually doing more for the working class and "unbanked" than Defi.

I agree that DeFi, in current form, isn't really anything about "banking the unbanked". That job still falls to something like an LN wallet and a supporting economy. It is the "crypto VCs", their close friends and the shill influencers who are getting most of the action. Yet, the concept has just begun to be applied. It cannot be denied that certain communities, not necessarily poor or unbanked, are finding use cases that directly increase their incomes.

I keep seeing these posts by artists on twitter expressing happiness when their art sells in the form of NFTs. The NFT platform just provides an outlet, they provide the original pieces too. When it comes to DeFi, the current scenario is mostly about making mad gains by betting on the next product which will provide an alternate to banking. They are far from replacing banks that can provide loans based on assessment of businesses and property and are dependent on crypto collateral. Yet, the opportunity to just find the next Compound or Uniswap is open to everyone. Poor Zimbabweans aren't gonna cut it but a fillipino and a vietnamese with an old Axie account can.

But nfts is not defi though:) And nft business is still highly centralized. Look at what opensea did censoring and delisting art they deemed was not original enough and yet allowing many other ripoff copies of cyberpunks to list.

I like nfts too but you know when the ones making millions and being the most headlines and selling at Cristies are famous rich artists anyway who sell art to millionaires, it's basically just fancy tech for existing scene. Not entirely true of course but all these projects popping up are really not helping the masses I believe.

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[Charot12345]

A simple question to the forum - I hope that people can provide sensible answers, since it would be way too easy to preach rather than to reason.

It has been mentioned many times in the forum that banks can be killed by bitcoin and that crypto is a threat for central banks, etc... One of the reasons that make me doubt about that possibility is the worldwide need of having a strong lending and borrowing system. I think that currently DeFi does not offer a realistic solution and that lending eventually has to rely on an intermediary. That, in some way or under a different name, is a bank.

How is this problem addressed currently and how could it be solved at large scale without a "bank" of shorts?

I don't think it can kill banks. It is possible that they co-exist but not killed banks. As for lending, I think it is not possible on bitcoin. It was not under bitcoin because it was decentralized and it was volatile.  There are many reasons why people need banks, and lending is one of it. Banks already set rules and have a fixed systems about it. Or the payment was already fixed. While if it is in bitcoin where the price goes up and down it can be confusing and complicated.

[paxmao]

--snip--
When at the heart of defi, you have to put up money to get more money. Borrowing money for collateral, which must be crypto.

That is the case for almost everything else in the world. You HAVE to put money to get money. There will always be people who have bigger purses and can become monopolists. In DeFi, with such proliferation of projects, there are just too many scams where people lock up funds and then farm the token to zero. This has always been the bane of crypto. Unregulated, anonymous founders and the ability to drum up a community with low effort marketing on Telegram and Discord.

Just too many third worlders are out there willing to use fake/ farmed twitter and facebook accounts to shill tokens. Its just the bounty mania becoming the DeFi mania. This definitely doesn't mean that the concept of DeFi isn't novel. It is laying the foundations for decentralized lending. How they evolve to actually fulfill the promise of making it easier to have financial access is up to the community to decide.

Its not that there is no path to such a future. Its only that majority is interested in gambles and mad gains, rather than slow, thoughtful building.

I have seen a lot of artificial community building. A free distribution of tokens is fine to create liquidity and awareness, but requesting Facebook, twitter or comments simply to make it look like it has a momentum and people are eager to use the product, when that is just not the case and it may most likely end up in and "excess liquidity" also know as "first day dump".

Regardless, a proper lending system overlay on bitcoin would be something really useful but the point remains that it seems that we would need a third party or some short of legal mechanism on top.

[Snappycoco]

I think DeFi lending and borrowing is quite a joke. I saw some DeFi projects offering borrowing through smart contracts but if you borrow of a value of x, you need a 1.5x of what you borrow for collateral. I know that its quite hard to do lending in this space, but this solution of providing 1.5x of what you are borrowing will not solve your problem. In the real world, you borrow money because you have nothing. You need collateral but different assets. I hope anyone could solve this joke.

[stompix]

Why do I find like I keep having to repeat myself or that no one is actually reading what stompix or I said about the problem with defi?

1. Because yeah, people are not usually reading anything besides the first post
2. Your opinion goes against the mainstream here, blockchain and cryptos are the solutions for everything

Yet, the concept has just begun to be applied. It cannot be denied that certain communities, not necessarily poor or unbanked, are finding use cases that directly increase their incomes.

Name ONE! case where DeFi has been successfully applied to a community without forcing them to first buy coins!
One real example of somebody unbanked with no money getting help through DeFi to start a business, and don't give that crap about somebody buying shitcoin#1 with 1 cent, now the shitcoin is worth 100$ so he uses it as collateral.
We're talking about a real-life experience where you invested all your money in a business and you need a loan because one of your partners is late with money, your car has broken down and you need a loan to fix it but you don't have any, you just applied for a job and because of family problems you need to move and you don't have money for rent...real-life examples!

I keep seeing these posts by artists on twitter expressing happiness when their art sells in the form of NFTs. The NFT platform just provides an outlet, they provide the original pieces too. When it comes to DeFi, the current scenario is mostly about making mad gains by betting on the next product which will provide an alternate to banking.

How the hell would an NFT provide alternate banking to somebody...I doubt even God knows!
You're deeply mistaken working (producing something like an NTF) with a service offered by an institution.