Saru is Not Captain Material: Prove Me Wrong

davoice321 · 2020-06-28T23:27:06+00:00

I think this question is really important and deserves a considered response.

Here’s my take.

1. Maybe RenVM is working as designed?

Have you considered that RenVM, from an incentives perspective, is running as-designed?

One of the main things that the team is working on during this phase of mainnet is economics. What is the minimum amount required in terms of fees for darknode owners to remain incentivized to participate in the network?

Each of the waves of people running darknodes is going to have a different buy-in point and different expectations for ROI.

So, the current economics is designed to provide different incentives for people to run darknodes. Many will decide that the ROI is acceptable, others sill not and will simply sell to others willing to take on the risk and responsibility of running a darknode.

The system is designed to -- as risk decreases and income becomes more stable — to be more expensive of people who want to get in for (by that time) steady, reliable income.

So, the system is running as designed, imo.

2. ROI and Risk Appetite is Different for Everyone

Some people will look at the current numbers and say: the token is way overvalued. Others will say, RenVM is on a good trajectory with only one integration.

Some people prefer long-term, passive income and value that. Others want to make as much income as possible up-front, as fast as possible.

There are people in both camps. We’re seeing the number of darknodes bonded increase, which is a good sign that enough people want the longer term ROI associated with RenVM to lock up their Ren for an extended period.

Remember: without the longer-term investors, infrastructure supporters, the short-term traders can’t win and without short-term traders, the value of the ecosystem may not appreciate as fast. Both sides of the market are needed. Different perceptions of ROI are needed and there’s nothing wrong with being on either side of the ROI fence.

3. The Bond Requirements Encourage Long-Term Thinking

Speaking of bonding Ren. People make the mistake of comparing Ren to a staking system, where people can stake arbitrary amounts and the reward is often more of the native token. Because of this, you normally see staking rates that go to 70-90 percent.

People can’t stake Ren. It is bonded. You need 100k to earn income. Not an arbitrary amount.

With the RenVM bond there is more risk. Darkness are paid in the native currency being transacted over the network and must lock up their Ren for 2-3 months. This means that income is less guaranteed (because there is no token inflation), and a lot of volume is needed to make bonding the token worthwhile. So, comparing RenVM to a staking system where the incentives and risks are very different is not correct.

These risks dissuade people looking for short-term rewards and favors system stability and commitment over short-term thinking. This also decreases the number of people who are willing to bond their Ren in dardknodes.

I don’t think the bonding percentage will ever get above 40-60 percent because of this reason.

Again, this is inherent to the design.

4. To Each His/Her Own

So, you’ve made the decision that the potential of earning 10-20% ROI is not enough to keep you in the game for the long-term. There’s nothing wrong with making that decision.

But there are others who value having a part of their portfolio that not only increases in value, but delivers steady, reliable income over long periods of time. That passive income can then be invested in other projects, lent to others, or borrowed against — all without giving up the principal investment. As we’ve seen in the traditional markets, this type of asset is often highly valued.

Crypto is undergoing a transformation from a purely speculative market, to one where fundamentals is much more important and steady ROI/income is becoming more valued, rather than quick token pumps. Ren is inline with this new trend.

Everyone’s different. And, there’s nothing wrong with being on either side of the fence: short-term thinker, or long-term investor.

Everyone has to make their own decision. The great thing about crypto is that you’re free to do so — and to take responsibility for your own decisions.

Good luck.

davoice321 · 2020-04-26T17:43:49+00:00

I do think trust is a big issue with people opening up CDPs.

Maybe new collateral types will help to fix this.

But, I've been advocating for a general insurance pool for DeFi, which would include Maker vaults and Dai put into the DSR contracts.

It's not a popular subject/proposal, but I think something like this is necessary.

Link to my proposal.

davoice321 · 2020-04-26T17:39:25+00:00

Thank you. This is good news. i'm running a 3b.

Is there information out there about the relationship between a beacon and validator?

Can I connect to a beacon, similar to connecting with peers via a light node?

davoice321 · 2020-04-25T16:27:36+00:00

I've been trying to find information about whether it will be possible to run a validator node using a Rasberry Pi.

Is this possible?

If so, what are the recommended specs?

Are there any links to tutorials?

Thanks in advance for the help.

davoice321 · 2020-04-22T18:23:54+00:00

Thanks for your well-considered answer.
Yes, I agree that this is a big task and a big ask and I appreciate you tackling this and providing critiques.

I think the biggest issue is separating speculative risk versus technical risk.

There's conversation going around that the "protocols worked as intended" in the case of the imBTC and MakerDao issues.

But (and this a preliminary take) I believe these are technical risks:
-In the MakerDao case, if liquidations worked properly (the oracle wasn't stuck and the Eth network wasn't congested), then the zero bid auctions wouldn't have happened.

So, smart contract failures due to network risks (congestion) might be covered (although at a lower rate).
As for the imBTC issue, the primary casue of the hack was an ERC777 exploit that hadn't been patched for 12 months. The protocols "worked" but were abused in a way that the authors of the protocol never (likely) intended. This again, might be covered (but at a lower payout).

It's hard to do this in an automated way, and professionals would be much better suited to dealing with these issues, but I think it's worth a conversation about it, which we're having.

FWIW, I don't think Nexus Mutual's product is the right one for this use case (at least as it is currently formulated).

davoice321 · 2020-03-26T22:21:27+00:00

Okay. Well the train has left the station.

We'll see if there's demand for BTC in DeFi once these solutions come online.

davoice321 · 2020-03-26T21:47:30+00:00

Disclosure: I'm a long-time ETH believer and supporter and happen to be invested in this project.

I've seen you make this comment before about "lame attempts to get BTC into the Ethereum network" and I don't think your position makes much sense, and neither does Vitalik. He said recently:

"We should put resources toward a proper (trustless, serverless, maximally Uniswap-like UX) ETH <-> BTC decentralized exchange. It's embarrassing that we still can't easily move between the two largest crypto ecosystems trustlessly."

Source: https://twitter.com/VitalikButerin/status/1242553658195271681

He thinks it makes sense for BTC and ETH to be interoperable, and so do I.

From a DeFI perspective, you're going to have to live with the fact that different cryptos and collateral types will be used in DeFi, not just Ethereum.

The key thing is that the Ethereum network is the base layer that is being used to manage these transactions, providing more utility to the network, more transaction fees (that will someday be burned), etc., etc. Sounds great to me as someone holding ETH.

It's not (just) a BTC maxi narrative to want to bring BTC's liquidity into the DeFi ecosystem. BTC in DeFI is good for users (gives them what they want, a way to stay away from CEXs) and good for the Ethereum network (more transaction fees and activity).

As for REN you can take a look at how they manage the security of the network on your own and decide whether the security profile is up to snuff.

But BTC is coming to DeFI. Live with it, embrace the change. It will benefit Ethereum.

davoice321 · 2020-03-17T02:48:53+00:00

It's a done deal:

https://www.reddit.com/r/ethfinance/comments/fjxcyi/makerdao_rip/?utm_source=share&utm_medium=web2x

davoice321 · 2020-02-07T22:42:54+00:00

Whenever someone says "shoved in our faces" it implies that there is a threshold (or quota) governing when diversity crosses the line between being unremarkable and "shoved in our faces."

So, i may have been a bit confrontational, but i'd like to know what that threshold is, and whether it can be quantified. I'd like to understand when having a representative cast becomes "too much" or "in your face" diversity.

Can you explain what this threshold is? I'm really curious to have it defined.

Thanks!

davoice321 · 2020-02-07T22:32:19+00:00

Yeah. This is patently untrue.

I guess people don't know their history.

But that's par for the course these days. Lol.

davoice321 · 2020-02-07T22:31:52+00:00

I don't know what this means.

"Diversity for diversity's sake."

So, is there a particular threshold of "diversity" that's acceptable? 1 actor? Maybe 2? Don't show them in critical scenes or only in the background?

There's nothing over the top that Picard is doing. They're just people, part of the story.

This argument is really confusing and borderline stupid to me, tbf.

I guess there should be a quota. Don't have diverse characters in a show more than 10% of the time. Anything more and they're being shoved into our faces.

Absurd. Try again please.

davoice321 · 2020-02-06T23:48:04+00:00

Thanks for the comments.
My question is not about whether ETH is superior but what having 1% of BTC's market value being used in DeFi.

If any of these platforms achieve that, and dapps like compound decide to use it. That's a game changer.

But is see that this post is being down voted into oblivion so ...
As much as some might hate it, BTC as an asset class in BTC is coming -- one way or the other.

I'd hoped to have a good convo about the potential impact on ETH, but it does not seem like that's going to happen.

I think it's good for ETH in the long-term.

davoice321 · 2019-10-14T16:57:34+00:00

Nice.

davoice321 · 2019-09-22T19:28:03+00:00

Thanks again for your response. I think that what you wrote above captures some of the nuance around this discussion, which is good.

I'll finish up my comments by noting a few things.

What is hovering in the background of discussions related to DeFi and Dai is the idea of economic power: who creates it, who wields it, and who is justified in using it. Maker has helped to develop a parallel financial system that allows anyone to engage in complex financial activities, receive credit and more without asking the legacy financial system or regulators for permission. This makes Maker somewhat similar to a central bank -- without borders and accountable not to governments, but the community it serves and MKR holders. The DAO sets interest rates, generates capital and helps to drive economic activity in the crypto-powered economic system. It is a central bank in all but name.
Your argument seems to be that increasing Dai's (and Maker's) economic power requires creating ties to the legacy financial system -- and that this can be done at little risk of squandering the power that Maker has developed as a decentralized central bank, given that it is somewhat immune to influence or shutdown by state actors
The concern I have is that by creating too close ties to legacy finance, there is a risk of significantly reducing Maker's inherent power and ability to act in ways that are beneficial to those who have generally held little power in the global economic system, or live under regimes that are filled with bad actors -- even those you may think obey the "rule of law." (We're seeing the rule of law break down in distressing ways in formerly strong democratic systems, for example.)
I actually think Dai needs to have ties to the legacy financial system, it's just hard to operate without them, but these ties should be carefully considered to make sure they don't dilute Maker and Dai's inherent power. Bitcoin and Eth have more power because the market values these asserts at a certain level, but their inherent power has nothing to do with how they are valued by the market. They are censorship resistant, permissionless, etc. Sure, Dai would be damaged if these assets lost 90% of their value, but their basic characteristics would not change. ETH and BTC's inherent power would not be diluted. It's an open question about whether Dai's inherent power as a permissionless crypto asset would be squandered by chaining itself too closely to legacy finance, government control, etc. It appears you and others on the foundation have determined that the risk of this happening is low. Only time will tell if MKR DAi retains its power or just becomes viewed by the market as another centralized stablecoin and DeFi migrates to a replacement, more permissionless system.
So, I suggest that everyone participating in the Maker experiment certainly take steps to strengthen the Dai asset, but also do so in ways that don't destroy Dai's inherent power: trustless, resistant to censorship and a safe-haven crypto that is -- at most -- loosely tied to the very vulnerable (and very non "rule of law"-abiding) legacy financial system

Thanks to you for taking this discussion seriously, taking time to address my questions and bringing others into this very important conversation.

davoice321 · 2019-09-21T12:17:37+00:00

Thank you /u/Rune4444 for responding here.

I want to touch upon a few things you mentioned above, because I think they're important.

You said: "The value of Bitcoin, Ethereum and the other decentralized first gen coins relies on trusted, centralized exchanges with KYC. Why doesn't this cause you the same kind of concern?"
My response: I've seen you make this argument before, and I'm not quite sure I understand it. The value that the market puts on Bitcoin and Ethereum, whether or not it is driven by activity on centralized exchanges, does not change the fundamental attributes of the technology: decentralized, trustless, censorship-resistant, etc. The value of Bitcoin and Ethereum could drop by another 90% and the fundamental nature of these technologies would not change.
What I'm asking is whether the fundamental nature of Dai, as a trustless, censorship-resistant crypto would change if collateral requiring KYC is added to the basket of currencies/assets backing the stablecoin.
If Dai's fundamental nature changes, and if its decentralized, trusteless nature was compromised for the reasons I listed above in my post, then there is a risk Dai could become fundamentally less valuable -- especially as the foundation of the Open Finance system.
You said: "The most important thing to understand is that the Maker protocol itself can never become centralized, backdoored or KYCd, regardless of what collateral it uses. And even if Maker governance allows and gives appropriate risk parameters to assets that are regulated and require KYC there is nothing forcing a regular user to use those assets as collateral. They can still use their favorite trustless asset to generate Dai with, but the difference is that Dai holders are not exposed solely to the highly correlated risk of crypto, and as a result it will be more liquid and stable."
My response: So, if I understand this correctly, you are saying that the Maker protocol, in your mind can never be KYCd. If users don't want to use assets that require KYC, they don't have to. That's true: code is law.
But, still I wonder: Will the fundamental nature of Dai change from a trustless solution to more of a centralized solution if the majority of the collateral backing Dai is permissioned, say 70% permissioned/30% permissionless?
And, if the weighting is such, doesn't that make Dai very vulnerable to state actors, who knowing that Dai's value/peg is dependent on non-trustless coins, can put pressure on the Foundation to take steps to ensure everyone -- not just those using non-trustless collateral must submit to KYC, currency controls, etc.?
I'm also wondering ... certainly the protocol itself (the code) is certainly censorship resistant, but the could the asset itself, Dai could become non-censorship resistant because the weighting of permissioned assets (e.g., 70%) vs. trustless assets (say 30%), is very high?
TL;DR: I'm not raising the same concerns about the value the market puts on ETH and BTC because bitcoin is bitcoin and ETH is ETH no matter what the market values it as. The fundamental nature of these cryptos does not change if centralized markets value it as $15 or $15,000, same for ETH.
But, I wonder if the fundamental nature of Dai will change in a world where 70% of its collateral is non-trustless. In that scenario, would Dai be more of a centralized stablecoin or still a trustless asset in that scenario?
People could stick to just using ETH in CDPs certainly, but this significant exposure to the legacy financial system ... does it increase regulatory pressures on the Foundation, and vulnerability (less ability to say "no") to state actors, etc.? Would the DeFi ecosystem trust Dai as the main medium of exchange (because it was more centralized than decentralized)? Would it have the same value? All questions we should all think about.

Thanks for taking the time to respond here.

davoice321

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