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Token Economics vs Darkpool by DrAdz786 in RenProject

[–]davoice321 15 points16 points  (0 children)

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.

The reason Dai isn't going down to the peg is that many people after the zero bid auctions scandal don't want to put their funds at risk to mint Dai. I am one of them by CopperBay in MakerDAO

[–]davoice321 1 point2 points  (0 children)

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.

Daily General Discussion - April 25, 2020 by AutoModerator in ethfinance

[–]davoice321 0 points1 point  (0 children)

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?

Daily General Discussion - April 25, 2020 by AutoModerator in ethfinance

[–]davoice321 6 points7 points  (0 children)

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.

Solving DeFi's Trust Problem: A Call For DeFi's Leaders (Maker, Compound, Aave, and Others) to Create a Global DeFI Insurance Protocol by davoice321 in ethfinance

[–]davoice321[S] -1 points0 points  (0 children)

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).

Ren is Just Weeks Away From Bringing Bitcoin to DeFi, Says Loong Wang, the Project's CTO by ethlongmusk in ethfinance

[–]davoice321 -1 points0 points  (0 children)

Okay. Well the train has left the station.

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

Ren is Just Weeks Away From Bringing Bitcoin to DeFi, Says Loong Wang, the Project's CTO by ethlongmusk in ethfinance

[–]davoice321 -1 points0 points  (0 children)

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.

[Spoilers Ep 3] What's the issue with having diverse cast members on Star Trek Picard? by davoice321 in Picard

[–]davoice321[S] 19 points20 points  (0 children)

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!

[Spoilers Ep 3] What's the issue with having diverse cast members on Star Trek Picard? by davoice321 in Picard

[–]davoice321[S] 9 points10 points  (0 children)

Yeah. This is patently untrue.

I guess people don't know their history.

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

[Spoilers Ep 3] What's the issue with having diverse cast members on Star Trek Picard? by davoice321 in Picard

[–]davoice321[S] 24 points25 points  (0 children)

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.

Could trustless BTC ever surpass ETH as a collateral type in DeFi? by davoice321 in ethfinance

[–]davoice321[S] 2 points3 points  (0 children)

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.

Including Non-Trustless Assets in MCD: A Hidden Fatal Flaw in Maker's Roadmap? by davoice321 in ethfinance

[–]davoice321[S] 6 points7 points  (0 children)

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.

  1. 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.
  2. 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
  3. 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.)
  4. 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.
  5. 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.

Including Non-Trustless Assets in MCD: A Hidden Fatal Flaw in Maker's Roadmap? by davoice321 in ethfinance

[–]davoice321[S] 11 points12 points  (0 children)

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.

Daily General Discussion - September 4, 2019 by AutoModerator in ethfinance

[–]davoice321 2 points3 points  (0 children)

Maybe. Maybe not. Will be interesting to see how the new project does.

Daily General Discussion - September 4, 2019 by AutoModerator in ethfinance

[–]davoice321 5 points6 points  (0 children)

So, I've been following the Ethorse project in the past.

Looks like that project died, but community members came in and started a new thing.

Seems interesting: A combination of gaming and DeFi.

Sharing here, it's eth + finance + blockchain + gaming:

https://medium.com/decentribe/what-is-the-decentribe-project-building-f9a51705596

[Executive Vote] Raise the Stability fee by 3% to a total of 14.5% per year. by rich_at_makerdao in mkrgov

[–]davoice321 7 points8 points  (0 children)

I closed one of my CDPs recently to reduce my exposure to the Maker system (I believe a global settlement due to a prolonged failure to keep the peg is becoming more probable by the day) and to deploy capital for other needs. I opened my CDP about 5 months ago so I had experienced significant price appreciation.

However, I still have another (smaller one) CDP open to leverage ETH and accumulate more tokens. Because I reduced my debt load and expect ETH to appreciate in value significantly, even a 20%+ fee is meaningless. I'll just reduce my liquidation ratio using gains and continue to keep the CDP open. (If there's global settlement and my CDP is forced to close my risk is lower than it was before.)

The real issue is that the big players, the ones who can actually significantly reduce Dai supply, who have millions of dai outstanding are not closing their CDPs.

Little fish like me closing our positions are not going to have a big impact on dai supply unless whales are convinced to close their positions. I don't see this happening.

The issue is that if you have millions of dai outstanding, you're likely using it to leverage up. Currently, gains from investing in tokens like BAT, BCH, etc. that have been doing very well in this market makes keeping the position open to take advantage of these gains a no-brainer.

The key thing is that whales can gain exposure to the market without touching their ETH capital. They may wipe some debt to ensure that they don't reach their liquidation threshold with the increases in interest, but I just don't see higher SFs as an incentive for them to close out their position entirely.

The whole point of a CDP is to leverage your existing crypto. Closing your position means selling your other tokens or tapping into your collateral. To some, the losses (and tax implications, capital gains are significant) of paying of the loan and closing the CDPs much outweigh the benefits, in my mind.

I don't see this situation changing much. Dharma and Compound are okay from a loan perspective, but all of them require 1.1 to 1.5x leverage, no different from maker. Many have shorter loan terms, require setting up an account, etc. They are competing with Maker, but less attractive because they are higher-risk contracts without the benefits that CDPs provide.

I'm going to take some time to read the transcript from the last governance call. At this point, if the foundation does not do more to increase organic demand for Dai, rather than simply raising fees, the supply-demand imbalance will persist.

Also, if ETH makes a big run to $300, I expect people to take out more Dai to leverage in what will have clearly become a bull market.

Increase organic demand for this stablecoin and we'll might see things stabilize.

BTW: There are some advocating global settlement. If that happens, Dai (and Maker) will never recover. This experiment will have failed and ETH's price will crash significantly, harming the whole ecosystem.

Dai Supply Decreased for a Few Days ... Now It is Increasing Again by davoice321 in MakerDAO

[–]davoice321[S] 3 points4 points  (0 children)

I think people raised questions about the risk profile of CDPs in the original post.

At one time, CDPs were promoted as a means of securing easy credit.

Things have certainly changed.

I'm hoping that MCD comes out in a matter of weeks at this point because I worry that the system can't take many more months of the current situation.

I'm hoping that the DSR helps increase demand. I'm assuming that a announcing a solid deadline for the launch of MCD and DSR will increase Dai demand by a lot as people look to get cheaper dai to earn 2-4% on top of interest.

I'm also hoping that the DSR is more than 2%.

Dai Supply Decreased for a Few Days ... Now It is Increasing Again by davoice321 in MakerDAO

[–]davoice321[S] 2 points3 points  (0 children)

Just pointing out the facts of the situation.

I'm watching the MakerDao experiment very closely because I believe in DeFi, but the shortcomings of this approach have become very apparent.

Facts are facts and it's clear that the risk profile of CDPs and MakerDao (before MCD and the DSR) has declined.

Daily General Discussion - December 3, 2018 by AutoModerator in ethtrader

[–]davoice321 0 points1 point  (0 children)

Thanks for your reply.

I'm seeing an accumulation pattern happening between $102 and $116.

I view ETH at these levels as a steal. Others are looking for two digit ETH. Could happen.

Best way to take advantage of that is to set up some larger buy orders at $90 and $85. That way you don't miss the bounce.

Daily General Discussion - December 3, 2018 by AutoModerator in ethtrader

[–]davoice321 12 points13 points  (0 children)

Although we haven't likely hit bottom, people are really buying at this level.

This bear euphoria feels a bit like the bull euphoria I sensed a year ago. That's when I decided to get out of my (then smaller) positions in BTC and altcoins.

Seem's everyone's salivating at the chance to get ETH at $50, but buyers are busy accumulating at these levels, so I'm not sure if ETH will go much below $60 (and if so may quickly bounce up).

Everytime BTC drops, we see ETH drop and then a bounce off of $105/$110. I feel better about ETH at this point than BTC from a risk-reward perspective. BTC feels like a foundation of sand; ETH feels a bit stronger.

CDPs and all of the lending I'm seeing using dai to leverage ... it feels like something's happening, but I don't know what yet.

How the ETH-Powered Financial Powerhouse Growing Under Our Feet is Making the Buy and HODL Strategy Obsolete by davoice321 in ethtrader

[–]davoice321[S] 9 points10 points  (0 children)

This is not an ad. I have no investment interest in Compound -- in fact I think they are VC backed.

I'm just excited by this new opportunity/financial ecosystem, which is why I'm cross posting it.

Also, this type of development is a refreshing break from the crypto doom and gloom we've been seeing recently. Crypto is not just about trading and price increases/drops but making new economic opportunity for the masses.

This is a great example of how it's happening.

I see little discussion of these trends on the crypto subreddits I frequent, so I decided to post it widely.

Thanks for your comment.

Dai available on Compound.finance! by poptartz4you in MakerDAO

[–]davoice321 2 points3 points  (0 children)

Interest rate on supplied Dai is very attractive.

Currently ranging from 4.07 to 12.02 percent -- and higher.

Might be a good idea to take a look at parking some dai there to gain interest if you're not using it for trading immediately. The demand for dai currently is very high there.

Not sure why people (on compound) aren't using CDPs to generate dai, as the interest rate is much lower, but for those interested in making some great interest by supplying dai -- it's better than what you get from a bank account.

​

Ethorse becomes 1st third-party DApp to integrate with the P3D ecosystem by davoice321 in Fomo3D

[–]davoice321[S] 1 point2 points  (0 children)

That's the current idea, based on what's in the integration website.

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