Utopia Talk / Politics / ‘Buy the Constitution’: Aftermath (long)

murder Member	Mon Nov 22 17:43:25 ‘Buy the Constitution’ Aftermath: Everyone Very Mad, Confused, Losing Lots of Money, Fighting, Crying, Etc. ConstitutionDAO tried to buy the Constitution. Now it has a $40 million mess on its hands and entire refunds are being wiped out by high fees. The community of crypto investors who tried and failed to buy a copy of the U.S. Constitution last week has descended into chaos as people are realizing today that roughly half of the donors will have the majority of their investment wiped out by cryptocurrency fees. Meanwhile, disagreements have broken out over the future of ConstitutionDAO, the original purpose of the more than $40 million crowdfunding campaign, and what will happen to the $PEOPLE token that donors were given in exchange for their contributions. Over the weekend, the next steps of the project repeatedly changed. In the immediate aftermath of the Sotheby's auction, in which ConstitutionDAO lost to hedge fund CEO Ken Griffin, the founders of the project asserted on its official Discord that, though they lost, "we still made history tonight." "We have educated an entire cohort of people around the world—from museum curators and art directors to our grandmothers asking us what eth is when they read about us in the news —about the possibilities of web3," an admin of the project posted on Thursday. Many donors are indeed getting an education about Ethereum and web3, but it's certainly not all positive as the community tries to quickly come up with a reason it should exist at all after failing in its initial goal. Chaos Reigns The specifics of what is happening are quite complicated, but, basically, ConstitutionDAO raised more than $40 million worth of Ethereum using a crowdfunding platform called Juicebox. In exchange for donations, contributors had the option to redeem a "governance token" called $PEOPLE at a rate of 1 million $PEOPLE tokens per 1 ETH donated, issued through Juicebox. If ConstitutionDAO had won, those $PEOPLE tokens would be used for voting on what would happen to the Constitution. It was never explained exactly how voting rights would be apportioned (the DAO said "Due to the unusual and extremely short timeline of needing to rally around obtaining the Constitution during the auction window, we have not been able to focus on giving the technical aspects of DAO governance mechanics the careful consideration and community deliberation this topic requires.") But many DAOs use a proportional voting structure; for explanation's sake, one way of doing this would have been to give 1 vote per $PEOPLE token, allowing people who donated more to have an outsized say in what happened to the document. Crucially, ConstitutionDAO repeatedly said that donors were not buying a fractionalized share of the Constitution and that individual donors would not "own" part of the Constitution, they would merely have a say in where it was displayed, etc. ConstitutionDAO also said that donating to the project should not be looked at as an "investment." "You are receiving a governance token rather than fractionalized ownership of the artifact itself. Your contribution to ConstitutionDAO is a donation with no expectation of profit," the DAO's FAQ section read. "Some examples of this would be voting on advisory decisions about where the Constitution will be displayed, how it should be exhibited, and for how long." That's all well and good, but regardless of the intentions of the core team, many people of course were looking at this as an investment (the meme was "buy the Constitution," after all.) This was a somewhat reasonable expectation—many cryptocurrencies have skyrocketed to ridiculously high valuations off the strength of a meme alone, and DAO governance tokens are themselves a $40 billion market. Clearly, some people expected to be able to flip either a tiny ownership stake in the Constitution or $PEOPLE tokens for a profit. This did start happening over the weekend, with some investors selling $PEOPLE tokens on decentralized exchanges such as Uniswap. ConstitutionDAO repeatedly said on Discord that it "neither prohibits nor encourages any secondary trading of the $PEOPLE token." This is all important because, on Saturday, ConstitutionDAO's admins announced two important things. First, it announced that it would be moving away from the $PEOPLE token into a new, yet-to-be-created token called "We the People" ($WTP), which would govern whatever future the project had. $PEOPLE, meanwhile, would go by the wayside because "we did not acquire the constitution and $PEOPLE's explicit reason for existing has now run its course," an admin said in what was billed as "a note from our legal team." They also announced that they were going to try to issue refunds outside of the Juicebox platform to those who wanted them. These announcements had the effect of cratering the price of the now apparently worthless $PEOPLE, according to hundreds of angry messages on the Discord ($PEOPLE's price is not currently tracked by any exchanges, but recent trades on Uniswap show it going for $0.0044), as well as sowing confusion and anger within the community. Many posters on the ConstitutionDAO Discord felt like the team was moving away from $PEOPLE tokens for reasons that weren't well-explained; this also led to a bunch of arguments about what the purpose of the project was, what the intentions of the founders were, and whether they were being scammed or not. As the price of $PEOPLE cratered, some people bought tons of the now close-to-worthless token. By Sunday night, however, ConstitutionDAO announced that it would "return to the original plan." This meant issuing refunds through Juicebox as was originally intended, as well as shelving the idea to create the $WTP token, which means that $PEOPLE was suddenly "useful" again, in the sense that if the project does continue in any way, $PEOPLE is currently the only token in existence. "One of the reasons for this reversion to the prior plan is that the decision to launch a new token and a new governance token (the previously discussed $WTP token) requires careful consideration, time to incorporate more community feedback, and thoughtful planning around the technology and structure of that governance," an admin posted. Previous references to $WTP in the Discord were edited out of the old announcements, leading to additional confusion. The peer-to-peer price of $PEOPLE has continued to fluctuate, according to transactions viewed by Motherboard on Uniswap. Basically, $PEOPLE went from being a hype-y DAO token to orphaned and totally useless to potentially valuable again within a 24 hour period. Its future is still very much uncertain, but people on the Discord are still very angry, wondering if this is a scam, and wondering if $PEOPLE will still skyrocket in value because of the apparent "historic" nature of it as part of a failed meme attempt to buy the Constitution. It is difficult to convey exactly how this is playing out on the Discord, but, basically, at any given moment a few dozen people are beefing with each other in the Discord’s “general” section about whether or not ConstitutionDAO is now a scam, whether they’ve been “rugged” (had their money taken), the intentions of the core team, what should happen next, whether this is just an unfortunate situation caused by disorganization and the speed at which everything happened, etc. This is mixed in with a bunch of people earnestly asking how they can get their money back, how to claim $PEOPLE tokens, what document they should try to buy next, etc. This is the general vibe: Part of what makes all of this even funnier and more chaotic is that, all along, this entire project has been billed as a DAO, which is a Decentralized Autonomous Organization, a new type of "web3" organization that is governed quasi-democratically via a transparent voting process using the governance tokens. However, as we mentioned, ConstitutionDAO's voting infrastructure was never actually set up, and so the community is currently being governed in darkness by a centralized "core team" of developers and some lawyers. This means the community itself cannot use its governance tokens to vote on the future of the governance tokens, and that it's really not much of a web3 project at all. "core team should have asked people to vote with their tokens," one user posted on the Discord. "there was no need for anything. there was no need for anyone in the core team to deliberate. whole point of dao and crypto infrastructure + ethos was missed." "this project lost the community the moment publically [sic] made announcements were deleted. it created speculation and uncertainty that could have been avoided," another added. "it's leaderless chaos. worst of both dao and real world. people had $people token, why weren't they asked to vote." Complicating things even further is the fact that many donors have basically two options. * They can leave their money invested in a project that is making things up as it goes, has repeatedly changed course, and has no obvious reason for existing once it failed to buy the Constitution. * They can lose a large portion of their money paying "gas fees" trying to get a refund. GAS FEES In its "how to donate" video, a member of ConstitutionDAO recommended that donors add "recommend adding about $150 to $200 more than you'd like to contribute" to their donations to pay gas fees, which are transaction fees on the Ethereum network. Motherboard contributed a small amount of money to the project to see how this would play out in practice. Here is how it worked: ConstitutionDAO accepted only ether, the token on Ethereum. For someone to convert USD to $PEOPLE tokens, the process had several steps. First, we had to buy Ethereum on an exchange (we used Coinbase). We bought $200 worth of Ethereum. Coinbase took a $3 fee. Then, we had to send the Ethereum from Coinbase to a MetaMask crypto wallet. To do this, we had to pay a $12 network fee. Then, we had to send the Ethereum from MetaMask to Juicebox. So-called "gas" fees vary wildly and depend on how busy the Ethereum network is at any given moment and the complexity of the transaction. Right now, gas fees on Ethereum are very high, and a highly complex operation could end up costing hundreds of dollars in fees. In our case, we paid a $75 gas fee to contribute roughly $75 to the project. Of the initial $200 we bought in ETH, $90 was eaten up in fees simply to donate to ConstitutionDAO. Motherboard was not alone in paying exorbitant fees to simply donate to ConstitutionDAO. The total cost in fees for donating to the project was nearly $1 million, with much of the cost being borne by people donating relatively small amounts (because the fees are paid per transaction, meaning people who donated huge sums of money paid a lower amount, percentage wise, when donating). In order to get a refund, we have to do this in reverse, basically. And so to get our ETH back from Juicebox, we would have to pay gas fees again, meaning essentially the entirety of the amount invested would be wiped out. And that's the rub. About half of all people who contributed to ConstitutionDAO are in this exact same boat, according to ConstitutionDAO itself. Admins posted on Discord immediately following the auction that "we had 17,437 donors, with a median donation size of $206.26. A significant percentage of these donations came from wallets that were initialized for the first time." This means that about half of all people who donated to ConstitutionDAO are now going to either lose basically everything they put into Ethereum network fees or will have to become a supporter of an organization that tried to buy the Constitution, failed, and now essentially has no purpose. Interactions with the Juicebox contract on the Ethereum blockchain reveal numerous instances of people getting their money back only to have it significantly reduced by fees or wiped out entirely. Here's someone transferring .011 ETH ($46) out and paying .015 ETH ($63) in fees, meaning they ended up paying $18 for their $0 refund. Here's someone else getting .018 ETH ($76) refunded and paying .0175 ETH ($74) in fees, so they got $2 back when all was said and done. Some are clearly seeing this as not worth it, with many choosing to "burn" their ETH refund (i.e. send it to a dead-end address) in exchange for redeeming $PEOPLE tokens. It didn't necessarily have to be this way. Before ConstitutionDAO announced that it would be refunding people's money in straight ETH, members considered going the "layer 2" route, or using another blockchain to refund people and get around Ethereum's high fees. If one were to consider many people's donations being completely wiped out as a worst case scenario, then some wondered if it may be worth it to explore giving people the option to take their donation in another token. In a post on Discord, a ConstitutionDAO team member called using ETH and Juicebox the "fairest and safest path forward available at this time." The total disaster that is ConstitutionDAO's refund process adds to the complicated legacy of the project. The attempt to buy the Constitution was portrayed as a kind of populist revolt against billionaire private collectors, and people piled in on those grounds. To many, it was cryptocurrency (or, perhaps, the "cryptocurrency community") itself that enabled the massive flash-fundraising campaign, but it turns out to have also been possibly the worst technology one could imagine for this type of application. While this debacle may well turn many people off of the idea of crypto-crowdfunding or even cryptocurrencies in general, ConstitutionDAO is still being held up as a success by many. It did, after all, raise enough money and jump through enough hoops to go toe-to-toe with a Wall Street villain at an auction within a week, and that isn't nothing. But as a proof-of-concept, the idea of crowdfunding with DAOs clearly has a long way to go. Motherboard reached the ConstitutionDAO team for comment but did not hear back. http://www...s-of-money-fighting-crying-etc
Seb Member	Mon Nov 22 17:50:48 Why not simply have used one of the many crowdfunding services instead?
jergul large member	Mon Nov 22 17:55:38 Teething problems enroute to a bright future. So many learned of crypto and will take that knowledge with them moving forwards #wakeupandsmellthetulips
Rugian Member	Mon Nov 22 18:05:18 Lesson learned. Don't buy constitutions, buy Doge Coin. To the mooooooooon!
murder Member	Mon Nov 22 19:04:25 This clusterfuck should be taught in school to knuckleheaded kids. Imagine having to perform several transactions just to donate money ... and then several more to get the money back ... and paying fees with every transaction. And that's ignoring the almost as stupid decision to donate money to a project with no governing structure.
nhill Member	Mon Nov 22 19:37:47 > Why not simply have used one of the many crowdfunding services instead? Because you aren't going to raise $40,000,000 in 8 days on GoFundMe, lol. Get a grip. Nor will you have a governance structure. This whole thing was an idiotic spur of the moment decision by the team behind this. As far as I can tell, they spun up the DAO on November 11th, 1 week before the auction. They also choose the most expensive blockchain to deploy the DAO. If they had gone with something like Harmony or Fantom, the fees for each transaction would be a few cents at most (gofundme would charge more in credit card fees). Hilariously, in the end, speculators got wrecked by Ken Griffin from Citadel. Remember this is the same guy that wrecked everyone earlier this year with the Gamestop/AMC/etc. meme stock debacle. Where he had Robinhood lock everyone from buying the stocks, but they could still sell, so it tanked the price. Clearly this guy has some sort of vendetta against speculators.
murder Member	Tue Nov 23 06:06:33 "Because you aren't going to raise $40,000,000 in 8 days on GoFundMe, lol." This is correct. If you want to raise stupid money, you have to go where the stupid money is. "Nor will you have a governance structure." Dude ... What I don't understand is why they didn't simply turn their attention to some other thing(s) that the donors wouldn't own. I'm sure there's a copy of the Articles of Confederation that they could buy cheap.
Seb Member	Tue Nov 23 06:52:56 Nhill: "Nor will you have a governance structure." Yeah but neither did this in any meaningful sense. You have an infrastructure for voting and authentication of a vote; but actually the guy in control of the wallet that cashes out can buy the copy, owns the copy, and there's no real legal mechanism to compel him to do anything or any real and enforceable governance structure that would actually compel the legal owner to do anything (including sell the copy of the Constitution and pocket the money). The reason you won't get 40m in 8 days on Kickstarter or whatever is because: 1. Speculative Bubble 2. There are people who would intuit all the above in the context of Kickstarter, but incorrectly believe that crypto solves problems like "how do I control / know what will happen with this copy of the Constitution when it's bought" - and feel far more confident putting money into it than they would into a Kickstarter. A significant benefit of some crowdsourcing platforms is they don't debit you until the target is reached.
Seb Member	Tue Nov 23 06:59:12 Basically, you could have set up a governance structure pretty easily through a conventional crowdsourcing platform because you can link a donation to an account, distribute some kind of credential, and written an actual legally binding trust that the money woukd be donated to or, in the event of failure, refunded (the latter trivial through a crowd funding platform). That later is real governance, not "eh, I said so and gave you a token" - if the thing being governed is off chain and can't be programmatically controlled by a smart contract, it ain't governable by a smart contract. You need an actual legally enforceable instrument.
murder Member	Tue Nov 23 08:10:39 Seriously? No one is going to comment on ... "Here's someone transferring .011 ETH ($46) out and paying .015 ETH ($63) in fees, meaning they ended up paying $18 for their $0 refund."
Seb Member	Tue Nov 23 10:49:45 They are paying for the decentralisation.
Forwyn Member	Tue Nov 23 11:22:10 Also, let's advertise our funds, so faggots like Ken Griffin can bring one dollar more and then show it off in a fucking Wal-Mart museum
Seb Member	Wed Nov 24 06:10:10 http://www.stephendiehl.com/blog/decentralized-woo.html Nailed it.
murder Member	Wed Nov 24 08:20:34 Some guy says "I'm going to create my own money, call it bitcoin, and print it in my mom's basement." Everyone laughs. So he says "Well what if I create my own money, call it bitcoin, and don't print anything?" People are intrigued.
nhill Member	Wed Nov 24 10:50:32 "http://www.stephendiehl.com/blog/decentralized-woo.html Nailed it." Lol, what a midwit take. Decentralization isn't the "selling point" of crypto, it's simply one of its myriad of capabilities that is now made easy and accessible due to an interoperable infrastructure. You can also make centralized crypto, that's how powerful the paradigm is. :O Btw Seb, you are a card carrying crypto enthusiast as per our agreement. In the other thread I gave you an example of something not possible outside of crypto, and you provided no rebuttal. Start behaving better.
nhill Member	Wed Nov 24 10:51:55 > Some guy says "I'm going to create my own money, call it bitcoin, and print it in my mom's basement." > Everyone laughs. Some guy prints cards with baseball players and stats on them. People are intrigued. You come up with the dumbest, easiest to dismantle arguments. Stick to whining about black people, it's your forte.
nhill Member	Wed Nov 24 10:55:36 > Also, let's advertise our funds, so faggots like Ken Griffin can bring one dollar more and then show it off in a fucking Wal-Mart museum Yeah, these ConstitutionDAO people are idiots. One of thousands of dumbass & poorly thought out crypto projects. A new one pops up each day, due to how easy it is to access the most useful digital technology invented since the internet itself.
nhill Member	Wed Nov 24 10:58:09 > Basically, you could have set up a governance structure pretty easily through a conventional crowdsourcing platform because you can link a donation to an account, distribute some kind of credential, and written an actual legally binding trust that the money woukd be donated to or, in the event of failure, refunded (the latter trivial through a crowd funding platform). > That later is real governance, not "eh, I said so and gave you a token" - if the thing being governed is off chain and can't be programmatically controlled by a smart contract, it ain't governable by a smart contract. You need an actual legally enforceable instrument. Tell me you don't understand crypto governance without telling me you don't understand crypto governance. Do some research on your own and we can discuss. I need to see some effort here. I ain't going to hold your hand. You can start with google.com.
Seb Member	Wed Nov 24 12:00:43 Nhill: Which other thread was this? It is possible I simply lost track of the conversation. "Do some research on your own and we can discuss." I have. Everything supports that conclusion. 90% of what crypto enthusiasts call governance isn't effective governance.
nhill Member	Wed Nov 24 12:03:03 http://www...hread=88761&time=1635257194846
nhill Member	Wed Nov 24 12:03:53 Starting from: "nhill Member Mon Oct 25 18:33:56"
murder Member	Wed Nov 24 12:51:49 "Some guy prints cards with baseball players and stats on them." *burn*
Seb Member	Wed Nov 24 16:17:49 Nhill: Oh yeah, the thread capped out before I had time to compose a response to yours. I meant to create a new thread and didn't get around to it. Hold that thought - it's 10pm and I need to get up at 5pm.
nhill Member	Wed Nov 24 16:18:44 Make sure you get your 19 hours of rest! ;)
Seb Member	Thu Nov 25 02:29:58 Reading your post I'm reminded why I wanted to think about it a bit before replying. The original point was pretty much all crypto assets have no intrinsic productive value. You argued that they did because you can get returns on trade - which I think is a category error. The argument around lending - you've not provided a simple mechanistic explanation of where the returns come from. But what it seems to boil down to is: Bob puts 10 groats and 10 shillings into a pot. This provides the liquidity for people to trade groats for shillings and vice versa. In exchange, Bob is given a token representing 10 groat-shilling pairs, and a share of the transaction fees. Earlier in the conversation you said: "So I can use this product (the lending pool I've been talking about) to leverage my liquidity tokens and get 3x (up to 15x in some cases) the fees and rewards for providing said liquidity. In order to do this, I borrow from the pool and pay the APR to the lender. Creates a symbiotic scenario where the liquidity provider profits more from trades made on a decentralized exchange, and the lender profits from allowing the provider to borrow his tokens to accomplish it. The lender takes on less risk, so the rewards are pretty straightforward." Ok so Bob has his tokens - he is due some transaction fees - and now he borrowed from this pot he's just put his groats and shillings into, which has some cost to it in the form of interest. Is he borrowing more of these tokens, or is he borrowing groats and shillings? And what's he doing with this borrowed sum? It seems to me that Bob's balance sheet looks like: Assets: Credit of 10 groats and 10 shillings due from pot Exchange fees due from pot Borrowed sum Liabilities: A debit of whatever he's borrowed Borrowed sum Interest payable on borrowed sum You spoke about leverage here, which implies the borrowed sum is being reinvested somewhere, but you haven't really explained where. And oesn't borrowing from the pot reduce the liquidity available for trades? Nothing about this particular structure seems predicated on crypto. The fact it isn't common in conventional systems seems largely based on a currency exchange actually having to have a pile of different coins is obviated in fractional reserve banking. But it is akin to say, Bob having shares in the bank that he gets his mortgage from. And none of this alters the fact that it doesn't make the asset productive - the underlying value of even the token representing your share of the pool is getting fees denominated in crypto assets that have no productive value. When you trade it through it all relies on trade price.
Seb Member	Thu Nov 25 02:35:36 Three helicopter view of what you are describing: Crypto currencies obsession with creating artificial scarcity makes creating liquidity much harder than in fractional reserve systems, allowing existing wealth to extract higher rents for providing it. This is exactly what I said many moons ago to Nim: the inability of easy creation of liquidity is a big problem in crypto currencies.
nhill Member	Thu Nov 25 03:13:12 That is not how it works, but good attempt. I'll address your statements and then tie it together. > The argument around lending - you've not provided a simple mechanistic explanation of where the returns come from. It's algorithmic. The returns vary over time depending on the demand for a particular crypto. Some are 2% APR, some are 150% APR. The market determines the returns based on how much leverage people want to use. > Ok so Bob has his tokens - he is due some transaction fees - and now he borrowed from this pot he's just put his groats and shillings into, which has some cost to it in the form of interest. > Is he borrowing more of these tokens, or is he borrowing groats and shillings? No, he borrows from the lending pool. There are 3 pools: 1. The LP pool, which has the groat-shilling pairs in it. 2. The groat pool. 3. The shilling pool. He would deposit into pool number one. If he decided to leverage his position, he would borrow from #2 and #3 in equal amounts to create more groat-shilling pairs. He would pay the borrow fee if he felt the trading fees or liquidity incentives would return more than the cost of borrowing. This is a team game, so we can't talk about only Bob. Let's talk about Bob's friend Alice. She really likes groats. She doesn't care much for shillings. But she's jealous of Bob's ability to grow his groat-shilling pool through trading fees or liquidity incentives. What can she do? She can deposit her groats into #2 and earn interest on it. Alice has a friend named Janice. She doesn't like groats but think shillings are the future. She can deposit her shillings in #3 and earn interest on it. Bob, on the other hand, thinks the exchange volume and incentives by linking the two crypto's together will outpace the difference in gains/losses between the two. So who's happy here? Everybody. Alice is happy because she doesn't have to take any risk of the exchange or shillings and simply grow her groats. It's like she's getting a share of the trading fees and incentives without having to provide liquidity directly. Janice is happy for the same reason, except she's getting he returns on the shillings. Bob is also happy, because he thinks the LP and exchange will pay off the interest and then some. That's the game theory. All 3 actors get a specific benefit from each other that none could have gotten alone. > And what's he doing with this borrowed sum? > You spoke about leverage here, which implies the borrowed sum is being reinvested somewhere, but you haven't really explained where. He borrows 10 groats and 10 shillings from the lending pools and turns them into LP tokens. The groat-shilling pair locked in a smart contract for automated market making. > allowing existing wealth to extract higher rents for providing it. You are saying that with more money, you get more profit? Yes, that's how interest works. But the "rent" is not higher. It's a static trading fee, something like 0.2%, but it depends on exchange. Existing wealth and deeper liquidity steadies the price of the market and prevents volatility. But anyways. Let's stick to the leveraged liquidity mining example. Show me the non-crypto version of this that is accessible worldwide, 24/7.
Seb Member	Thu Nov 25 04:35:13 Nhill: Are the pots 2 and 3 part of the exchange or do they just represent some lending facility denominated in their respective currency?
Seb Member	Thu Nov 25 07:33:08 Nhill: What you are describing seems to me to simply be borrowing to invest. The exchange itself generates returns - but it could be any investment. Running a money exchange or investing in one isn't a fundamentally new thing. Sure you can do it all decentralised - but there's not an obviously crypto unique business model. You could equally implement the same business model using fiat and contracts. The fact you don't see them is because there exist large financial institutions that can provide liquidity at will, and currency exchanges do not need to go around actually gathering groats and shillings to provide the liquidity for buyers and sellers of particular currencies and paying people for them. In part that's because - like I said previously - in crypto systems liquidity and lending is constrained by actual money supply: you need to have a coin to lend a coin, you need a coin to pay out in a coin. In fractional reserve banking systems, you don't. This means much greater competition in lending, and I suspect, lower borrowing costs. Your high returns, compared to what a fiat currency exchange might earn, represent the high transaction fees for what ought to be a pretty low margin utility business that artificial scarcity has made more expensive. Ultimately it sounds like what you are describing functions more like a stock exchange. You borrow "shares" of two companies, lend them to the market. The way conventional stock markets work doesn't require that though: the companies list directly and that provides the liquidity.
Seb Member	Thu Nov 25 07:37:05 TL; Dr - the exact business model you describe doesn't exist because fractional reserve banking made it obsolescent. Money supply and liquidity in fiat is infinite in principle and limited by the cost of borrowing, which is controlled arbitrarily by the central bank. Money supply and liquidity in crypto is finite and the cost of borrowing is controlled by supply and demand dynamics.
nhill Member	Thu Nov 25 12:01:24 My God, you've gone full retard. That's...not exactly how marking making works in traditional markets. Lol. You conjure up such weird fantasies out of your irrational urge to not accept crypto for what it is. So, let's learn about how real markets work. They don't have "infinite" liquidity. Not at all. In fact, the stock market can be more expensive in "fees". You may think fee-free trading exists, but, if so, I have a bridge to sell you. The way trading works is the "fee-free" stock brokers actually provide orderflow to market makers. You know, the people the are incentivized to provide liquidity to the markets (sound familiar? lmao). This means the HFT firms like Citadel get to front-run your trades. The broker will route the trade to them, and firms like Citadel will perform arbitration on market buys to provide the liquidity at a favorable price (for them). Full-service brokers, ones that don't front run your trade, charge higher fees than decentralized exchanges. So that eliminates every point you just made up there. I'll wait and let you try again.
Seb Member	Thu Nov 25 13:30:14 Nhill: "They don't have "infinite" liquidity." You are mixing currency markets with stock markets. If there is liquidity issues in currency exchange markets, central banks just do a currency swap - they can - in principle - do that to an arbitrary degree. In principle, you cannot do that in Crypto based systems, because the ability to issue tokens is controlled and limited. "In fact, the stock market can be more expensive in "fees"." It can be - but again, you are conflating stock markets with foreign exchange markets, the latter being the direct comparison. You are getting returns of 5% to 15% - which implies very high fees - far more than you would expect on a foreign exchange. "You may think fee-free trading exists" I don't know why you would think I might think that - possibly because you have gone full retard.
Seb Member	Thu Nov 25 13:54:54 nhill: You know, you need to calm down - taking an aggressive and derogatory tone just makes you look like you are triggered. "he way trading works is the "fee-free" stock brokers actually provide orderflow to market makers." No shit. Lets remember how to read. Paragraph 4 describes a currency exchange, which is not a stock exchange. What you were originally describing was a currency exchange: trading shillings for groats and vice versa. Pargaraph 5 describes how currency lending is not constrained by having to physically match cash reserves to lending. This point stands. Complaining that this is not how liquidity is created in stock markets misses the point. We are talking about a currency market. Paragraph 7, explicitly states that what you are describing is more like a stock market. The undertone is, politely, what could be expressed as "Congratulations muppet, you have contrived to make foreign exchange markets and lending facilities as prone to rent seeking behaviour and outsized fees by intermediaries as stock markets, this is not the killer move you think it is". The 7th paragraph also explains why your crypto business model doesn't exist: companies list directly on the exchange, which means you don't need to do a whip-round to build a liquidity pot - the pot is called "the stock exchange" - and yes, that means brokers, particularly those acting as market makers, are well positioned to extract rents. Could you create a weird cooperative broker that pools it's members shares and distributes fees? Absolutely - though in practice to get that kind of scale from retail level investors is *hard* because in a real stockmarket there are thousands of stocks traded, not just two. It would be easier to simply buy stocks in a brokering firm directly. You are presenting a decentralised exchange trading in only two denominations as being as complex as a brokering firm on a stock exchange - while ignoring that the direct comparison is actually just a bank providing a loan and offering foreign exchange services. Like I said, category error! "So that eliminates every point you just made up there." Not really - you seem to be agreeing with my point: you've made liquidity provision in a foreign exchange market very similar to how it is created in a stock market - which is a *bad* thing. And unlike actual shares, digital groats and shillings do not come with some cash flow or ownership rights to a productive entity which gives it underlying value. So all these fees are coming out of expectations of appreciation of the asset based on mark-to-market trades rather than underlying value.
nhill Member	Thu Nov 25 16:52:09 Um, it's simply annoying when you act like a domain expert but you haven't even grasped the simplest fundamentals. Yeah, idiotic people waving their dumbass assumptions all over the web trigger me. Has nothing to do with crypto, tho. > It can be - but again, you are conflating stock markets with foreign exchange markets, the latter being the direct comparison. No, I'm not conflating anything. You are treating crypto as if it's a currency market, lol. That's not even remotely comparable. Is Blizzard stock a currency? God, I don't even know where to begin with you, so let's start simple. Are you aware of crypto projects that are also video games? Are you aware of crypto projects that provide *real* products, such as computing power? There's a whole myriad of value-driven products, not just some half baked currency FoRex shit upon which you're fixated. That's how powerful the paradigm is.
Seb Member	Fri Nov 26 01:54:51 Nhill: Yes, however in the original thread, you said USDC, which is a stablecoin supposed to act like currency. Further, if you do take them as stocks (and there's an issue here in that often coins represent - as you say - not a share of ownership of the company or revenue stream - but an option to use on some capacity of the platform) - all this model boils down to is a complicated implementation of a stick exchange and stock broker - but with a limited number of stocks. The exact model of allowing an individual shareholder to pool shares to create liquidity doesn't exist in conventional world because it's the kind of shit we used to do in 17th century when people operated from benches and coffee houses as hopelessly inefficient for capital allocation at scale for a large, complex economy. Yes, it works much better for the retail investor, but it's not great for large companies trying to raise capital - which is the actual point of issuing shares.
Nimatzo iChihuaha	Fri Nov 26 02:48:53 Seb This "infinite" liquidity that the central banks have created, do you ever consider that this is actually a problem? That this phenomena is The driving force behind the unsustainable way in which humans have organized themselves on this planet, where we can borrow from the future in the hopes that we will "make it big" before the loan needs to be paid? It seems to me that these discussions will always suffer from an inherent problem, we keep using examples from the current paradigm like money, stocks, currency etc. but fundamentally what is being presented is a new way of seeing all these things, in summary a new financial paradigm. A new attempt of fixing problems that are inherent to the current way of doing business, that simply can not be fixed in iterations because it is "coded" in the base layer. There is an additional issue here in that a new financial system is being built parallell to a fully functioning one. It is thus easy to point to specific things and say that this is not working. But that would be missing the point. Imagine pointing to EVs at some point in time and laugh at how pathetic their performance was or how much they weigh in comparison to a car equipped with a combustion engine. It is PHYSICALLY impossible for a car with an electric motor to out preform a combustion engine, someone would say. So in summary what is being presented is fundamentally a new way to do business and it is a work in (rapid) progress.
Seb Member	Fri Nov 26 03:41:29 Nim: I don't think so, no. I'm not sure of the extent that interest rates can be used to limit environmental destruction and unsustainable development. It seems to me it would be a blunt tool that could equally prevent development of more efficient and sustainable technologies by forcing use of older, cheaper technologies with lower capital investment costs. You aren't really borrowing from the future - in the end it's just putting cowry shell into and out of the economy - it helps affect how and where human activity occurs. Blockchain technologies however is a terrible example of unsustainablility: it's predicated on performative waste of some scarce resource in order to produce artificial scarcity of information. You might say you value decentralisation highly and so it is worth it - but that's just saying you put a very high premium that justifies consuming vast resources to achieve what could be done in other ways far more parsimoniously. "but fundamentally what is being presented is a new way of seeing all these things," I really don't think it does though. These can all be easily mapped to existing concepts. Sometimes, they are several things futzed together "this token represents a notional voting right, that can be freely traded, but it also can be redeemed for some quantum of useage of my platform as/when built" so it's an odd mix of stock, currency and option. There's no reason you *can't* create such instruments conventionally, or raise capital by selling options on your productive capacity; but a good reason they generally aren't used. It mistakes the operational layer for the business model. A lot of the crypto stuff looks like new ways to implement old business models. Technology to fix a societal problem. You liken it to an electric car, but my point is whether it's a segwey: something launched as soon transformative it would change the way cities were designed, but in the end - we just see electric motors in conventional vehicles. When you look at industrial applications of blockchain that are working successfully - e.g. Shell use something like this in their supply chain - they tend to keep the Merkel tree data structure, but ditch the proof of X bit and rely on central operation because they actually need things that decentralisation cannot offer. I suspect, as and when central banks adopt crypto, that's how they will use it. Ditch the decentralisation element.
Nimatzo iChihuaha	Fri Nov 26 08:55:58 "interest rates can be used to limit environmental destruction and unsustainable" But it's not just interest rates, since what is being presented is a new way of (among them community based) governing the elements of the financial system as well. Further more actual competition between governance models and algorithms etc. This is the run up stage to which models and systems will come out the other side as the winners. "You aren't really borrowing from the future" Describing national debt as borrowing from the future is a valid description. "predicated on performative waste of some scarce resource in order to produce artificial scarcity of information." Not sure what the significance of "artificial" is here, but it is about intelligent control of systems we have created (money in this case), they are "artificial" by design. We can say this about central banks, they artificial create abundance by devaluing money, a performative act to assure us that things under control. I don't know what the waste is, if we are not talking about BTCs consensus mechanism specifically, there are already far more efficient POW mechanisms and of course other consensus mechanism. "You might say you value decentralisation highly and so it is worth it" Decentralized systems are inherently more resilient than centralized ones. We should all value them, regardless of the technology that will realize them. I think block chain is the best attempt at it. The premium we are willing to pay, is not static and something that can be lowered and has been lowered. "These can all be easily mapped to existing concepts" I don't think the existing concepts allows for competing financial systems, currencies and governance models, so that according to an evolutionary mechanism allow the best instantiations to rise to the top, and have all the harm of the thousands of failures be limited in scope. That is, in my opinion the real magic going on right now. The global financial system simply does not allow for this. Honestly, we don't know fully what it is and what can be done with it, just like in 1998 and the internet. We know it is about money, like the internet was about communication, lets leave it at that. "so it's an odd mix of stock, currency and option." In 1998 we could have said the internet is an odd mix of telegram, telephone and publishing. Now we just call it the Internet, internalizing that it is its' own "thing". "A lot of the crypto stuff looks like new ways to implement old business models." I don't believe it is, but even so, the Internet was a new way to implement old business models. But even in the new implementation of old business models, there are significant differences, like the Internet lowered the barrier for entry for several domains, like content creation and publishing. DeFi has likewise lowered the barrier for entry to lucrative investment and savings opportunities that today are only open to people who are very wealthy. "operational layer for the business model" There is no mistaking, there are problems inherent to the operational layer of money, there is no business model to it currently at all, you (central banks) don't need a "business model". I have no idea what you mean here. "Technology to fix a societal problem." You have previously brought this up as inherently problematic, but have yet to qualify it as such. I have in the past responded to it: we use technology to alleviate and "fix" social problems all the time, with varying success. It is a staple tool in quality control to reduce errors by removing the possibility for operators to do the wrong thing with technology. We just never had a technology that could potentially fix/improve "the root of all evil", money. Which in its' current instantiation is full of horrible incentives and layers of stale legacy. Honestly I have no idea what you mean with this. "transformative it would change the way cities were designed, but in the end" Boy are you in a hurry! This is kinda of like complaining that the internet had not transformed the world, in 1998. Most cars are not EVs, most of finance isn't on the block chain, yet. I thought we were all gazing the horizon? One caveat here is that, I don't think EVs will be nearly as transformative as blockchain finance, it is just an example of a technology we deemed as practically worthless until recently. Decentralized finance and governance, trustless and automated execution of contracts was simply not possible until recently. "- we just see electric motors in conventional vehicles." Wow... Allow me to explain. EVs will require enormous changes in infrastructure, from charging stations to increased electricity productions. Not to mention that the design and production of _true_ EVs (not simply as you say put a new motor in an old frame, which is what a lot of car companies have done to get something out as soon as possible) opens up a lot of possibilities for designing different cars. Even the tires I hear, need to be rethought because EVs are heavier and wearing them out quicker, in turn that will affect how we built the roads themselves. There are second, third, fourth order issues and beyond that will not materialize until enough users are riding in EVs or are on DeFi. Just like the internet, once enough users were on it, the need for secure transactions and encrypted protocols popped "out of no where" to facilitate online shopping and so on. We need to raise our gaze here.
nhill Member	Fri Nov 26 09:13:23 Thank you for having the patience to take up the mantle here. > so it's an odd mix of stock, currency and option Ah, now you begin to see the true potential, Padawan. It's all 3 together, or each one individually, or a novel mix thereof. That's the power of its composability. An inclusive OR. :) And then you can take this composability and write your own code. Imagine being able to take the raw infrastructure of your bank account and write your own custom plugins on top of it. Or use ones written by others. Infinite possibility unlocked. > Yes, however in the original thread, you said USDC, which is a stablecoin supposed to act like currency. USDC was an example to illustrate the protocol in a simple way. The beauty of this system is ANY crypto token works within it. I try to stick to USDC in my illustrations to avoid overwhelming you with distracting details.
nhill Member	Fri Nov 26 09:21:29 > Yes, it works much better for the retail investor, but it's not great for large companies trying to raise capital - which is the actual point of issuing shares. That's the beauty of crypto, my friend. They have these types of protocols and systems that are designed for the small investor. Lest we miss the forest for the trees, here, they also have protocols designed around the use cases of large companies trying to raise capital. Another wonderful aspect of this is that every person on Earth, provided they have the technical knowhow, has an opportunity to get in on these ventures the day they are started. Unlike companies where shares are only available to employees, family, and friends for years and then IPO at 1000X the original price. Crypto, depending on the tokenomics of course (anything is possible with this type of paradigm), gives us all a shot to be in on a venture day 1, instead of year 10. Should you have the risk appetite, that is. It's not uncommon for projects, such as video games, to raise millions of dollars in capital on day one with their platform token-- without the need for VCs or institutional investors (although they are often enlisted, just depends on the project). Previously access to this level of capital was gatekept through who you knew and your personal net worth. Now it's accessible to all of humanity for the first time.
Seb Member	Fri Nov 26 10:19:44 Nim: "Describing national debt as borrowing from the future is a valid description." Not really - tax revenues being collected in future and then sent to a national bank as interest payments where it subsequently vanishes affects money supply rather than representing a material transfer of real tangible assets or wealth from the future to the past. "In 1998 we could have said the internet is an odd mix of telegram, telephone and publishing." Not really - because it is fundamentally different from all of those things. What you would say is "The internet enables / will enable you to send written messages, pictures and voice calls in a way that is not intrinsically linked to the owner of the cables into your house" - and if you are far sighted you would say "wow, that lets me send a newspaper directly to your computer", or if you were really really far sighted you would say "wow, I can make a business that can scale and get a near monopolistic advertising over this new channel". The problem with blockchain is that the example use case here is "I can make a sort of weird tradeable bearer bond that is also a futures contract" - and the point I'm making is we have a way to do that already. The reason people don't raise capital off the back of futures contracts isn't due to the technical inability to do so, it is because it is a bad way to raise capital. Rather the reason you make your token an effective futures contract is in order to give it a value, so you can put it into a market and trade it. The unique aspect is "and we don't need to rely on a trusted intermediary" - and so far there are not many examples where that aspect is particularly useful - unlike the internet where the unique aspect was disintermediation from the physical infrastructure and generality of the information that could go over it. As you say, the problem with analogies is that they don't tell you whether you have invented a commercially viable electric car, or a tesla. Or to put it another way, maybe they called Thomas Edison a Clown, but they also called Bozo the Clown a Clown. "the Internet was a new way to implement old business models" No, the internet made platform business models - previously viable only for financial markets - something you could extend to all sorts of other products and services. It was transformative in a way decentralisation, so far, doesn't appear to be. " I have in the past responded to it: we use technology to alleviate and "fix" social problems all the time" Not really - something that is a problem for society isn't the same as a problem that arises *from* society, and when we say societal problems we mean that latter. E.g. take Covid: *having a vaccine is a technical solution to the medical problem of people getting covid *getting people to accept a vaccine because they have developed a suspicion of the state due to unequal provision of health for decades is a societal problem. Decentralisation of the technical operation of various applications doesn't solve the societal issue of the centralisation of financial and political power. It just moves it around. "EVs will require enormous changes in infrastructure, from charging stations to increased electricity productions." Again, the problem with analogies is that they are never perfect and people will keep moving the goalposts. Firstly, this classification - EV - is a bit silly - any city that has electric trains or trams has had EV for probably over a hundred years now. When we talk about EV's we are really talking about "making conventional vehicles run from electricity". Yes, EV's will require changes in infrastructure - maybe replacing petrol stations with charging stations etc. But they will not fundamentally change how cities are designed in, say, the way trains or for that matter, cars did - creating concepts like conurbations, commuter belts, industrial districts etc. that were previously impossible due to the impracticality of transport. *THAT* is a transformational change. It will change small scale shit like - as you say - exactly what material you make a road out of or what you make the tire out of, and a few lots where you used to have petrol stations, and some charging points. This is not transformational - rather the design and layout of cities has set the design parameters for electric vehicles and the reason we have had to wait so long for them was until battery tech allowed a car, van or bus to do what an diesel or petrol one could do in terms of range and performance. Nhill: "Ah, now you begin to see the true potential, Padawan. It's all 3 together, or each one individually, or a novel mix thereof. That's the power of its composability. An inclusive OR. :)" Yes, but what you are missing is that all of this was previously possible trivially using conventional methods. The reason it was not done was because it was waiting for blockchain to make it suddenly viable - it is because it is not a particularly sensible thing to do. Rather, the reason why you start trying to raise capital by selling future options on the right to use your platforms services is because you don't actually want to (for various reasons, often regulatory arbitrage) make it an actual ownership share, but you need to find some way of giving it value. "Another wonderful aspect of this is that every person on Earth, provided they have the technical knowhow, has an opportunity to get in on these ventures the day they are started." Penny stocks sold OTC are a thing you know. We could also equally simply remove all the regulations around stock markets that make it so hard to easily list at angel level. It's not that companies are secret hoarding the opportunity to give them cheap capital - those barriers exist for other good reasons. We don't need a byzantine blockhain technology to remove these, rather the technology is simply being used to obfuscate and abstract the business - not create something new; but do something that is precisely the same as a thing we have intentionally made hard to do. nhill: "USDC was an example to illustrate the protocol in a simple way." Then you failed dramatically by using a thing that purports to be a currency and then throwing your toys out of your pram when I pointed out the protocol was a shit way of trading things that purport to be currency. "I try to stick to USDC in my illustrations to avoid overwhelming you with distracting details." If that was the case, you would simply have said "Well, actually, I was thinking more specifically of tokens that are more like stocks than those attempting to behave as currencies" rather than your emotional outburst. The reality is that you failed to articulate your thoughts clearly, lost track of the simplification you had made, had a paddy attack, and are now trying to attribute your failings as caused by me.
murder Member	Fri Nov 26 10:23:53 So apparently ConstitutionDAO shut down ... without any of the suckers getting a vote on the matter. Governance token? lol :o)
Nimatzo iChihuaha	Fri Nov 26 13:07:49 "affects money supply rather than representing a material transfer of real tangible assets" I said nothing about material transfer of tangible assets. All debts are borrowing from the future, you don't have the money you need now, but given enough time >assuming< you can create value in the future, you can have the money later. I understand there is no time travel involved. "Not really" Well, the same can be said about the things you have said about block chain finance, I just found a close enough comparison. Not really, but it could have been said about the internet if you didn't understand what was going on. It probably was said. No, something in that vein was definitely said about the internet a million times. "No, the internet made platform business models" Whatever else the Internet was and became, it was (also) a new way to implement old business models. Listen, I am just doing with the Internet, what you are doing with block chain, not being impressed by it, circa 1998. Just that we have the benefit of hindsight and know what the Internet did. "something that is a problem for society isn't the same as a problem that arises *from* society, and when we say societal problems we mean that latter. E.g. take Covid:" This clarification does not explains what makes the proposition inherently problematic. To tie it to what we are talking about, the systems we built provide incentives, some by design and some by accident, human nature interacts with the system and produces results. Money and finance are human systems, technology. I have no idea what would be problematic with using technology to build better systems with less shitty incentives. I don't think you actually disagree with that proposition. Additionally, I fundamentally disagree that the problems we see with money are as you call it a "societal" problem (which according to you means flaws in human nature). Many of them are inherent to the incentives that emerge out of the system and I do not believe they can be fixed by slapping on new paint ever other year. You have to rebuild the system from the ground up and I know that you intuitively understand this as a systems person. All of us system people understand this, but some of us do not see that it applies to political and financial systems as well. 100 years of democracy and a hand full of decades of fractional reserve banking are not that impressive my friend. Our history is full of system wide shit hole implosions as River of blood would call it. "Firstly, this classification - EV - is a bit silly" Silly or not this tangent is completely unnecessary, because we both know we were talking about cars, not trains, trams or anything else. You talked about ordinary cars, I understood that and replied to that. "maybe replacing petrol stations with charging stations" Maybe? :P "But they will not fundamentally change how cities are designed" I never said they will, even left a caveat that I do not think EVs will have the same impact as blockchain finance. Then I explained why "- we just see electric motors in conventional vehicles." is fundamentally the wrong way to look at them (or any new technology, the other example was the internet) that it is in fact far more than that that has to change and gave examples of things we are just figuring out about EVs, tires. How it will take a degree of adoption to fully realize and reach the *level* of societal transformation that EVs _will_ have. That was my point, that it will take time and a degree of adoption to reach peak transformation, things have to be solved and invented along the way, things that are not obvious from the start. You understand this perfectly about the Internet, the internet of the 90's did not have the necessary code for secure payments online, as one example, it took adoption to realize the flaws and to see what was lacking, because we had not idea what people were going to do with it nor what they wanted to do with it. The same applies to blockchain.
nhill Member	Fri Nov 26 13:36:46 Seb You really thought a cryptocurrency protocol only operates on USDC? Do you understand what the word "interoperable" means? Sorry, I didn't account for this level of willful ignorance. You are right-- it was a mistake on my part giving you that much credit. lol
Nimatzo iChihuaha	Fri Nov 26 14:12:32 Let me respond to this "it can be done with current concepts and technology" and all the people who are either not aware or not impressed with what is happening. This has never been attempted before and certainly not catching on with the adoption at any significant level, that is the only thing that matters. With merkle trees or anything else. And what _is_ it that is being done? Fundamentally the creation of new financial systems from scratch, not 1, not 2, but thousands of them. That is the biggest gift here and if you do not understand the value of starting from the ground up in creating a system - any system - then you will not understand it here either and there is no amount of explanation or facts that will sway you. Personally, I stand in awe to what is going on. The best thing is that due to the inherent decentralized nature and fragmented structure (a lot of block chain islands that you can only cross through "bridges") to most of the projects in this domain, while survival of the fittest applies there is very little contagion factor. Things can implode and burn to the ground and the rest will live on. This evolutionary process of extinction can go on, with little impact to the world even if it all fails. However if as I (and Nhill) believe it succeeds, we will have not just new banks, but a new financial order and new paradigm for "money" in *parallel* to the one we already have, maybe even dozens of them. Each of them with their own rules and incentives, governance, ownership and structure, some are owned by "big money", some are owned by a community and everything in between, all with their own flavor and culture. When they are good and ready, people will be able to transition to them from the old paradigm, and once there between the various new systems smoothly and without pain. It will be individual people, companies and organizations in non crypto based nations, but also entire nations. This is great! Because we do not want to unravel the current paradigm, that would be a fucking disaster, hundreds of millions of people would die from war and starvation. It is difficult to predict exactly what it will be like, but I know this for certain, they will fundamentally be systems based on persuasion and not the coercion based system we have now.
Seb Member	Fri Nov 26 15:38:35 Nim: "Whatever else the Internet was and became, it was (also) a new way to implement old business models." Look, if it has just been a new way to implement old business models, it would not have been nearly so transformative as it has been. " Listen, I am just doing with the Internet, what you are doing with block chain, not being impressed by it, circa 1998. " The difference is that back in 1998 there were people who got it and pointed out *back then* definitively things you could do with it that you couldn't do with prior tech and thus it would be transformative. You could certainly have doubted that at the time, but you would have been wrong. One of those things was about ubiquity of information and the ease of distributing it, and one of the most insane aspects of "web 3.0" is forced artificial scarcity. "Just that we have the benefit of hindsight and know what the Internet did." No, the point here is that so far there isn't a concrete, definitive example of something *new* you can do with this that you couldn't really do before. Just lots of examples of how you can do things that you could do before, that were done before, but in a new, less efficient way - or very specifically can be done "distributed" but with no real explanation as to why it's better to do it distributed. This is very different from the late 90s. Nhill: "You really thought a cryptocurrency protocol only operates on USDC? Do you understand what the word "interoperable" means?" Obviously no. But you are dodging responsibility for your own argument. You chose to talk about USDC - if I started to do things like substitute for your arguments what, in my mind, I might assume to be a more compelling argument than the one you are making, the likelihood is I'll end up completely misinterpreting what you are saying. If I was to extrapolate, i'd guess that's something you do and why you keep lapsing into making really weird straw arguments like the one you just made. And (ha ha ha you have know idea how funny the second one is) yes.
Seb Member	Fri Nov 26 15:45:33 "You don't agree with me so obviously you haven't done your research. You criticised what I wrote which is your fault because what I wrote was flawed but I made it flawed because I think you wouldn't understand it otherwise, and obviously I expect you should have corrected the flaw I deliberately introduced because you couldn't possibly understand because to take me at face value is stupid". This is not a cogent argument nhill. It's logically incoherent nonsense. Gently, I suggest that one of the things you are saying is bullshit. Probably the bit about needing to use USDC as an example because otherwise my tiny mind couldn't compute your galaxy brain ideas. Calm down, start again.
Seb Member	Fri Nov 26 16:11:31 Nim: "This clarification does not explains what makes the proposition inherently problematic" I didn't say the proposition - blockchain - is problematic. I said that often it is presented as a solution to societal problems when it is a solution to (narrow) technological challenges. Technical decentralisation of the computational layer for conducting finance doesn't decentralise power and exorbitant privileges. Rather it shifts it somewhere else. As we've discussed at length in these and other threads. "Boy are you in a hurry!" This is the problem with these kinds of analogies - they suffer from temporal dislocation. But let me say it explicitly - I don't think there's any obvious reason that electric vehicles will transform city layouts in the way trains and ICE cars did - however long you wait. "we both know we were talking about cars," Exactly. We are talking a very narrow shift between cars powered by petrol Vs cars powered by batteries. This is completely different to the shift film (horse or train or tram) to car. The concept of what we want from personal automobile to car is pretty mature and refined, and the shift to electric power offers little novel. Compare this instead to the idea of self driving cars. Now that, if it can be made to work, really is transformative. Because suddenly the basis for needing to own a car Vs rent a ride on demand comes into question. That's a foreseeable, concrete and obviously transformational possibility inherent in that tech where you can draw a direct theory of change (based on assumptions, extrapolations etc. that may or may not come to pass) to a very different world. And what I'm saying is that blockhain lacks these. When you really boil down all these applications for blockchain, most of them converge on "we can create markets that evade regulatory reach" the novelty is not in decentralisation allowing something new, but a means to do things we *can* do today but society and often the actors involved generally think are a bad idea for a number of reasons. E.g. shares used to be bearer certificates, not registered, if you go back a hundred or so years. Fraud and theft - such crypto can mitigate - isn't the only reason we moved away from that. So the test here, in my mind, is can anyone point to a genuinely transformative thing you can do with blockchain you can't do on older technologies that has an obvious use or purpose - in the way that internet visionaries even before the internet (cf. Diogenes and Locke in Ender's game) could predict of internet; or we can do today RE self driving cars. So far, I'm not seeing it. And without that we get back to "well who knows what will happen" - obviously, to we don't know what will happen. We could be wiped out by a gamma ray burst tomorrow. The point here is what we can plausibly argue can happen, and the strength of the argument.
nhill Member	Fri Nov 26 17:58:57 I don't care if you agree with me or not. You're all over the place. I used $USDC in the initial example so I wouldn't have to explain what $SPELL or some other random token does. $USDC was a placeholder, an easy to grok transitionary coin that is the "foo" of the crypto world. It had nothing to do with dumbing it down, like I said before, I didn't want to distract you with irrelevant details. I had assumed you knew that most crypto protocols operate agnostic to specific tokens (but there's usually a whitelist to avoid outright scams). That assumption was incorrect, my bad. Now, please, if we're beyond this, feel free to revise your argument, as the Forex angle isn't applicable here. Thanks.
Seb Member	Sat Nov 27 04:21:57 Nhill: Then fine, explain you used it as a placeholder. Don't have a fucking hissy fit when I point out that this is a ludicrously inefficient form of currency exchange that's acting more like a stock exchange. Simply say "yes, that's right - I used USDC but actually this is indeed more like trading stock". Note I have another set of criticisms about how it feels as a stock market too. In addition, this poses a question of whether there are more efficient decentralised mechanisms for exchanging tokens intended to be money.
Seb Member	Sat Nov 27 04:51:53 Nhill: Regarding the entire model though - those lending to the liquidity pool are just another form of broker/market-maker. Back in the 17th c these used to be little coffee house outfits. What's going to happen as the market matures is that DAOs with bigger, deeper pools of liquidity end up dominating the market. What you've cut out isn't the broker - *you* are the broker, taking a fee for facilitating exchange of stocks - it's stock exchange itself the DAO cuts out. As for getting in on the ground for exciting new opportunities like - oh buying a governance token for participating in an advisory vote on where a copy of the Constitution that might get bought is displayed - all you are saying is that this model has found a way to evade regulation. Startups don't start off with early stage capital with IPO because the standards and requirements to weed out high risk and fraud are to onerous. This is a good thing: it prevents lots of fraud that is generally bad for the overall functioning of capital markets. The reason they rely on a relatively concentrated number of angel investors accessed via social contacts is because it is easier than trying to manage many small scale investors. Ok, so maybe crypto allows aggregation in a way that's efficient for startups but scaleable to retail investors? There are already other ways to get aggregated retail scale private investment into startups though - crowd funding and peer-to-peer lending platforms allow this just fine and already have more mature functions for spreading and hedging risk and secondary market in loans built in. So what's the actual user need here?
nhill Member	Sat Nov 27 16:42:49 > crypto allows aggregation in a way that's efficient for startups but scaleable to retail investors Global, too, and 24/7. There are no other ways to access this level of aggregation-- the non-crypto versions are fragmented. The beauty of the crypto-based system is everything is open and interoperable. It's the system itself that's novel. As I said in my first thread here, decentralized finance (a small subset of crypto, here I'm simplifying things again to make the argument easier) is rebuilding the financial system. If you want to know what DeFi is simply study the financial system. There's a version of every traditional finance product at this point implemented on the blockchain. And novel combinations thereof of which I spoke about that you dismiss as a 17th century coffee house outfit (that's a Peter Schiff argument, too, btw, so you may enjoy his positions on crypto). You say 17th century coffee house, fine. I disagree, but don't find it particularly relevant. These mechanism still don't exist outside of crypto and they do fulfill 3 different segments of user needs (traders get less slippage, liquidity farmers get more rewards, and passive investors get capital appreciation). What's cool is all these chains and protocols can build on each other-- or you can build a service that ties a few of them together to make a new product. Some of this won't make much sense until you're deeper into the systems, but don't focus on that details here. This is an example of how composable these services are: In our example above, the $FOO (I'll use this instead of $USDC) token gets turned into a $bFOO token (that's the version that has n% APR, where n is determined by market demand), and that $bFOO token can get wrapped in a 4th service called a yearn vault, $yvFOO. This $yvFOO token will bounce between multiple $bFOO lending pools periodically to obtain the highest returns. Then there's a 5th service, Abracadabra, that will take your $yvFOO token as collateral and mint you some stablecoins for around 50% of the value (to eliminate insolvency risk). So you can stay put in your appreciating investment but obtain a bit of liquidity to do something like buy a house (without giving up the investment returns). This is a full Cambrian explosion of potential unlocked that, no, my friend, it is not possible in traditional markets. This allows for a financial system based on cooperation, rather than exploitation. One example of emergent cooperation is that often when a novel crypto protocol gets big enough somebody inevitably forks (remember, open-source!) the protocol and makes some tweaks (such as putting it on a different blockchain), thereby competing with the original protocol. But instead of toxic marketing ("I'm a Mac, I'm a PC, here's why the other guy sucks and you should buy me"), they cooperate with the upstream protocol and build value add products and synthesize instead of compete in zero-sum games. You talk about this as if its only purpose is to avoid regulation, but that's completely missing the point. There's a parallel digital universe, the Cryptoverse, being built before our eyes, that has no borders or bias. Cooperative governance structures and protocols are manifesting, coalescing, and actualizing the potential of our species unbound by zero-sum finance. The Richard Stallman vision made manifest.
Seb Member	Mon Nov 29 01:39:06 Nhill: "Global, too, and 24/7." The 24/7 think is a nonsense - the US banking system is uniquely bizarre. Nowhere else in the developed world has any problem with transactions and business hours. Global is just a function of "not regulated" - i.e. not a technical feature but regulatory arbitrage. Meanwhile the exchanges are deeply balkanised, the opposite of aggregated. "These mechanism still don't exist outside of crypto" No, the mechanisms exist, but are not used conventionally because their main use is in uncompetitive business models that went extinct. "This is an example of how composable these services are:" You've just described an automated, unregulated structured debt product sold to retail investors. There's nothing complicated in this. You will remember some stuff that went down in 2008. Made the news. The ability to automate isn't because of the magic of blockchain, it's because you've removed all the regulatory steps. There magic of blockchain is simply in preventing there being anyone to haul in front of the courts. In terms of the actual product, it's decidedly un-novel and generally recognised as being quite dangerous for the whole economy if you let them anywhere near the core of the financial system.
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