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  • Yeah, when I watched what you guys were doing, so I called that when I relooked at defi, when I was at bankers trust, I had a bunch of direct phone lines and I could choose which broker to use at the Chicago mercantile exchange or the bond future.

  • I could choose which uh company to trade treasuries with and um you know, they would give me better liquidity and they might take me out for a steak dinner or take me to the, to the knicks on the floor.

  • But I never got offered ownership in their company or the protocol.

  • And when I saw you guys in the defi summer and some of the lending protocols saying guess what, you will give you an interest on your soul, you'll grow your crypto.

  • That's the best way you explain lending market, you get to grow your crypto, but you also get some of these extra tokens in this protocol that will also accrue value.

  • That is a mind blowing concept that you would have never seen in traditional finance or probably impossible to do without a blocking or economy.

  • Imagine even taking a huber right each time you take a Uber right, you get a small portion of uber equity or eating at, let's say drinking in a pub or going out somewhere or you know, watching a sports game, you get part of like ownership of that sports club.

  • So like all this concept of like ownership has, its what website that's very well is that it just like changes the way.

  • So as a user, you become a stakeholder.

  • So basically because you use the products and the protocols, you have the kind of like a more skin in the game to decide like how there will be built compared where you know, a traditional model where you have a company stakeholders, investors and investors are kind of like uh incentivized to uh create products that create more value for them.

  • So they have like the monetary stake but the user has not only kind of like user has the stake of like using a good product and then if you get like some sort of like a discounts, ownerships and and additional like kind of like hell for that.

  • Uh That's amazing.

  • Yeah, it's a whole new paradigm shift and it's super exciting and it's also all on the Blockchain.

  • Yeah, transparently.

  • That's the thing like when you compare like uh these things that's financed the traditional finance, what amazes me like how transparent everything is.

  • So if you go currently into the other protocol or any defy protocol out there, you see each and every transaction on the Blockchain, you every single second.

  • So you see like what's the colorization ratios on on the other protocol, what kind of assets are borrowed?

  • What kind of interest rates you see like the historical um data.

  • So you can even quantify for the future.

  • So these protocols are auditable by anyone every single second, which means that anyone can build better risk management tools as well.

  • And because the data is accurate there compared for example financial crisis in 2000 and eight.

  • You know it's very difficult to understand like what kind of exposures for example JPM had against Goldman and Goldman against let's say Bank of America and what not.

  • And so you have like this financial reporting but it's not the same thing as you have like uh financial reporting on the whole state of the economy each and single second which means that anyone can build better risk management tools any part of the port.

  • And that's what's happening in the other protocol.

  • We saw a proposal coming from a firm called conflict which does stress testing and risk management in the with three and they practically make it a proposal of changing risk parameters and it's kind of like a decent just way of building not just like better finance more like efficient but also like more risk of our finance which is good for everyone.

  • Especially for the users.

  • Yeah the transparency cannot be overstated.

  • When I worked on Wall street the whole game with secrecy.

  • Old game was a lack of information that's why we got paid millions of dollars a year.

  • If you ever look at those phones in the movie Wall Street there are these black phones I used to have to, I can talk on two phones at once by the way they have a click they have a clicker in the middle of the phone.

  • What's that for its to mute So you cannot tell people information and we would do massive derivative trades, hundreds of millions of dollars in notional between banks and they were never reported to anyone.

  • And that's why I think what standings referring to is in the financial crisis when everything went wrong, the Fed comes in and says, okay, where's the risk?

  • And everyone says no one knows where we don't know.

  • It's all on a is the document that was signed off, that's eight pages long or it's in a risk management system internally to the bank, but you literally have no idea what the risk is exactly.

  • Um, and then it starts getting ugly as it did with Lehman and these other places.

  • But our job was literally not to tell our customers information exactly.

  • That's not possible in victory.

  • Because like you see everything and end of the end of the day, what amazes me how these communities are managing risk.

  • So all of these communities, it's, they consist of developers, uh, there might be some professionals there but their users that are using these protocols and practically making decisions on what kind of response bridges to apply and crypto is very volatile.

  • It's volatile than anything else.

  • And you know, when these collaterals reducing value, you know, there's this kind of like a liquidation is going on the different protocols and they have been very resilient on what's happened happened this year in the big market drop and, and last year.

  • so it's just showcases that you don't need to be a financial kind of like uh you know, advocate to actually build good protocols and and recovery systems.

  • You just need to be have a group of people as a community like using the product and deciding that hey what's good for for the product and that will work.

  • We have like basically multiple protocols now in the fight that just have amazing risk management.

  • And I'm pretty sure when we look back into this thing like we get inspired that you don't need to have like necessarily like similar backgrounds just modeling risk.

  • You can just have People that are using and have a lot of like kind of like a stake in the system.

  • And it's been impressive because like you said it's almost like a public display of a stress test.

  • Yes, it's been out there and I was talking to Dan morehead of Pantera capital who was raising Bitcoin funds in 2013 Who tried to buy $2 million dollars a Bitcoin on coindesk and on coin based on there were four employees and he couldn't get it done.

  • And uh he said brian look at Bitcoin for example, he said for 13 years it's been stress tested by every terrorist group, every government group, every CIA FBI group in the world.

  • And yet it's never had downtime.

  • He said you can't say that about any banking system in the world can't say that about facebook and google.

  • They've all had downtime and yet a network like Bitcoin has made it through that Without breaking and again, you know, ethereum now all the developers, all the protocols and again, you're talking about big market moves.

  • So black Thursday last year, this year when Bitcoin comes off 50%.

  • Now, what happens to the stable coins stay stable?

  • Do I do I get my lending securities back and we're seeing these public displays of kind of a stress test.

  • Yeah.

  • And there's a lot of discussion.

  • So if you see some sort of like a kind of like unwanted behavior, the communities will talk about it, you know, publicly in the forums in twitter and you quickly like the communities react very quickly and because it's a system where it's based on the communities, like it's very difficult to act against a protocol and kind of like because like everyone is trying to achieve the very same goal of course, like when things scale and you have more like commercial actors going the next question is like how you keep the protocols uh somehow like uh I would say like, like a friendly and environments where people care about decentralization, uh financial inclusion.

  • But that's that's the thing with the forking if if there's some sort of like issues where the community members aren't uh you know, they don't see it as as kind of like beneficial for the protocol.

  • They can always fork and this risk is amazing because you can't fork Gpm, you can't for for Bank of America, it's just like, it takes 50 years to get to the same level.

  • But in the five you can basically for uh you can for any protocol and if you do it right away, you can get very quickly in the same spot.

  • And that's, that's something that also keeps us like kind of active, like how we ensure as a stakeholder.

  • Like we build good protocols for for people.

  • So you're a politician, not a ceo well, kind of, I would say that I'm more of a builder.

  • Like I don't like politics because it takes so much time and but politics is an important part.

  • So the essentials, finance is interesting because there's this component of building things and then there's this component of governing things.

  • I'm more of a builder.

  • I like to build things and let other people to govern them.

  • That's like, that's pretty much like my vision, but also I, I like to, I have a saying in some of some of the things I built, so maybe I want to say, hey, I like what's happening, but my opinion is this, but I want to do it in a way that my social capital isn't like uh saturating what's good for the protocols.

  • So that's the thing.

  • Even if you deploy things for example, Batalik uh created the ethereum uh was founded it and he's active there.

  • The communities still, you know, this kind of like a social capital.

  • You need to be careful because you need to ensure that you don't direct too much the, the whole community and let this kind of space and involvement there.

Yeah, when I watched what you guys were doing, so I called that when I relooked at defi, when I was at bankers trust, I had a bunch of direct phone lines and I could choose which broker to use at the Chicago mercantile exchange or the bond future.

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Stani Kulechov On DeFi vs Traditional Finance: Everything Is 100% Transparent With Blockchain ?

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    林宜悉 posted on 2021/09/27
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