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Comment by BrissyCoder | Hacker News Reader

It's a Ponzi scheme built upon a Ponzi scheme.

Ethereum (and whatever other chains support smart contracts) literally only exist as a platform upon which to build Ponzi schemes.

Sorry but I can't do anything with DeFi. It's just juggling more crypto around. I've had multiple tell me I can get a loan on it but this is just False for any practical reason. I can't say get a loan for a car and use the car itself as collateral like I can do at literally any bank. I have to put up 100% of collateral in crypto. It blows my mind that there are people on this site who are proponents of DeFi in its current form.

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To be fair, you do have to start with over-collateralized loans before you can get under/no collateral loans with plenty of projects trying to do the latter. That's how lending itself started (https://www.provenir.com/resources/collateral/history-of-len...).

But I agree that if it's always overcollateralized then there is obviously much less utility created (though definitely some - similar to how you can get a loan against your home).

The project mentioned, Goldfinch, has already distributed 4.5M in uncollateralized loans to emerging markets using DeFi rails and liquidity already (https://medium.com/goldfinch-fi/goldfinch-raises-11m-from-an...). My 2c is that it's a sign of what's to come.

About Goldfinch: Perhaps I've seen too many movies, but the "backers" look like the guys that will vouch for you to get the loan and break you knees in case you forgot to pay it back.

> To be fair, you do have to start with over-collateralized loans before you can get under/no collateral loans with plenty of projects trying to do the latter.

Yeah but also the collateral always has to be cryptocurrency right?

Yes for the most part it is. One reason being that it's just a lot easier to code and cleaner when everything is on-chain and tracked the same way.

But that's starting to change (https://centrifuge.io/) - still a long way to go ofc. I also know people who have done non-crypto collateral or just completely unsecured lending, but it does involve trust that is off-chain (legal contract, know the person, etc). I think that's a fine stepping stone (and may end up being necessary) as people figure out how to do everything on-chain and in decentralized ways (ex. using on-chain reputation)

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