How about all the military reservists and the voluntary soldiers/marines [and specops] unwilling to comply who will find access to capital from decentralized communities?
Fun times ahead, stateside and abroad…
4,811 karma · joined February 10, 2012
Fun times ahead, stateside and abroad…
Now time to watch the slow leverage build up of stablecoins on chain with the decentralized non custodial derivatives protocols :D
Might loose a bit to fees getting it on chain(s) (though less than intl money transfers if one is used to that), but should make it back pretty quickly.
[0] https://www.reuters.com/business/walmart-allowing-some-shopp...
[1] https://github.com/bisq-network/bisq
If the US (or any jurisdictions) regulators don't understand how the "interconnectedness" manifests itself on a day today basis (or how it has and continues to evolve), no matter what they "force" (esp if the model is divorced how things are done today), it will be routed around and will be none the wiser until something blows up.
The revolving door between centralized industry and centralized gov regulators certainly doesn't help with that…
I disagree.
> I'm really confused why you are bringing it up, TBH. And neither do Japanese Government Bonds. Or the ECB.
howmayiannoyyou mentioned "The real one, the one represented by offshore US dollar denominated financial products (eg. Eurodollars, US denominated foreign debt), and domestic financial products (eg derivatives, Corporate bonds)."
The former is encompasses the latter.
All these markets and participants are all interconnected, and alot of their interconnections lie outside of any particular jurisdiction. One would be fooling themseleves if one thinks lines on maps demarcates clear boundaries for the actors, assets and financial arrangements in the space.
> FYI, yes, in order to promote financial stability in eurodollar markets, central banks can arrange mutual swap lines
Swap lines from various actors have existed long before CB swap lines. They wont help with long term issues with counterparty risks, and the quality of collateral (and the rehypothication of such) that cant be papered over for "financial stability"; trying will only guarantee more lack of such "financial stability" in the future (Jerome Powell called the post 2008 global bailout regime in 2012 the "duration bubble" [0, on page 193 of the transcript from the October 2012 FOMC meeting], still being blown larger and larger today).
> but again this has nothing to do with how the US regulates American banks. Europe can regulate European banks however it wants. If the result leads to some eurodollar funding issue, then we can bail them out with a swap line if we want, or not bail them out if we don't want.
If the regulators fail to understand the interconnectivity that happens outside of their jurisdiction and off the balance sheets of the actors (not just banks), then that can mean such regulations mean nothing beyond the paper they are printed in or even worse, failure to understand the consequences of any regulations.
[0] "Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum. You can almost say that that is our strategy."
Eurodollar system was already alive for almost a century by then:
"The first seeds of the eventual eurodollar bloom, in domestic US terms, were sown all way back in sixteen – as in the year 1916. Believe it or not, the Federal Reserve Act, then only a few years old, had been modified so that banking syndicates (those able to raise the princely sum of $1 million capital) could form what were called agreement corporations.
What was the agreement? Like the arrangement in London many years later which would make the eurodollar into all it could be (and then some), US agreement corporations would be relatively free of regulation provided that their exclusive focus and customer base didn’t include any domestic Americans or American businesses. "[0]
And from 1975[1] from Richard Debs, FRBNY’s Chief Administrative Officer:
"Finally, for the sake of logic, I should mention the legal framework of the Euro-dollar market, since I included the Euro-dollar market in my working definition of international banking from the point of view of the United States. However, I’m afraid that I can’t do much more than just mention it. The Euro-dollar market itself is not easily definable, and its legal framework, if any, is even less so. The market grew rapidly without the assistance, or burdens, of an integrated or even coordinated set of laws. It is an international—or multinational, or transnational—phenomenon, but it is regulated only to the extent that the Euro-dollar activities of the institutions operating in that market—the Euro-banks— are subject to regulation and supervision by the national jurisdictions in which they operate."
> But name one need in the real economy that requires complex financial products and we can have a discussion.
Some people have the very real need to hedge the risks they face, whether they be growers of grains or the banks that lend to grower of grains or institutions that have idle assets they can lend to markets and generate additional yield on to offset declining yields elsewhere. Yes, these instruments can get used by speculators, but that helps for liquidity purposes for those who want to hedge such risks in markets.
Just because you don't see it being apart of the "real economy" doesn't really matter to those participants.
To me, I think that the biggest issues I have with the current system is the level of moral hazards at play with the centralized and incumbent players (and the centralized governments they have captured) who will fight tooth and nail to avoid the day of reckoning where the excess can be washed out despite the pain it may cause to some people over others who prudently managed risk.
And this is where I think DeFi[2] can step in and provide a leveling playing field, where centralized incumbents and their captured governments cant just stop the DEX they have massive exposure on when the trade they put on blows up in their face (even if it means a "fiscal mass extinction events for many enterprises & households" who have long bitten off more they can chew)
[0][1] https://alhambrapartners.com/2021/09/17/dollar-warning-updat...
[2] https://maroonmacro.substack.com/p/issue-23-the-bull-case-fo...
Aave/Compound/Curve/Benqi <- decentralized non custodial overcollateralized lending protocols.
These centralized and incorporated companies [basically a big bulls eye saying "please screw me over, here, I'll make it very easy for you for governments"] use Aave/Curve/Compound on behalf of their users who are too lazy/ignorant to do it themselves, plus maybe some economies of scale with cost of gas fee on ethereum.
Right now on benqi (compound fork on avalanche), one can supply DAI and get 8.09% APY in DAI alone (there's more APY in other tokens but I don't like to count those since those incentives come and go), but it fluctuates based on borrower demand/pricing model used in the smart contracts [0].
By supplying DAI, using it as collateral to borrow more dai (up to 75% for dai, different collateral factors for non stablecoins, i think max 60% of collateral value, some with 0%[which means it cannot be used as collateral but it can be lent/borrowed, USDT is like this]) and then depositing it back in again, you can get more yield on that minus the borrowing costs if there are protocol rewards/incentives to be liquidated for more dai.
There's also providing stablecoin <-> stablecoin liquidity on dexes and collecting fees on each swap.
[0]: compounds jump rate model: https://github.com/compound-finance/compound-protocol/blob/m...
I think the sand direction is deff an improvement over the 300 delta_C systems now with (NaNO3, KNO3, NaNO2) at the 900 delta_C in used in the pdf, but idk if it will win out in the long run with the need for direct contact vs some kind of sCO2 system with higher delta_C mixtures (for example a theoretical mixture CaCl2 + MgCl2 with 1500 delta_C, or even engineered metamaterials[0, i've only seen some specific examples of electromagnetic metameterials when i was in school about a decade ago, this post was about a year after i left] in a mixture to have even higher delta_c).
There's only so much one can do when one limits the materials used for heat capacity to naturally occurring ones (i imagine that compounds in the future could be engineered to be at least a order of magnatude higher in delta_c from natural mixtures).
Agree, I think for so long the whole renewable build out has ignored storage costs which will really come to bite electrochemical battery dependent systems in the ass (because banks like UBS have long projected that costs will be harder and harder to bring down and ACS has long talked about the difficult to deal with chemistries with all the different batteries out there [and with the inherit degradation of the system over time]).
I think in the long run (well, unless our political challenges with nuclear get solved), on the utility level (potentially even behind the meter for specific high energy applications that have space to construct/"mine" their own solar field), molten salt storage will take the lead (esp as salt mixtures/chemistries get cheaper, have higher thermal operating ranges, storage and transportation gets better).
I think this quote from somewhere describes this best: "It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so."
If you ask me, i think the big thing™ most people trust and don't question that's pretty much backed into tradfi mm funds and centralized crypto stablecoin reserves alike is US treasuries. Most assume that they are super safe and that nothing can go wrong, however most ignore or are in ignorance of the rehypothication of them in eurodollar markets (and the rehypothication of collateral more generally). The heavy usage of them as collateral in the post 2008 monetary system has basically tied the super-safe-risk-free-asset™ asset to the credit risk of the most junkiest actors globally (that for the most part, whose balance sheets go unseen and will never see the light of day).
61% of Americans paid no federal income taxes in 2020[0], up from 47%[1] in 2019 and the long term chart seems like the non paying number will get higher regardless of what people "have to have" and "have to do".
> 2. The feds will bail out depositors in banks that have screwed up badly.
Ignoring the moral hazards at play, this really only considers on shore dollar denominated deposits, not dollar denominated deposits held overseas and will only work if its only a few banks and not something systemic.
So none of this really means anything to in the tail risk scenarios people are opining about because its all just SSDD at the margins, crypto or non crypto (because everything is connected and getting more so everyday).
[0] https://taxfoundation.org/us-households-paying-no-income-tax...
[1] https://www.forbes.com/sites/howardgleckman/2019/08/06/remem...
As long as one has non-US local friends/family who can cash out, I don't think this matters much (albeit in a local currency)
I think in this day in age, all of this is really depends on ones personal preference in how deeply they want to tie themselves directly to the traditional banking system (and traditional asset classes/financing/jobs/organizations) without even trying to give up US citizenship (because obviously, the process is a PITA).
I think there will be other ways to build "consumer confidence" without relying upon promises from easily corruptible centralized entities who have routinely engaged in moral hazards at scale for the benefit for a few actors above and beyond other actors.
If those centralized entities declare those who try to mitigate against the financial risks in a decentralized fashion for those who do not willingly enter into such risks as illegal, "opt-out" is legally untenable and I will expect increasingly more conflict going forward.
I talked with a guy yesterday about how to build out the on chain swaps market and the current challenges with doing so, who worked for some of these deeply regulated mega banks trading interest rate derivatives for 13 years, and something tells me that these folks (you know, the grunts on the ground who are intimately familiar with how modern money really works and how it can fail on a day to day basis) are going to run circles around around career regulator <-> industry revolving door (and ultimately self serving like anyone else) bureaucrats in dealing with this conflict…
;)
At this point, threads like this help me add to my list of what garbage i need to compile out every year or so when i feel like syncing up hahaha.
This can be said for pretty much any technology/software/hardware/mitigation that some people dismiss out of hand…
> It could be argued that if more people used "surveillance escape valves", there could be pressure to close them.
I would even go one step further and argue that our devices should actively send spoofed data (not necessarily random) and poison the data wells these companies like to drink from to amass their power they wield asymmetrically at scale against individuals.
Perhaps, but its ok either way, it's not really limiting the DAO or the places leveraging the DAO to pursue this stuff.
> Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
Its not just about honoring the ticket for the duration of any particular booking, but also mitigating the risk between multiple parties and being able to easily integrate such information with as many decentralized protocols are needed for the parties involved without extra dev overhead to connect them.
For some places, you need to have a card on file in case of damages (this is where the decentralized escrow/dispute and resolution protocol come in) and rely soley on visa/mastercard and the hotel unilaterally being able to say that you were the cause of an issue that may come up or being able to decided whether or not you are on the hook.
Incentivized actors (these need not be people, it could be automated, but since everything has an address, no one can tell the difference) of those other protocols on chain need visibility with the address that held the nft. So yes, its trust the protocols and incentives associated with them around handling dispute and resolution and non custodial locking of collateral in escrow (or allowing another protocol to time lock collateral on ones behalf).
And this assumes that the place someone buys an nft stay has the in house capability to do all that without using a particualr nft stay protocol (which alot of places dont esp for random bnb) or ok with giving a large cut to airbnb/booking.com/visa etc if they don't.
> You are not cutting out the middle man of some SaaS provider, you are substituting them.
Yes, for code that can take a lot less of the cut than existing SaaS providers (if any at all). A protocol != SaaS provider, even though a SaaS provider could manage a protocol[0], or a protocol can just be an set of immutable contracts deployed on chain, or anything in between.
[0] https://aws1.discourse-cdn.com/standard21/uploads/shinedao/o...
Granted, I really can't be bothered to care about all the stuff going on out there with nft's but i'm not going to let it sour me on those trying to build decentralized alternatives for systems people like to engage in now while cutting out the centralized platform rentiers/censors.
[0] https://cdn.discordapp.com/attachments/785611286100049941/88...
[1] https://cdn.discordapp.com/attachments/785611286100049941/88...
Its fascinating reading about all the research online into molten salt designs in the 60's wrt nuclear and its promise that just went ignored (if you take the word of people who worked on it on their blogs) because of things that sounded very much like:
> Oil has owned our military, political, and industrial landscape.
I'm just glad that the rest of the world is not limited to build out for large scale renewable systems (i.e. freaking chile has +200MW and 17.5h molten salt storage sans direct solar radiation CPVCSP plant bidding for under 4 cents/kwh in 2021 and the US has nothing, what a joke the US is for renewable despite all the past research in related fields, but good on other countries taking advantage of it).
I suspect even the sCO2 turbine research will go nowhere towards broad commercialization/utilization in the US and get broad adoption outside of it despite its applicability to nearly every system that converts heat into electricity now.
Sadly, I think nuclear will still go nowhere outside a few places as long as fears around weaponization remain (even the thorium stuff has its downsides from the protactinium -> u233 route, and i've at least seen this stuff pursed for awhile in few EM's leveraging US researchers/companies/consultants).
I wish they did, and just cared less about all the other features that were missing from gecko (but that's just be being selfish and not wanting to build out native stuff myself lol)