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panek @panekkkk
, 13 tweets, 4 min read Read on Twitter
1/ A thread on "open finance" lending. 👇

"Open finance" is a simple descriptor that applies broadly across a large class of SC-facilitated crypto-primitive fin protocols + apps.

It has no specific meaning but I think of it as "open source" meets "increased accessibility".
2/ @DharmaProtocol is an "open finance" lending protocol. It lays the foundation for building user-facing crypto lending apps on top.

As a protocol, it is agnostic. It is as open or as closed as the apps (and their underwriters/liquidity providers) on top want or need to be.
3/ Here are some apps that @DharmaProtocol facilitates to make lending more "open" (ie, "more accessible"):


Borrowing against NFTs or cryptocurrencies is currently underserviced, too expensive, or not serviced (no one will underwrite it) today.
4/ Crypto-collateralized (typically over-collateralized) loans for speculation/purchasing/other purposes require no underwriting or KYC/AML and thus are permissionless and censorship-resistant.

Both @MakerDAO and @DharmaProtocol facilitate low-fee loans like this today.
5/ Far future, weird or impossible-to-conceive crypto-native debt apps may arise such as

- automated debt obligations b/w dif SC apps (eg, to get around Plasma "thawing" periods)
- trustless savings accounts
- initial debt offerings
- tokenized municipal bonds.
6/ Yes, these are very much sci fi but such concepts may become commonplace w/in the next 10 years.

In countries like Brazil, APR on loans is so high that consumer loans are impossible to obtain despite credit worthiness.

Crypto-lending protocols/apps may be able to source cheaper loans for persons in these countries.

Crypto-lending protocols/apps may permit underwriting in other jurisdictions (w/ looser restrictions) or sourcing debt through novel vehicles like initial debt offerings.
8/ Now you may say, "but some of these could be possible today using traditional apps!"

And you're right. *Some* of these apps may be possible today. But some aren't even available today yet are already available on Ethereum (eg, *low-fee* crypto-collateralized loans).
9/ Ultimately, crypto-financial primitives like Dharma provide a standard, open-source protocol for sourcing global debt liquidity and facilitates interoperation w/ other crypto native apps that should compound network effects into the far future.
10/ This doesn't mean traditional debt goes away. But there are 2 billion unbanked people that traditional finance has failed.

Open finance crypto protocols/apps will start small, by serving crypto-native and un/underserviced persons or use cases, and will grow over time.
11/ And crypto fin-tech will compete w/ traditional fin-tech. That's fine. Banking the unbank needs all the help it can get. Crypto however benefits from network effects and open-sourceness in ways that trad fin-tech doesn't so it seems likely that crypto will win long-term.
12/ Most of these concepts were taken from a great podcast with @NadavAHollander on the Unchained Podcast. Give it a listen!…
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