#Week_2: #DeFi, Day 1: Decentralized Finance - the High Level Basics - by DeFi Education
In a sentence, banks can be replaced by software code
Long-term the majority of transactions will be done with smart contracts. Similar to how e-mail displaced the majority of snail mail,
2- Smart contracts will replace middlemen.
Before Defi, Bitcoin and other major crypto currencies like Ethereum were *unproductive assets* in your portfolio,
With smart contracts, you can now take loans against it *or* loan it out, and some other Utilities.
3- Collateralized Loan: Imagine a world where you could lend out money, knowing that there was collateral staked (avoid total loss),
On the borrower side, imagine a world where you can take out a loan for stable coins without interacting with a bank. This is what exists today.
4- look at simple examples of how this helps a crypto currency owner:
Example 1: you have a sudden $10K bill to pay (medical cost) before Defi, you will have to sell part of your BTC, incur a taxable event and use that to pay the bills.
After Defi? You can avoid that,
5- put your 4BTC up as collateral and borrow $20K, As long as you pay the $20K back and the price of BTC doesn’t drop significantly, You are good even you will avoid a taxable event, All 100% by the book.
Example 2: you’re sitting on a bunch of crypto assets, and you are bullish
6- you will hold them anyway, you’re better off putting them into a liquidity pool and earn interest on the assets generating a yield, instead of only waiting for price increase, (it has a downside called: impermanent loss, we will cover it later)
7- Example 3 (Somewhat Futuristic): If you have a choice between fundraising from the entire world (7 billion plus people). Or. Fundraising from a few banks that charge a 7% commission, what are you going to do?
You know the answer,
you can even set some rules of who can invest
8- Example 4 (Futuristic): We began to see already apps allowing lending/borrowing by making a NFT as collateral!
More importantly, physical assets will likely become smart contracts. For example, every single home in the USA can be a NFT, imagine the value that can be added!
9- Example 5 (Futuristic): If we know that all items can now be traded 24/7/365 regardless of geography,
why would the stock market be limited to a weekday trading schedule
Beginning of Evolution - Decentralized Exchanges (DEXes)
people use middlemen to acquires stocks and such
10- As those centralized brokers like Fidelity or @RobinhoodApp
The only exception to this is really crypto where the smart people take their coins off of exchanges and move them to cold storage,
Decentralized exchanges such as Uniswap, 0x, Sushiswap already do a huge volume!
11- The only reason this doesn’t work for smth like stocks right now is due to regulations.
As a note to keep ourselves honest here, centralized exchanges will still exist.
Large funds with tons of regulation need them, But decentralized side will gain more adoption over time.
12- Individuals who are looking to fight change will say “things work fine the way they are”. This is the same thing people said about mail and phones when the internet came out.
Why is this so valuable?
These centralized entities have huge expenses and not user efficient
13- One final thing: some Utilities created with DeFi
royalties/revenue stream as an example, from a song or a movie or an Art,
This benefits the artist as you cut out a bunch of middlemen. It also benefits fans/Consumers as they can financially benefit if it succeeded as well-
14- This means any sort of financial contract can be constructed in a smart contract.
If the above seemed like a lot to handle, that is fine! If you remember when the internet came out, many people dismissed it and said they didn’t need it. Here we are now.
#Week_3: #P2E, Day 2: Level 2: Game Monetization, The Promise of Play-And-Earn by @0xRyze
A glance into Game Monetization & how to keep games running
@AxieInfinity has been making headlines in the news for variety of reasons: its token’s price action, how it creates work-
2- For people globally and its incredible profit surge, surpassing the revenue of big projects (84.9 million USD in funds for its treasury! as of jul 2021)
Games as Products, server costs, the cost of hiring engineers and developers to build them, etc.
3- Keeping a (Game’s) Engine Running;
Game developers have a choice of how to monetize and fund their games. They must find ways to (1) fund initial development, (2) make revenue from the game that outstrips expenses.
Breaking down different incentives to monetize it;
One of the greatest takeaways for crypto natives from the bull market of 2021 is that the next million crypto users will be onboarded through “consumerism”, not DeFi,
2- Meaning the stuff which are consumed, used regularly, that the average person in the street can understand it; unlike finance.
So there will be a generational opportunity to participate in this paradigm shift, for those who pay close attention.
Here are some thoughts
3- The state of crypto gaming | What does crypto gaming look like today?
*the player point of view (POV);
-P2E for now is just yield farming with extra steps.
-Gaming Guilds resemble factories hiring laborers to perform small tasks
#Week_2: #DeFi Day 5: Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets by @chainomics part 2
*Smart Contract-Based Reserve Aggregation.
Here: The smart contract will compare prices from all liquidity providers, accept the best offer -
2- on behalf of the user, and execute the trade. It acts as a gateway between users and liquidity providers, ensuring best execution and atomic settlement.
*Peer-to-Peer Protocols: It is an alternative to exchanges or liquidity pools, also called over-the-counter (OTC) protocol
3- They mostly rely on a two-step approach, where participants can query the network for counterparties who would like to trade pair of crypto and then negotiate the exchange rate bilaterally. Once the two parties agree on a price, Trade is executed on-chain via a smart contract
#Week_2: #DeFi Day 4: Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets by @chainomics, will break it into 2 parts
A very good read coming from an academic professor!
This article highlights opportunities and potential risks of the DeFi ecosystem.
2- DeFi uses smart contracts on top of blockchains to create open protocols that replicate existing financial services in a permissionless, interoperable, and transparent way,
Agreements are enforced by code (no middleman) transactions are executed in a secure and verifiable way.
3- So the adv here: unprecedented transparency, equal access rights, and little need for custodians, central clearing houses, or escrow services, as most of these roles can be assumed by "smart contracts."
So The backbone of all DeFi protocols and applications is smart contracts
Actually it has a lot in common with yesterday's article, so i will try to focus on the new angels.
Crypto promises to make money and payments universally accessible, no matter where they are in the world.
2-DeFi takes that promise a step further. Imagine a global, open alternative to every financial service you use today -savings, loans, trading, insurance and more- accessible to anyone in the world with a smartphone and internet connection.
This is now possible by smart contracts
3- Smart contracts are programs running on the blockchain that can execute automatically when certain conditions are met. Not only that, it has the composability function: meaning we can build on top of it, more sophisticated products, which is called: decentralized apps or dapps
terms repeated in the previous summaries: Mcap: price multiplied by the amount of tokens that are currently in circulation.
FDV: price multiplied by the total amount of tokens that will ever exist
2- Smth interesting here, we can consider Market Cap as a measure of public $ buying= demand, while FDV is a measure of supply.
As demand increases for unlocked coins= market cap UP, FDV increases proportionally, even though demand for the locked ones didn't necessarily increase
3- let's introduce a new term: Bullish unlock?
if unlocks increase supply but not demand, how does a bullish unlock happens?
locked tokens can have an active market of their own, ppl buy or sell locked coins with a discount to the market price, Consider it OTC for an allocation,