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Comment by seibelj | Hacker News Reader

https://app.ribbon.finance/v2/theta-vault/T-yvUSDC-P-ETH

This is an automated put-selling strategy using stablecoins (USDC). Every week the smart contract picks a new strike based on the Black Scholes formula and sells puts for the ETH price.

This is just one use case for one project in the DeFi space. It has $115 million deposited which is a small amount of the total put to work in DeFi.

Crypto doesn’t need to be a currency - crypto is permissionless finance. There are thousands of projects like the one I linked. HN commenters generally have no idea what’s going on in this space and continue to argue “bUt iS iT a CuRrEnCy???” talking points as if anyone gives a fuck who works or invests in the ecosystem.

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People implemented automated trading strategies decades before Blockchain or "smart contracts" existed.

Key word is “permissionless” - anyone on earth can create more projects and anyone on earth can invest. No license, government, or agreement needed.

What does permissionless even mean in the context of an automated trading strategy? Ultimately, someone needs to put up the initial capital, meet marginal calls when required, and cover losses when they happen. What happens when your smart contract goes to initiate a sell and there are no buyers (a real possibility in any market but especially illiquid crypto markets)? Exchanges exist for a reason.

Everything is building blocks. For the project I linked it’s fully collateralized - you can’t withdraw money that would make the system unstable. Other projects build on other pieces of infrastructure to do all of that automatically.

Again it seems like the person I’m talking to understands very little about this space because your questions are rudimentary to anyone who understands crypto, but you comment as if you are an authority. This is the central problem with HN and crypto conversations.

Actually, the central problem with crypto advocates is that they start from the position of assuming everyone around them is an idiot and then set about building replacements for all sorts of things (banks, currencies, exchanges, legal dispute resolution mechanisms, supply chain management, databases, etc.) that they themselves do not understand and end up with fragile, inferior substitutes that never get any traction for good reason.

Clearly I am indeed speaking with someone who has no idea what they are talking about, which as I previously stated is the default HN crypto commenter.

> assuming everyone around them is an idiot

Or just subservient to a corrupted system.

In this context it means: -system is built with bearer-style assets in mind to handle liquidations without having a 'negative' balance (so instead of a margin call, onus is on the user to track prices and refill liquidity, otherwise the system liquidates the position to pay back the other market participants involved) - Anyone can put money in this - the smart contracts use other automated markets like AMMs (think of it like a two-way vending machine between Twix and M&M's, where one can set the price between two assets based on how many units of Twix and M&M's they put in initially, and people can trade into and out of them by putting one in, and getting the other. The people who put in both provide liquidity, and they get a portion of the trading fees. These two-way vending machines are set up so that if someone puts a ratio of Twix/M&M's in their vending machine that doesn't match the market price, someone can just arbitrage that out so that the price matches the market. It's like finding the cheapest place to get food

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