Comment by whatisweb3 | Hacker News Reader

Comment by whatisweb3 | Hacker News Reader

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I loosely agree with you but am a little more optimistic. I see centralized lenders and services like Celsius and 3AC collapsing and running off with money, or blocking withdrawals - this would not occur had the loans been made on-chain through smart contracts, and DeFi platforms like Aave are holding up just fine during this downturn. This is an example of a shift of power away from incumbents and toward the people en masse, should they choose to actually understand and use the decentralized blockchain.

> If we get something wrong, it may be impossible to change, unlike normal human systems.

It's not far fetched that blockchains will change as humans adapt to new challenges. An example is already happening: Eth is transitioning from PoW to PoS and moving to a layer two centric ecosystem to meet block space demand.

There are real concerns with adding functionality on top of the blockchain without understanding its immutability - like the ridiculous suggestion of putting twitter or a period tracking app on-chain.

To me this is fundamentally contradictory:

> the people en masse, should they choose to actually understand and use the decentralized blockchain

I used to work for financial traders. Our company was essentially the same as the companies of professional gamblers. We knew we were playing zero-sum games. Our goal was to create asymmetries in information and skill such that we got the money that other people were putting in. In the markets we played in, the opposition was mostly other well-funded players. But you can bet that there are well-funded groups with snowdrifts of math PhDs who are happy to take money from "the people en masse" that decide to trade in the markets.

Those people already exist in the non-blockchain financial economy. From predatory lenders to fake health care plans [1] to ponzi schemers, frauds, and grifters. What mainly keeps them in check is regulation, not regular people "choosing to actually understand". Because what distinguishes "the people en masse" from the people who prey on them is that the predators can devote all their time and attention to one particular hustle, while "the people en masse" have to defend against every hustle, while trying to be good at their jobs, take care of their families, and live their lives.

So the hustlers are always going to be one step ahead from regular folk. Doubly so in an unregulated, rapidly evolving space with metastasizing complexity like you see in the cryptocurrency/ico/nft/defi/web3/wft space.

[1] https://www.nytimes.com/2020/01/02/health/christian-health-c...

> So the hustlers are always going to be one step ahead from regular folk.

I don’t disagree. This is always going to be the case in any global market with information asymmetries - grandma’s investments are not going to do as well as a hedge fund with a team of 50.*

The difference is: the people entering CeFi are having access to their funds revoked, and a counterparty failing to repay debts while fleeing to Dubai. while the people entering DeFi have not had access to their funds affected, and are not worrying about counterparty risk.

This is why it is a shift in power - the users retain control of their funds and leveraged positions, as opposed to placing that power entirely in the hands of tradfi and CeFi companies.

* ironically a lot of big players like 3AC are getting wiped out too, so it isn’t always true

There is good reason to think that hedge funds in general do worse than grandma's investments. That has long been Warren Buffett's belief, one he demonstrated in a 10-year bet with a hedge fund advocate: https://longnow.org/ideas/02018/02/09/warren-buffett-wins-mi...

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