Hacker News Reader

Comment by brk | Hacker News Reader

Blockchain may fix it, but couldn't we also argue that blockchain created these problems in the first place?

I will fully admit I have only casually followed the whole blockchain/crypto scheme, so maybe I'm wildly off on something, and would definitely appreciate informed responses.

Without blockchain, there is no "crypto", without crypto, there are no exchanges and related coins, and without those, none of this happens or exists.

How would blockchain be used to fix this?

View on HN

>How would blockchain be used to fix this?

All of the things that are being reported on this situation would not have been possible on a DEX.

Decentralized exchanges (DEX) exist on-chain. They incorporate automatic market making (AMM), not a third-party market maker with an association to the exchange. The DEX does not have custody of user funds, and it would be impossible to hide a multi-billion dollar hole in an exchange's balance sheet.

Do they work in practice?

Kind of..

Solend is a major one that's currently falling over.. and apparently just disappeared $6M worth of users' assets;

https://twitter.com/patio11/status/1590725993324777472

Solend is not a DEX. It is for borrowing against assets. https://aave.com/ is a better lending protocol. Solend has a questionable history, and is closely associated with FTX, which is why the SOL token is down so much.

Patrick gives a good description of the problems in that tweet thread, and why it is affected.

Yes.

https://uniswap.org/ and https://curve.fi/ are the most popular, and have similar 24 hour volume to established exchanges like Coinbase.

The birth of the stock market also created new avenues for fraud that did not exist prior. This is a new asset class, poorly understood and poorly regulated, and still ripe for abuse.

DeFi would solve some of these problems by shifting the counterparty risk from a man named Sam to an immutable protocol that we can all audit and verify. Look at aave, compound, Uniswap.

The birth of the stock market also created new avenues for fraud that did not exist prior.

Right, but I've never heard anyone say in response to stock market fraud, "You know what would fix this? A stock market!"

The logic path on fixing what is ultimately a blockchain-related problem with more blockchain just seemed a bit circular to me. The blockchain/crypto portion does not really seem to be solving any real-life problems, or if it has, anything it has solved is being outstripped by the problems/losses.

Did the blockchain fail here? Blockchain and DeFi was created to solve these very problems of centralized trust and human financial fraud. Uniswap and Aave withdrawals are working just fine.

Leaving your coins on a centralized exchange kills the reason for a blockchain and DeFi. It’s crypto by name only.

> centralized trust and human financial fraud. Uniswap and Aave withdrawals are working just fine.

Finance always follows commerce. It’s commerce which ultimately creates an organic price floor for assets.

Given that no commerce exists in the cryptospace there is no such floor.

You are describing a decentralized casino, but it’s taboo to say it and hence the word “asset” is being thrown around

Aave withdrawals of DAI stablecoin has been unaffected by the greed of SBF, and unaffected by the speculative price swings of Eth or Bitcoin. You personally may not consider these assets, but many do.

Reply on news.ycombinator.com