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DeFi: What is it?

Discussion in 'The Kruse Longevity Center' started by Jack Kruse, Jan 11, 2021.

  1. Jack Kruse

    Jack Kruse Administrator

    TODAY'S PSA ON DAO's: Badger is a decentralized autonomous organization (DAO) with a single purpose: build the products and infrastructure necessary to accelerate Bitcoin as collateral across other blockchains. It is a part of the DeFi network now being built around BTC blockchain. If the internet is internet 1.0, FB and Google are Internet 2.0, Consider DeFi internet 3.0. This is how the internet will run in 3-5 years from now when all middlemen are removed from all financial transactions. DAO's are highly deflationary tools because they eliminate middlemen.
    How does a DAO work in a blockchain? In the DAO, each action or vote is represented by some form of transaction in the Blockchain. In most cases, each member is given a token (vote) which represents the shares of the DAO; these tokens (votes) can also be used to vote in the DAO to take a certain decision to help the blockchain function to support the transactions going through the network.
    One of the major featuresof digital currencies is that they are decentralized. This means they are not controlled by a single institution like a government or central bank, but instead are divided among a variety of computers, networks, and nodes.
    Badger DAO’s 1st Product will be called Sett. Badgers make their homes by digging tunnels and caves and use grass and leaves for bedding. A badger’s home is called a SETT.
    Setts are so strong and protective that they can be centuries old and are used by many generations of badgers. This is exactly what Badger is attempting to do for crypto holders.
    Sett is an automated DeFi aggregator focused on tokenized BTC assets. This means they will try to cut out the middleman costs on many of the things involved in financial transactions. This idea was Inspired by and based off the Yearn.Finance vaults, where users deposit assets to earn a yield. Once the assets are in a vault SETT smart contracts then put those assets to work executing a variety of strategies across DeFi protocols. It is like making your crypto assets work for you while they are in cold storage on the blockchain. Through this, users optimize the yield they get out of their positions without having to do all the heavy lifting (multiple transactions, gas fees etc.). This is how SETT cuts out the middleman.
    Badger's second DAO product is called Digg. Badger's Digg to tunnel to live. Digg is a non-custodial synthetic Bitcoin on Ethereum. It’s an elastic supply cryptocurrency that’s pegged to the price of Bitcoin. Why does the DeFi platform need Digg?
    The goal of this product is to remove the need for centralized parties (banks) to custody (middlemen) our BTC and instead rely on the elastic parameters in the token smart contracts to maintain the peg (maintain value). Every day at the same time the system calls a price oracle to provide the USD value of Bitcoin and if there is a need to increase the supply meaning (Digg is higher than BTC) it should drive sell pressure on the token since holders now have a higher quantity of the Digg in their wallet. The same works on the inverse in driving demand.
    Who is building this?
    4 long term cryptocurrency investors who are friends came together earlier this year with an idea to launch a truly community-owned ecosystem DAO that can push Bitcoin as pristine collateral forward.
    They are strong believers in the future of DAOs for shared ownership and the value that can be created when an ecosystem collaborates to build vs compete. https://cointelegraph.com/news/wen-digg-badger-dao-preps-for-hotly-anticipated-synthetic-btc-launch
     
  2. caroline

    caroline Moderator

    I am loving this stuff ....thanks!
     
    Alex97232 likes this.
  3. Jack Kruse

    Jack Kruse Administrator

    If you want to understand BlockFi listen to this interview.
     
    caroline and Richard Watson like this.
  4. Jack Kruse

    Jack Kruse Administrator

    The only way to discover the limits of the possible is to go to the edge of possible looking into the abyss to see beyond the edge of what we know into what was once impossible because no one thought to look. New blog BTC #17: IS THE AXIS ON THE DeFi BEING DEFINED NOW? https://www.patreon.com/posts/btc-17-is-axis-47204036
     
    JanSz likes this.
  5. Jack Kruse

    Jack Kruse Administrator

    For every action, there is an equal and opposite reaction. In the case of international trade and global payments, the U.S. made aggressive use of sanctions and tariffs. With some merit, Washington has argued that these actions level the playing field for global trade or punish bad global actors. But a series of equal and opposite reactions are occurring as nations move to remove the role of the U.S. dollar at the center of global trade and finance. This is extremely bullish for BTC and will be horrendous for Americans who's life is based on fiat.

    This will have a long-lasting structural impact in ending the dominance of the dollar as the world’s reserve currency.


    Over the past years, the U.S. set out to address inequities in the global trade environment by imposing tariffs and sanctions on various countries from China to Mexico and Canada with the rewriting of the North American Free Trade Agreement into the United States-Mexico-Canada Agreement. Even the countries in the European Union were affected. In addition, Washington implemented sanctions against Russia in 2014 in response to Moscow’s annexation of Crimea, and more recently against Iran and Venezuela, effectively using the dollar’s role at the center of global trade and finance to force compliance of other nations. These actions impacted nations beyond those directly targeted by the U.S. action, and today many governments around the world are taking countervailing steps to remove their reliance on the dollar-based global trade and finance system that has reigned since 1944.

    In November, 15 Asian countries, comprising 30% of global GDP, signed the Regional Comprehensive Economic Partnership (RCEP), creating a free-trade zone among the signatories. This agreement attempts to provide gains to trading within the regional partnership through reduction of trade and investment barriers, and increased incentives for economic integration. It is noteworthy that RCEP came about without the participation of either the U.S. or Europe, and has effectively created the world’s largest trading bloc, according to the Rand Corp. Beyond the obvious benefits for economic growth in the region, a more-subtle byproduct of this agreement is to focus on bilateral settlement of trade, effectively removing the dollar as the standard unit of transaction for regional trade, according to economist and geopolitical analyst Peter Koenig, a veteran of more than 30 years with the World Bank. Liu Xiaochun, deputy dean of the Shanghai New Finance Research Institute, recently furthered this idea, stating, “Under RCEP, currency choices for regional settlement in trade, investment, and financing will increase significantly for the yuan, yen, Singapore dollar and Hong Kong dollar.” Liu’s comments were posted to the China Finance 40 Forum, a think tank comprising senior Chinese regulatory officials and financial experts.

    Asia is not the only region taking steps to disentangle itself from the U.S. dollar standard in global trade and payments. The European Commission, the executive branch of the 27-country European Union (EU), released a communication explicitly stating the goal to strengthen the “international role of the euro.” This goal would “help achieve globally shared goals such as the resilience of the international monetary system, a more stable and diversified global currency system, and a broader choice for market operators.


    The Society for Worldwide Interbank Financial Telecommunication (SWIFT), the largest global payment settlement network, has already experienced a drop-off in dollar transactions in its most-recent readings. It is interesting that this occurred after the implementation of RCEP, although the timing also comes in the wake of the COVID-19 pandemic and resulting economic disruptions.

    The dollar was already contending with structural headwinds.
    One is the large stock of international savings on deposit and invested in the U.S. A decline in the value of the dollar risks creating a negative feedback loop where hedging and capital outflows can exacerbate the dollar’s decline. Another is the weakening fundamental picture for the dollar due to America’s widening of the current account deficit and a growing budget deficit. These headwinds are likely to persist for the foreseeable future – not to mention being exacerbated by the aforementioned regional trade agreements and international policy actions.

    For the postwar period, the United States wielded the dollar’s central role in global trade and finance to its advantage, trying to even the playing field for trading relationships and as a sanctioning facility. The end of this powerful, unipolar advantage might be at hand. The pendulum is swinging in the direction of a new, multipolar world. Countries are reclaiming autonomy in global trade, payments, and finance. With the implementation of more regional trade agreements with local currency settlements, the dollar’s once-dominant role in global finance likely will continue to erode.

    As the global trade-and-payments systems move away from a single-currency standard, the U.S. dollar, to a bilateral exchange framework, countries that are the most productive, most innovative, or offer the most competitive goods and services will see their currencies in greater demand. This change is coming, and we should be ready for the change as it comes

     
  6. Jack Kruse

    Jack Kruse Administrator

    The headwinds are blowing........the dollar is weaking quickly.
     
  7. caroline

    caroline Moderator

    Is there another currency that could take over?

    other than bitcoin?
     
  8. Jack Kruse

    Jack Kruse Administrator

    right now........no. The central bank could make a new one but the people would go to war with their government before this could occur. At least in the US because we kept our guns. Oz is not so fortunate
     
    John Schumacher and caroline like this.
  9. caroline

    caroline Moderator

    fantastic interview ....must watch!

    I love, love, love this stuff!
     
  10. Jack Kruse

    Jack Kruse Administrator

    Ethereum's fees are a sleeping giant for the DeFi bets I mentioned in the blog below.

    Ethereum's fees
    - are currently worth ETH at $2500
    - grew 150x over the past fifteen months
    - begin accruing to ETH holders when EIP-1559 launches later this year

    IMO, fees will soon greatly help ETHER higher. Ethereum's fees grew 150x over the past fifteen months. The net present value of the run rate of last week's fees is worth ETH at $2500 (using a 3% discount rate), a 50% premium over today's ETH price. However, currently, these fees accrue to miners, not ETH holders. Last week, ethereum's daily fees were $24M, and total miner compensation (fees + block rewards) was $47M in ETH. On average, miners must sell all that ETH to pay for their hardware and electricity. That's $47M of ETH sell pressure from yesterday alone. Once EIP-1559 launches later this year, ~80% of last week's $24M in daily fees begins accruing to ETH holders via fee burn. When ethereum switches to proof of stake in two years, the rest of that $47M in miner compensation begins accruing to ETH holders via no more PoW expense. As fees continue to grow, EIP-1559 launches later this year, and ethereum transitions to proof of stake in two years, the fees accruing to ETH holders seems likely, IMO, to propel ETH higher. That said, I still rather have the DeFi dapps built on ETH 2.0 because they will be replacing centralized banks and businesses like Amazon, Apple, and FB.
    https://www.patreon.com/posts/btc-17-is-axis-47204036
     
  11. Jack Kruse

    Jack Kruse Administrator

    The DeFi ecosystem consists of the following categories:

    Custody: Ethereum wallets which allow for the self-custody of users’ private keys and digital assets. This means individuals are in control of their funds at all times and don’t need to trust a centralized entity, reducing the risk of hacks. These wallets are the gateways through which users can interact with DeFi applications.

    Lending: DeFi lending protocols provide users with the ability to lend their digital assets in exchange for return on their deposits, and borrow cryptocurrencies against collateral, without intermediaries.

    Trading: Decentralized exchanges or DEXs are platforms that enable the exchange of digital assets on-chain and without relying on centralized intermediaries. These platforms are open for anyone, anywhere to use without, and users retain control of their private keys and assets.

    Derivatives: Derivatives platforms in DeFi offer the issuance and trading of digital assets which are representations of financial instruments, from fiat currencies to indexes and options.

    Insurance: These projects offer protection against smart contract vulnerabilities or price volatility, aggregating community funds to use as cover.

    Asset Management: Protocols enabling users to better manage and visualize their portfolios, via an array of tools including automated strategies and routing funds to the highest-yielding lending pools.

    [​IMG]
     
    John Schumacher likes this.
  12. Jack Kruse

    Jack Kruse Administrator

    DeFi is a growing movement that has the potential to democratize access to financial services. This emerging ecosystem is being built on global, public and distributed networks such as Ethereum, and uses smart contracts – or self-executable digital agreements. It is highly interconnected and composable, forming a colorful financial system made up of “money legos.”

    DeFi offers products and tools for anyone in the world to leverage sophisticated financial applications with minimal capital, and without having to trust a third party.

    DeFi as an ecosystem consists of many sectors or categories, largely driven by:

    • Lending – the ability to easily lend and borrow cryptocurrencies without intermediaries
    • Decentralized exchanges (DEXs) – mediums to exchange assets while always retaining full ownership
    • Derivatives – on-chain representations of complex financial vehicles packed into stand-alone assets.
    • Insurance – protection against smart contract vulnerabilities or price volatility.
    • Asset Management – ways to monitor, deploy and manage capital at your choosing.
    You’ll notice that many projects use the term TVL, short for Total Value Locked. When users deposit funds into a DeFi protocol, it adds to the TVL, a financial metric to gauge relative ‘success’ or popularity within the wider sector. A popular site to see how these protocols rank is DeFi Pulse.

    This will help you interact with the most popular DeFi protocols today, giving you the first glimpse into an endless rabbit hole of innovation.

    Most of DeFi is being built on Ethereum, so in order to leverage a large part of the ecosystem, you’ll need the Ethereum network’s token called Ether (ETH), which is used to pay for transactions.

    So if you want to participate in DeFi you need to:

    Set up an Ethereum wallet

    1. Download an Ethereum wallet. This will be your gateway to DeFi.

    2. MetaMask is one of the most popular ones. Navigate to the https://metamask.io/download.html

    Withdraw to MetaMask


    1. Click on the “Send/Receive” button in your crypto exchanges web app

    2. Copy and Paste your newly-created MetaMask wallet address.

    3. Confirm the transaction.

    Now that you have ETH in Metamask, you can interact with the beautiful world of Decentralized Exchanges (DEXs), starting with trusted protocols like Uniswap.

    How to: Use Uniswap to trade from ETH to Dai


    1.To trade your ETH to DAI on Uniswap, navigate to https://uniswap.org/

    2. Select the crypto-asset that you have as ‘From’ (ETH) and the asset you want to swap into as ‘To.’

    3.Look over the details of the swap and confirm the transaction on the Uniswap interface.

    4. Verify the transaction in your MetaMask pop-up.

    5.Once you see the confirmation message on the Uniswap webpage simply wait for your transaction to execute and you’ll see it reflected in your MetaMask wallet.

    Uniswap is the best place to find any supported token and trade. Watch for slippage, or difference in price from spot value, as it will vary depending on the asset’s liquidity. Uniswap depends on liquidity providers to supply assets to the protocol for other users to trade against. In return, they receive 0.3% of trading fees and stand to govern the protocol through UNI tokens.

    DeFi Lending 101
    Now that you have stablecoins (DAI, USDC), you can take advantage of DeFi lending. In short, users supply assets and receive interest. Interest rates change relative to the real-time supply and demand of a given asset and is accrued automatically thanks to smart contracts.
    How to: Use DeFi protocols to lend stablecoins
    1.Navigate to https://aave.com/ and connect your MetaMask wallet by choosing the browser wallet option when prompted

    2. View the various lend and borrow rates for each asset and select the asset you wish to lend

    3. Click on “Deposit” and choose the number of stablecoins you wish to deposit.

    4. Give Aave permission to interact with the DAI in your wallet and finalize your deposit.

    5. Confirm the approval and deposit transactions in MetaMask.

    6. Go to the “Dashboard” page and view your earnings live.

    Both Aave and Compound have trusted DeFi protocols that have supported billions of dollars worth of volume. While both are very similar in principle, they slightly differ in terms of the assets supported and the incentives to use the protocol.

    While Aave features a more diverse pool of assets, different types of borrows, and unique markets, Compound is largely seen as the most trusted US entity, with users being able to earn COMP governance tokens for lending and borrowing from the protocol.

    Now that you’re lending assets via Aave or Compound, you’ll want to easily track and manage those positions from one trusted dashboard.
    How to: Connect your wallet to portfolio trackers
    Initial steps are similar for popular portfolio trackers Zapper and Zerion. Go to their webpage and connect the MetaMask wallet you wish to track. 1. View your holdings, including the DAI you deposited in Aave.

    Both products offer a similar experience, with a slight differentiation on the deeper inner workings of the protocol.

    While both Zapper and Zerion can be used to actively put capital to work, Zerion is better known as a platform for visualizing wallet assets and portfolio performance. It’s worth noting both trading and lending can be executed through these dashboards, however, it’s good to get familiar with the protocols and front-ends themselves.
     
  13. Jack Kruse

    Jack Kruse Administrator

    Kruse Longevity is getting into the DeFi space. FYI. It was inevitable.
     
  14. Jack Kruse

    Jack Kruse Administrator

    Here is a hot take few see: DeFi successes will fuel more price appreciation in BTC than it will in ETHER. ETHER is not 100% decentralized but BTC is. This is a counterintuitive take but the process has already begun in 2020. As DeFi Dapps become monetized, money velocity increases tremendously. DeFi Dapps are 100% decentralized but ETHER is not. These Dapps run on it, and some will be worth more than ETHER because of this arrangement.
    Why does this situation favor BTC over ETHER valuation? BTC is not being used as a currency because of how the IRS is handling it like a property. Therefore, it’s a store of a pristine collateral source of value. This is why it is compared to gold, but gold is not a living source of value because it cannot be programmed to improve the velocity of money and does not have the utility as a bank for the new DeFi banking industry.

    DeFi successes using Dapps changed everything when it comes to pristine value. Because of DeFi, BTC is much more than an SOV because of its swap utility due to Dapps. That ability is due to Aave, UMA, UNI, YFI, Maker, etc.......
     
  15. JanSz

    JanSz Gold

    upload_2021-2-10_19-30-33.png

    When ready
    You may want to add a note that you will be accepting
    payments using Bitcoins instead of US$ via PayPal and MC.


    upload_2021-2-10_19-28-1.png
     
    Martina and GavinH like this.
  16. JanSz

    JanSz Gold

    @Jack Kruse
    You may be aware of this or not; I mentioned that to Support
    Credit cards sometimes send new cards to their users, same account, the user in good standing, unique card number.
    By no fault of her/his, Card user is stuck with making changes to subscriptions when their credit cards changed.
    Most if not all businesses allow their subscribers to make changes or updates to their credit cards.
    You do not have that provision.
    That makes your supporting people unnecessarily busy.


    ....
    [​IMG]
     
  17. Jack Kruse

    Jack Kruse Administrator

    We will soon accept BTC. I expect Jans you will be the first one to pay in BTC. We will see if you do.
     
  18. Jack Kruse

    Jack Kruse Administrator

  19. JanSz

    JanSz Gold

    I have GBTC (in IRA).
    I do not have BTC, I do not have MC.
    I have PayPal. I Will try that first, when it works latter will possibly be looking for MC.
    But
    please
    tell them to clean up the ability to make updates to credit cards.
    The current arrangement creates unnecessary work for middlemen.
    ..
    [​IMG]
     
    Last edited: Feb 13, 2021
    caroline and Martina like this.
  20. JanSz

    JanSz Gold

    Last edited: Feb 13, 2021
    caroline likes this.

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