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Collateralized lending has its place […] But, if you don’t have money and need to borrow some, it’s not terribly useful.
- This is a great point and something I personally resonate with. As someone that’s now fortunate enough to be in a position where I can get loans based on my assets, I realize not only just how powerful leverage is (mortgages, HELOCs) but also how necessary it is to really invest in yourself.
- This of course, has the big caveat of understanding the difference between credit primarily used for consumption / discretionary spending and that used for bootstrapping your own value production
In summary, without an effective way to support unsecured lending, DeFi’s economy will forever remain an asset-backed economy. Only useful for speculation and providing cheap equity lines of credit to the wealthy. Reinventing a system of haves and have nots, now with 100% more blockchain
- I’d always been weary of the self-fulfilling cycle that is DeFi today (and it really only serves the purposes of those already knee-deep in using complex financial instruments), so this is a breath of fresh air.
- In my eyes, DeFi makes it largest impact when it can offer financial services to the unbanked, make every payment channels vastly more efficient (e.g. as opposed to doing that for institutional market derivatives)