Do you really feel that Uniswap is better run with sqlite on a Raspberry Pi? If so, you are advocating for putting your money into a CEX, because somebody has to own and control that database and physical device.
Your point is that centralized financial services on sqlite is good, decentralized protocols on a blockchain is bad? If that is your point, it's a funny one to make in a thread about a CEX collapsing.
> If that is your point, it's a funny one to make in a thread about a CEX collapsing.
What's funny is inventing arguments for other people and valiantly fighting against them.
"Smart contracts" were mentioned as "other uses of crypto currency, as yet unaddressed". I addressed them. I couldn't even care less how you made the illogical leap from that to whatever you accuse me of.
Uniswap is a good application of smart contracts. Your comments explicitly suggest that Uniswap would be better run on something like sqlite, which needs a centralized owner, which is functionally the same as replacing a DEX with a CEX.
> in every single case would be more efficient and better served by Visual Basic running on a single Raspberry Pi from a sqlite database
Funny how out of 8 points listed, all you've latched onto a single one.
Let me rewrite this on point in a single sentence "this ineffecient unenforceable bug-ridden fest that can only use the imaginary tokens can be run more efficiently from a single Raspberry Pi".
But, you are still making the claim that a decentralized smart contract protocol would be better replaced with a centralized traditional database on a Raspberry Pi. We disagree.
Come on. You started with assigning me arguments and thoughts I never said and thought.
> you are still making the claim that a decentralized smart contract protocol would be better replaced with a centralized traditional database on a Raspberry Pi.
A person who claims that their opponent makes arguments in bad faith ignores everything their opponent says and keeps pretending their opponent said something he didn't.
There are eight bullet points. Read them. Understand them. However, I'm not going to continue this conversation.
Depends where you look. Solend and Uniswap have different risks, to use comparison AAPL and some new hot unknown tech stock have different risks. Uniswap does not have code to pause withdrawals, does not have a DAO or governance structure to change the contract.
Risk profile in Uniswap and established DeFi protocol is more transparent than FTX. You cannot verify and audit a CEX, you have to trust they are doing things right, or trust the third parties who audit them. If you are skeptical of Binance or Tether audits then you understand the want for open source DeFi.
They are widely used and process billions per day.[1]
There are other problems with DeFi: protocol risk, transaction fees, speed, UX. They are newer and less known than CEXes and most users who buy and hold crypto on FTX or BlockFi do not know how to use the blockchain. Most of these problems can be overcome, like see L2 development, but it will take some time.
A protocol is just code, code can have bugs. Another risk is around governance. Some protocols use proxy contracts, so a single developer or team can upgrade them. But they can accidentally push out a bug in a new version. Other protocols like Uniswap opt for non-upgradeable contracts, users have to opt-in to the new version.
A lot of crypto investors are day traders or naive hodlers who have no idea what blockchain and DeFi means. But DeFi protocols like Uniswap and Aave are holding up fine and are incapable of pausing user withdrawals.
There is still the question of how to convert your crypto to actual spendable dollars again. Sure, uniswap will let you get another token but you still need an exchange to get dollars. This gets particularly important when, say, the giant scam that is Tether finally crashes and burns,
Yes, a regulated centralized exchange is valuable for on and off ramp. All they would need to do is process user transactions, take a small fee, and not gamble with user funds. Regulators could do audits and keep consumers protected.
But regulators have failed to provide clear framework for exchanges in the US[1], so most CEXes are running off shore.
Yes, because DeFi never suffers from collapses or hacks. Nobody every drained a DAO with a flash-loan, or used one to cash-out illiquid assets with no intention of paying it back... DeFi is as much of a joke as the rest of the ecosystem.
Those stories about smart contract programming errors leading to money getting permanently frozen are quite scary. Though admittedly in the grand scheme of things they seem to have “only” lost millions of USD, not billions.
Yes, it's a risk. If a contract or protocol is several years old, processing billions per day, and the code is un-upgradeable, you might say the risk is lower.
I'd rather gamble with Uniswap protocol risk than FTX human fraud and greed risk.
Great, you can point to some that haven't been hacked, exploited or just plain collapsed yet.
You said "day traders on FTX are learning first hand the value of DeFi", but DeFi is just as much of a shitshow as the rest and has had just as many collapses.
Uniswap, AAVE, MakerDAO traders will disagree with you.
I am one of these people: I had funds locked into a CEX, was lucky to pull them out some days before turmoil but others not so lucky. During that time my DeFi holdings were fine. I would now rather take on protocol risk of something established and proven like Uniswap, instead of risking with an unregulated CEX.
Beginning of the end for unregulated centralized exchanges. Possible beginning for DeFi and regulated CEXes. Or possible that regulators fail to distinguish them, and crypto stays flat for some years until a trad banking event revived interest in blockchain.
But really who cares? Smart contracts and stablecoins can continue to work the same no matter market volatility.
A lot of the same things that these failing CEXes are doing. Custody of coins, trading, exchanging tokens, long and short positions, borrowing and lending. Most people on FTX are day traders or hodlers.
This happens all the time in crypto, look at DeFi which is very transparent and analyzable. If you build a custodial centralized unregulated exchange then yeah, this kind of auditing no longer works.
A lot of those affected by FTX are traders, investors. Taking bets on market. Or dumbly using FTX as a place to park their tokens, instead of self custody or multisig.
