Altcoins, DeFi thread

[Panscan]

In the spirit of WCI recent post about allow more crypto posts assuming it doesn't overrun, I thought we could have a dedicated thread for BTC and a dedicated one for the other stuff. Perhaps talk about DeFi in here too.

[xraygoggles]

I figured I should make a thread for Ether and DeFi (decentralized finance). I know it's not as well-known as Bitcoin, but it's progressing at a rapid pace, especially throughout 2020 when the total value locked within DeFi exploded into the billions of dollars. Real exponential growth, and it's only getting faster in 2021.

One big difference of ether is the use-case compared to Bitcoin. Bitcoin is now seen purely as a store of value (digital gold), instead of its original purpose of a frictionless currency. Ether (which is the coin on the Ethereum blockchain) is more of a commodity, and is used to pay for gas fees (which occur every time a transaction occurs on the blockchain, such as depositing, lending, leveraging, or yielding from various DeFi projects). Ether's value is derived from its use as the currency to perform transactions on the blockchain, and as the field matures and develops, the value should increase, in theory.

The long-term goal of DeFi is to transition the current, antiquated financial system onto the blockchain. It's not going to happen anytime soon obviously, but piecemeal I think it will have an impact. There are already a few banks and institutions, including the US Treasury, which are discussing the possibility of incorporating stablecoins as a reserve on the blockchain, for example.

I would be happy to provide info/input, if anyone is interested in this sphere, or investing in the various coins/projects.

Some beginner resources to peruse if interested:
https://decrypt.co/resources/defi-ul...alized-finance
https://academy.binance.com/en/artic...d-finance-defi

https://www.coindesk.com/what-is-defi

[jacoavlu]

start here: https://www.lynalden.com/ethereum-analysis/

[Panscan]

start here: https://www.lynalden.com/ethereum-analysis/

Stuff is so complex, very interesting

[docnews]

Bump after posting in BTC thread...

If you are a BTC maximalist that makes sense to me because first mover advantage has created a tested network that will always be more mature and therefore arguably more secure than the other crypto networks. But if you include ETH for arguably more adaptability/usability, I think you should include ADA and DOT in your discussion. These 2 alts were built from ETH co-founders who thought ETH wasn't moving to proof of stake fast enough. ETH in a way has admitted they are right as it begins a complicated shift from proof of work to proof of stake. Thoughts?

[chocolatebear11]

I figured I should make a thread for Ether and DeFi (decentralized finance). I know it's not as well-known as Bitcoin, but it's progressing at a rapid pace, especially throughout 2020 when the total value locked within DeFi exploded into the billions of dollars. Real exponential growth, and it's only getting faster in 2021.

One big difference of ether is the use-case compared to Bitcoin. Bitcoin is now seen purely as a store of value (digital gold), instead of its original purpose of a frictionless currency. Ether (which is the coin on the Ethereum blockchain) is more of a commodity, and is used to pay for gas fees (which occur every time a transaction occurs on the blockchain, such as depositing, lending, leveraging, or yielding from various DeFi projects). Ether's value is derived from its use as the currency to perform transactions on the blockchain, and as the field matures and develops, the value should increase, in theory.

The long-term goal of DeFi is to transition the current, antiquated financial system onto the blockchain. It's not going to happen anytime soon obviously, but piecemeal I think it will have an impact. There are already a few banks and institutions, including the US Treasury, which are discussing the possibility of incorporating stablecoins as a reserve on the blockchain, for example.

I would be happy to provide info/input, if anyone is interested in this sphere, or investing in the various coins/projects.

Some beginner resources to peruse if interested:
https://decrypt.co/resources/defi-ul...alized-finance
https://academy.binance.com/en/artic...d-finance-defi
https://www.coindesk.com/what-is-defi

If ether value is dervived from its use as currency, wouldn’t the price become costly if everyone is investing in ether. I do not understand investing in alt coins because they seem to be utilty coins in whatever ecosystem. But if the alt becomes pricy, I don’t see how or why a person would want to use it rather than just buy and hold.

could you also explain why can’t we just use USD in the Ethereum System?

thank you in advance.

[docnews]

chocolatebear11 you are right that volatility would need to drop significantly for people to use some crypto as direct currency instead of holding but defi allows you to lend the value while still holding onto crypto. Haven't jumped in myself to defi since I wasn't sure of the apps that setup it up.

[Zaphod]

Stuff is so complex, very interesting

This is the biggest hurdle for me, its just too much. Like I just want to mint this dumb nft and put it out there for fun, I dont want to have to pretend to understand another thing that is above my pay grade. On the flip side there is value in doing work that clearly other wont or cant do, and since I've already done some of that work elsewhere, I just cant here.

I dont care about details and neither do most people, make it frictionless. Trustless, who cares, make it simple. Very few things are widely adopted if you dont make uptake easy.

[xraygoggles]

If ether value is dervived from its use as currency, wouldn’t the price become costly if everyone is investing in ether. I do not understand investing in alt coins because they seem to be utilty coins in whatever ecosystem. But if the alt becomes pricy, I don’t see how or why a person would want to use it rather than just buy and hold.

could you also explain why can’t we just use USD in the Ethereum System?

thank you in advance.

There are new updates supposedly happening this year and next , including switching to proof of stake mining for better efficiency, upgrading to eth 2.0 for faster transactions at lower costs. These are all big ifs, but if they do manage to streamline the blockchain and make it faster and cheaper to perform transactions, then the price of ETH should rise, as its value grows.

Another marker for potential increases in the value of ether would be if some of the DeFi projects either get Big Money involved, just like how institutions are getting into Bitcoin, or if they start to become incorporated into traditional finance (such as stablecoins).

The current rise in Ether (& Bitcoin, DeFi, shitcoins, et al.) are all predominately speculative.

[jacoavlu]

There are new updates supposedly happening this year and next , including switching to proof of stake mining for better efficiency, upgrading to eth 2.0 for faster transactions at lower costs. These are all big ifs, but if they do manage to streamline the blockchain and make it faster and cheaper to perform transactions, then the price of ETH should rise, as its value grows.

Another marker for potential increases in the value of ether would be if some of the DeFi projects either get Big Money involved, just like how institutions are getting into Bitcoin, or if they start to become incorporated into traditional finance (such as stablecoins).

The current rise in Ether (& Bitcoin, DeFi, shitcoins, et al.) are all predominately speculative.

why should faster and cheaper (in terms of gas fees) transactions make ETH rise in value?

one proposed change is destruction of coins which could deflate the supply

thats the thing with ETH. It just seems like it’s always “what’s coming”

ETH miners don’t want the proposed change. Already seeing shots fired between devs and miners. It will be interesting to see how this plays out. I will be watching from the sidelines.

[Jantoven]

So what do people here think about DOT as a potential competitor to ETH? Could it potentially take its niche in the crypto market?

[chocolatebear11]

Bitcoin seems like the only crypto worth investing in because of its potential for store of value.

I wonder if blockchain technology will just be like the internet where you can’t invest in the technology but it will just be readily used.

all these 1000s of altcoins, I don’t understand why they are needed. Ethereum could be easily replaced by another token (everything is open sourced). You’re buying tokens wanting the price of it to go but you don’t have a stake in the company. At the same time, the alt coins are supposed to be used in the system for some purpose.

It’s interesting but Maybe I’m missing something.

[Jantoven]

Bitcoin seems like the only crypto worth investing in because of its potential for store of value.

I wonder if blockchain technology will just be like the internet where you can’t invest in the technology but it will just be readily used.

all these 1000s of altcoins, I don’t understand why they are needed. Ethereum could be easily replaced by another token (everything is open sourced). You’re buying tokens wanting the price of it to go but you don’t have a stake in the company. At the same time, the alt coins are supposed to be used in the system for some purpose.

It’s interesting but Maybe I’m missing something.

Cathie Wood of ARK uses this phrase - "it's usually winner takes most." Basically, a few companies will take a huge chunk of the pie, and everything else will vanish off into space. Bitcoin already has the name brand recognition and market cap that will be virtually impossible to disrupt. So it's really, at this point, what other one or two companies will win in the long-term. A lot are betting on ETH as one of those. I don't quite know or understand blockchain technology enough to really know whether it'll be ethereum, or perhaps some other competitor (DOT?) that offers an improved platform, etc.

That said, I think there is a lot of money to be made in the short-term, betting on a lot of these companies, but I am not sure how I'd feel about investing in them long-term.

[Panscan]

Bitcoin seems like the only crypto worth investing in because of its potential for store of value.

I wonder if blockchain technology will just be like the internet where you can’t invest in the technology but it will just be readily used.

all these 1000s of altcoins, I don’t understand why they are needed. Ethereum could be easily replaced by another token (everything is open sourced). You’re buying tokens wanting the price of it to go but you don’t have a stake in the company. At the same time, the alt coins are supposed to be used in the system for some purpose.

It’s interesting but Maybe I’m missing something.

Why does bitcoin have potential store of value that something like eth doesn't? I don't see it that way at all. so far bitcoin seems to be the most simple and efficient crypto, which obviously has it's own drawbacks that people are trying to address with other cryptos or layers or blockchain on top of BTC. I'm not sure why that means BTC is somehow a better store of value than any of the other cryptos

[Panscan]

why should faster and cheaper (in terms of gas fees) transactions make ETH rise in value?

one proposed change is destruction of coins which could deflate the supply

thats the thing with ETH. It just seems like it’s always “what’s coming”

ETH miners don’t want the proposed change. Already seeing shots fired between devs and miners. It will be interesting to see how this plays out. I will be watching from the sidelines.

do you not believe in metcalfe's law? surely faster and cheaper transactions will have more people part of the ETH system, no?