The Untrusted Cooperative

in LeoFinance8 months ago (edited)

While I am excited about what Leo Finance is preparing with wLEO, as it allows me to get in and start learning more, I think the largest benefit of DeFi is that it serves as a proof of concept for much larger operations and introduces better ways to organize ourselves and our economies. For a long time, the banking and insurance sector has been pretty much untouchable for the normal Joe, but through decentralized lending pools, even the smallest investors can start getting involved and seeing a relative return on investment.

I think that if there ever was a good usecase for blockchain, it is to take decentralized control of the financial transactions of our lives and put them into a trustless co-op system, taking out the middlemen operators and limiting the potential for collusion and manipulation. We become our own banks. We are a long way away from that perhaps, but DeFi seems to be testing the waters and creating a few ripples in the process.

For example, I wonder if the tally of all insurance fees and all insurance payouts of Finland were totaled up, what would be the difference - considering insurance companies are making profit. Nothing stops the citizens of the country to do this for themselves, except for the ability to organize it and account for it - but this can become much easier in the future. I wonder what would happen if the same was applied to tax, where instead of it going directly to the government, it sat in a "resource pool" of the people, where every transaction would be accounted for - would that change how tax money is used, would it change the creative accounting processes of business if all financial transactions had some level of transparency so that the system always zeroed?

I have always wondered how many people would be keen to go to war if they were billed for it monthly. For example, to cover a trillion dollar "public" cost in the US, every citizen would have to pay about 3,300 dollars a year, or 280 dollars a month. But with a 60% employment participation rate, that is almost doubled to around 500 dollars a month or 6000 dollars a year. For those counting, 6000 is almost 2 full months of the median salary in the US - before tax.

Essentially though, these amounts are spent on all kinds of things, but we as taxpayers don't really "feel" the cost because we don't see it directly, even though it is definitely incurred. Would transparency and a direct transfer to support make us think twice about where money was being spent? This of course gets complicated at scale due to differences of opinion on what people find valuable - but, is it impossible to approach at scale?

Previously, yes, it was too hard, as we just didn't have the infrastructure to organize ourselves to come together as a group, so we created systems of people who managed things for us. However, once managed, the incentive to manipulate for "personal and group" benefit took hold in a way that increased power for the few and decreased it for the many, so that the few were in unassailable positions and could effectively make and break laws due to the resources at their command - the many's resources.

This system falls apart once transparent however, as participants will soon learn that they are being bled dry and that their struggle through life need not be quite as difficult. And then, we consume differently, including the narrative that has been fed to us since born - that we can't manage ourselves, that we can't trust each other, that we need to have a master. However, making the change is difficult because part of the system has been to build a culture of mass reliance on the few and proxy our resources to them to use as they see fit.

This doesn't mean that all of the functions of the government are destroyed of course, as things still need to be organized at some level. It just means that rather than us being subjects of the government, they are truly working for us, the way it should have always been, as we control the government through resources, not the other way around. The paradigm shift toward this kind of economic revolution is difficult, especially since we are still incentivized to keep the status quo, to keep things unchanged.

While this is outside of my wheelhouse, I predict that the move toward trustless systems will not only see a change in the way we think, it will drive the development of mechanisms and tools that can help us better manage ourselves, so that the economic revolution will be supported by a technological revolution running alongside - with each feeding off the other so that they intertwine and integrate into the fabric of our lives. At some point, decentralized finance just becomes, everyday financial services.

It is impossible to know exactly what the future will hold for us all, but one thing is already known, the global economy that is currently in service, is fundamentally broken and needs to be replaced. Any move toward questioning it and trying to find and build alternate solutions is an important step in the trial and error world in which we operate and will prove valuable if it can close the gap between where we are today and where we need to be tomorrow.

Our participation today, however irrelevant and insignificant it might seem, is part of a much larger conversation that needs to be had and every transaction we make toward a different economic outcome, adds weight to the argument - a discussion driven by the untrusted cooperative.

Taraz
[ Gen1: Hive ]

Posted Using LeoFinance

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You're approach to the space is spot on. While many are in DeFi and circling around projects based solely on short-term personal gain, there is something much larger at play underneath the 200% APY returns and glorious stories of going 10x. While we'd all like to make a profit in the here and now, focusing on building, using and iterating these systems for the future is what truly matters.

I hope others adopt this line of thinking and choose to look at the long-term value proposition of things like DeFi, Liquidity Pools, wLEO, etc. as opposed to short-term profiteering.

Posted Using LeoFinance Beta

While we'd all like to make a profit in the here and now, focusing on building, using and iterating these systems for the future is what truly matters.

If we aren't looking to change the system, we are just trying to climb up the ladder.

I hope others adopt this line of thinking and choose to look at the long-term value proposition of things like DeFi, Liquidity Pools, wLEO, etc. as opposed to short-term profiteering.

I have my powerdown on LEO running now so I can have some liquids to get involved with - thanks for you and your team's work :)

Nice :) there are a lot of whales powering down and also buying all the liquid LEOs on the market to get ready to proivde liquidity. I love to see the community rallying behind it.

Thanks for supporting by getting involved - as you said, all of us getting in there and getting our hands dirty is what moves the needle forward 🦁

Posted Using LeoFinance Beta

I have been selling off small amounts in the hope some more people will get involved, not just the whales - but I won't sell much! :D

That is an interesting trickle down effect - stake is actively moving around into new hands and curation rewards will also increase as the whales power down and move stake off-chain into the LP.

It seems to be a W all around :)

Posted Using LeoFinance Beta

Yep, the curation is going to be interesting. One thing to keep an eye on is how people vote who don't have large stake but now have more draw on the pool - is there abuse? I know this isn't a huge concern perhaps, but it is interesting to watch :)

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What I'm hoping for is the eradication of human middlemen. We need them as much as we need a fox to guard our hen house. Positions of power and authority attract a lot of bad people. Power games at the very top are extremely dirty and devoid of all morality.

Rule of law, the division of powers and democracy are examples of primitive protocols that slowly evolved in crowded Europe where there was nowhere to run from tyranny and where technological and economic development led to division of labor and thus a decentralization of power bases. Blockchains and decentralized virtual machines running on blockchains are tools that allow us to build more advanced protocols that I hope to gradually displace human authority in the distant future.

What I'm hoping for is the eradication of human middlemen.

Yes. This is something that needs a technological solution as it has been proven that, we (many) can't be trusted with some things when given the power and authority.

Blockchains and decentralized virtual machines running on blockchains are tools that allow us to build more advanced protocols that I hope to gradually displace human authority in the distant future.

Yep- it is going to get very interesting with AIs involved as I think we will discover, we aren't great at managing much.

Yep- it is going to get very interesting with AIs involved as I think we will discover, we aren't great at managing much.

There are pitfalls in that too, but I think they are nothing like in Terminator. There will be a lot of trial and error. And it will be a very gradual process.

Yeah, I don't see the terminator issue (at this point) but for a lot of processing jobs, an AI could potentially watch the humans operate at a transaction level for a while, and then create a line of best fit model that can do the same job at lightning speed with less variation.

A lot of white collar jobs either are or soon will be on a shaky ground.

Yep, I believe so. Manual skills will carry even more of a premium.

For a while.

I wish I was a plumber :)

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The insurance example is a great one. In the same way, DeFi tools are taking liquidity pools from users, and distributing the swap fees they charge users exchanging into the users offering the liquidity, a similar solution for insurance products could be created. Actually, Vigor, the EOS project which is about to launch offers loans of the VIGOR stable coin (pegged to the USD) to users who provide crypto collateral, but on top of the collateral, there is an insurance pool provided by users who want to take the risk of covering the loan in case of bailout due to huge price changes which may cause the collateral to be insufficient. Then, part of the fees the users are paying when asking for a loan are given to the insurers.

I believe we are not that far away from seeing this kind of DeFi Insurance solutions.

That is really interesting, thanks!

The potential for all of this to reorganize many aspects of what we have come to think of as "the way it is done" is huge. It can be highly disruptive to industries while shifting our value as people into a far more healthy ecosystem.

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Interesting news. It feels like a real DEFI fever has come, which will soon touch everyone.

Yep, it is building up pretty fast, tough I think it will deflate a lot too for a time before real stability gets worked into the system.

@tarazkp, In this Pandemic Season many are not showing much interest towards the Technological aspects but we should not forget that in one way or other Technology will going to write the Future Story of Humanity. Stay blessed always.

People are hurting and are looking for saviors, when we currently have a very good opportunity to save ourselves.

Posted Using LeoFinance

Sounds true.

Trust is build in time and that is very hard to be achieved in the financial and economy world. You need smart contracts to ensure that trust and I think the blockchains can ensure that, thus I see them as financial instruments and even country currencies.

Posted Using LeoFinance

Trust is build in time and that is very hard to be achieved in the financial and economy world.

We are getting there slowly, though the system that is can't be trusted. Luckily, there is a new way :)

I had a similar concern when I wrote my pience on Leofinance. It is heartening to see the growth in this space and towards financial freedom. Responsible governance in a true sense would be to ensure transparency in everything government involve in its true sense. Hope people can see beyong the short term profit from these projects and value the true potential of the projects that are being conceptualized and implemented.

Posted Using LeoFinance Beta

I think that the excitement of the short gain will eventually break due to the value of the long game. At least, I hope so =)

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