Let DeFi Change How You Look at the World
Many people look at DeFi and think "Oh cool! A new way to make money!" But it's far deeper than that. DeFi is a gauntlet challenge to banking and a spit in the eye for the Federal Reserve. It's a contradiction to everything big banking holds dear and it's summarized with the letters TVL (If you don't know much about TVL you should read my Quora answer about it).
TVL stands for total value locked and reveals the importance of open blockchains allowing users to know how many coins or tokens are in a smart contract's wallet. Want to know how much value is in the $ETH-$USDC pool just look it up on Uniswap! It's there and easy to find. Crypto is an enemy of fractional reserve banking because it requires all value to be present and accounted for. Whenever exchanges like FTX try the old bankster's tricks they inevitably go bankrupt. TVL reveals the truth... we want accountability for our funds.
Bank World
Banks used to store all (or at least most) of our money in their vaults but then they got greedy. They started lending out more and more money and hoped they wouldn't have a bank run. Sometimes, it worked and other times it failed. And this gave birth to FDIC insurance, and eventually fiat money. The only way to make certain that banks don't have bank runs is to either maintain TVL or have Central banks give them money whenever they have a problem. DeFi chooses TVL and wants all value present and accounted for while banks take bailouts. But who really pays for the bailouts? We do! We pay whenever:
- New money is printed and given to the banks.
- Government(s) step in and bail out the banks with taxpayer dollars.
- Central banks raise rates to slow down inflation.
Many of these costs are hidden from the average consumer but they pay them without knowing it.
TVL
TVl changes this. TVL makes it so anyone can see how much value is present. TVL does not allow borrowing off "credit" but only borrowing based on the value you already hold. TVl is fundamentally honest but imposes sharp limitations.
- You can buy more than there is in the pool
- You can't borrow more than you have.
- You can't lend out money you don't have.
Bankers and governments don't like this. They get rich off getting newly printed money first and then buying valuable goods and services with it. They devalue the money but they spend it before it's devalued.
The answer to stopping banks and governments from abusing us is TVL. Let's add it to centralized exchanges and add it to crypto businesses first. May everything else follow.
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This post is provided for entertainment purposes only. I am not giving you financial advice and you should expect no financial returns one way or another based on my statements. These points hold equally for any statements that could be attributed to The Art of The Bubble or any related business entities. If you decide to buy or invest in anything, then your returns and potential losses are your own. No statements about taxation are taxable advice and you are encouraged to consult your own tax professional. No statements are legal advice and you are encouraged to consult your own legal professional. You are also encouraged to do your own due diligence before investing in anything.
Finally, I do actively invest, so you should assume that anything I discuss I may also be trading or investing in. I can’t say for certain, since my trades are often quick, but just assume such to be safe about conflicts of interest.
