Three types of monetary value creation in the DeFi world
Three types of monetary value creation in the DeFi world
First by seeding from the CeFi: Analog world money or asset is exchanged for the crypto coins or tokens. The exchanges are discrete, i.e., done in individual transactions. Thus, the monetary value held or stored in CeFi assets are transferred to the DeFi assets (coins and tokens).
Second — at some point, the values in the DeFi starts become “independent” and to become self-sustaining: An example is the coins and tokens are used to buy other coins and tokens — as when 1 bitcoin was exchanged for 2,000 ETHs in Jan. 2015; and recently 50 ETHs are exchanged for 1 of the 10,000 limited edition Bored Ape Yacht Club (which are priced at minimum of $200,000 USD, up from $200 in April 2021).
Third: Live, dynamic, and continuous flow and mixing of the CeFi monetary values into DeFi . There is a continuous monetary value flow, as opposed to the “discrete” (above first stage), from the CeFi into the DeFi space. This continuous flow leads to new and different tasks and challenges. The flow (and changes or disruptions) includes licensing fees or patent royalties, as well as various (good as well as negative) business matters that may/will rise from the CeFi space. The nfting of patents is one of the new categories to be designed.
“Both Kwon and Sestagalli have been vocal against DAI in the past, arguing that the stablecoin is not sufficiently decentralized because it’s partly backed by USDC.
Terra’s UST is an algorithmically governed, seigniorage-based stablecoin that relies on an elastic monetary policy to ensure price stability and growth. Unlike MakerDAO’s DAI, it’s not collateralized and leverages the LUNA token to ensure price stability and maintain its peg. Abracadabra.Money’s MIM, meanwhile, is an overcollateralized stablecoin similar to DAI, except the collateral backing consists of yield-bearing assets.
According to Christensen, the two DAI rivals rely on unsound stability mechanisms that could crumble under the pressure of extreme market forces. The theoretical argument against UST and MIM is that the former relies on sustained demand for LUNA, while the latter is overcollateralized by “low quality” or rehypothecated assets. Notably, both stablecoins have maintained their peg during several significant market pullbacks.”
https://cryptobriefing.com/terra-and-abracadabra-stablecoins-are-going-to-zero-maker-founder/
