I was thinking of Defi and the pools they use. What if the price of Bitcoin drops from 55k to 5k in like a flash crash or any lowering event, the collateral that the borrowers have give in order to be able to borrow would become "worthless" to the Defi platform ex. Compound. I thought of it and came up with they would just have to sell off the collateral fast enough, to claim the fiat to keep the value of the pools the same for the lenders, right? But we all know when the price of BTC drops in that fashion, exchanges stop working, apps dont open, or they just stop trading all together to stop a sell off. so what happens to those Defi pools when collateral cant be sold off? do the Defi lenders just get the short end of the stick?
So that got me thinking of is it possible to create a private exchange where there is no middle man for groups like Defi pools, lending groups. If they had no middle man they can freely buy and sell collateral as needed, according to value to keep lenders money/stablecoins value intact. I mean isint that the whole point of crypto anyways? No middle man or overseeing entity for our money? ... look at what happened the Tether. If i understand correctly the value went to .83usd at a point. Private exchange would eliminate the risk nobody talks about with Defi lending.
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