๐ฏ๐ตโ ๏ธ Current risks: โข Heavy reliance on debt โข Large US Dollar & Securities exposure โข Currency devaluation, leading to inflation These could trigger a 90s-style crisis 2.0 ๐
๐จ The system faced its biggest test during the 90s banking crisis: โข 110 financial institutions resolved โข Full deposit protection implemented โข Massive debt-based interventions DICJ has met its insurance obligations, but at what cost? ๐ค
๐จ The system faced its biggest test during the 90s banking crisis: โข 110 financial institutions resolved โข Full deposit protection implemented โข Massive debt-based interventions DICJ has met its insurance obligations, but at what cost? ๐ค
๐ฏ๐ต๐๐ช๐บ Japan's & EU's deposit guarantee schemes differโฌ๏ธ ๐ฏ๐ต DICJ: Active crisis manager (Act 34 of 1971) ๐ช๐บ DGS: Mainly deposit protection (Directive 2014/49/EU) Japan's approach = more intervention power & broader mandate EU's approach = more focused mandate
๐ฐ DICJ's funding comes from: โข Self-issued bonds โข Insurance premiums paid by banks โข Borrowed funds from financial institutions & public In practice, operation financing is heavily relied on debt, making it risky long-term ๐
๐ How fast do you get your deposits back? The Incubator Bank case (2010) shows DICJ timeline in practice: โข Bank failed on Friday โข Deposits returned by Monday 3 days/by next working day to have insured deposits available ๐ค
๐ด Coverage limits: โข Regular deposits: Up to ยฅ10M (~$65k/โฌ60k) โข Payment & settlement accounts: 100% covered ๐กFun fact: During the 90s crisis, ALL deposits were fully protected. Japan gradually reduced this to ยฅ10M by 2005
๐ฆ The Deposit Insurance Corporation of Japan (DICJ), provisioned in the Deposit Insurance Act (DIA) defines as its goals: โข Deposit insurance โข Financial system stability โข Troubled financial institution resolution Deposits guarantee is just one of responsibilities
๐ฏ๐ต How does Japan protect bank deposits when banks fail? ๐คฏ Their deposit insurance system handled 180+ financial institution failures, including the massive 90's banking crisis ๐ Here's how Japan's ยฅ10M deposit guarantee scheme works: https://illya.sh/blog/posts/deposit-guarantee-scheme-japan-dia-dicj/ ๐งต
๐ฏ๐ต How does Japan protect bank deposits when banks fail? ๐คฏ Their deposit insurance system handled 180+ financial institution failures, including the massive 90's banking crisis ๐ Here's how Japan's ยฅ10M deposit guarantee scheme works: https://illya.sh/blog/posts/deposit-guarantee-scheme-japan-dia-dicj/ ๐งต
๐ Tried out the BRICS Pay demo. Gold/#XAU is one of the supported currencies (the only real money in the list!) ๐ To be supported cross-border, within every member nation ๐ณ You can use VISA/Mastercard to load up your account ๐ช๐บWe urgently need an akin system in the #EU
In summary, blockchain-based Tokenized Liquid Futures: - Eliminate intermediaries - Increase transparency - Enhance liquidity - Automate risk management - Provide flexible capital deployment Thus enabling a disruptive #DeFi use-case over its #TradFi equivalent
The smart contract automates risk management on-chain by: 1๏ธโฃ Enforcing margin requirements 2๏ธโฃ Handling liquidations 3๏ธโฃ Ensuring contract settlement Removing the need for trusted third parties and ensuring transparency ๐ก๏ธ
The smart contract automates risk management on-chain by: 1๏ธโฃ Enforcing margin requirements 2๏ธโฃ Handling liquidations 3๏ธโฃ Ensuring contract settlement Removing the need for trusted third parties and ensuring transparency ๐ก๏ธ
The tokenization of the long and the short positions of the futures contact allows for trading of the positions in a fully decentralized manner, without the need for need for a clearing house This means no trusted entity or oracles are required, ensuring full decentralization
The tokenization of the long and the short positions of the futures contact allows for trading of the positions in a fully decentralized manner, without the need for need for a clearing house This means no trusted entity or oracles are required, ensuring full decentralization
๐ The later this default occurs, the higher this loss is to the offending party This aligns with the principle of the time value of money
๐ The later this default occurs, the higher this loss is to the offending party This aligns with the principle of the time value of money
๐ The liquidation logic makes the initial required margin a collateral for all of the parties Failure to meet the obligations means a loss of the deposited margin/collateral, either in full or in part
๐ The liquidation logic makes the initial required margin a collateral for all of the parties Failure to meet the obligations means a loss of the deposited margin/collateral, either in full or in part
If a party fails to meet margin requirements, the smart contract: 1๏ธโฃ Terminates the agreement 2๏ธโฃ Transfers deposited assets to the compliant party 3๏ธโฃ Applies penalties to the defaulting party This liquidation process is executed automatically on-chain ๐ค
If a party fails to meet margin requirements, the smart contract: 1๏ธโฃ Terminates the agreement 2๏ธโฃ Transfers deposited assets to the compliant party 3๏ธโฃ Applies penalties to the defaulting party This liquidation process is executed automatically on-chain ๐ค
Smart contract on the blockchain tracks: 1๏ธโฃ Deposited amounts for each party 2๏ธโฃ Required deposits at each checkpoint 3๏ธโฃ Maturity date It uses this data to automatically enforce the increasing margin schedule ๐
Smart contract on the blockchain tracks: 1๏ธโฃ Deposited amounts for each party 2๏ธโฃ Required deposits at each checkpoint 3๏ธโฃ Maturity date It uses this data to automatically enforce the increasing margin schedule ๐
The margin in DeFi futures acts as: 1๏ธโฃ Traditional margin, as in TradFi 2๏ธโฃ Collateral hedging the counterparty risk 3๏ธโฃ Under-collateralized assurance for a futures contract delivery Daily/periodic settlement can be incorporated into the dynamic margin requirements
The margin in DeFi futures acts as: 1๏ธโฃ Traditional margin, as in TradFi 2๏ธโฃ Collateral hedging the counterparty risk 3๏ธโฃ Under-collateralized assurance for a futures contract delivery Daily/periodic settlement can be incorporated into the dynamic margin requirements
Example of gradually increasing margin: - Day 1: 10% deposit required - Month 1: 25% required - Month 2: 50% required - Month 3 (Maturity): 100% required This flexibility allows parties to structure payments based on future cash flows ๐ฐ
Example of gradually increasing margin: - Day 1: 10% deposit required - Month 1: 25% required - Month 2: 50% required - Month 3 (Maturity): 100% required This flexibility allows parties to structure payments based on future cash flows ๐ฐ
๐ The margin requirements increase algorithmically over the contract's lifespan This ensurer both parties deposit their obligation in full by maturity, while allowing for partial collaterization Thus leveraging the time value of money, without the need for a trusted party
๐ The margin requirements increase algorithmically over the contract's lifespan This ensurer both parties deposit their obligation in full by maturity, while allowing for partial collaterization Thus leveraging the time value of money, without the need for a trusted party
The DeFi margin for futures contracts differs from TradFi margins, by: 1๏ธโฃ Gradually increasing over time 2๏ธโฃ Ensuring full collateralization by maturity 3๏ธโฃ Delaying full payment TradFi margin's main goal is to cover daily settlement gains/losses of the futures position
The DeFi margin for futures contracts differs from TradFi margins, by: 1๏ธโฃ Gradually increasing over time 2๏ธโฃ Ensuring full collateralization by maturity 3๏ธโฃ Delaying full payment TradFi margin's main goal is to cover daily settlement gains/losses of the futures position
Each position (long and short) is subdivided into several fungible tokens, which can be traded independently The native token support of Mina Protocol blockchain means that a smart contract encodes both: the futures agreement, and its tokenization ๐ช
Each position (long and short) is subdivided into several fungible tokens, which can be traded independently The native token support of Mina Protocol blockchain means that a smart contract encodes both: the futures agreement, and its tokenization ๐ช
๐ Smart contracts on the blockchain enable full tokenization of futures contracts ๐ Both long and short positions become tokens, representing a "promise of future asset or money" This allows partial selling of positions, increasing liquidity, flexibility and reducing risk ๐ง
๐ Smart contracts on the blockchain enable full tokenization of futures contracts ๐ Both long and short positions become tokens, representing a "promise of future asset or money" This allows partial selling of positions, increasing liquidity, flexibility and reducing risk ๐ง
Futures pricing is deterministic, and its main goal is to prevent arbitrage: ๐ฐ Futures Price = Spot Price * e^(rT) - r: risk-free rate (e.g., $MINA staking yield) - T: time to maturity This formula approximates pricing at maturity in both TradFi and DeFi ๐งฎ