Is it a net positive to recommend Incognito now?

sgp_

Incognito is a project that offers trading of a tokenized XMR for other tokens on a Uniswap-style DEX. To grow the liquidity pool, they are currently offering 13% APR on Monero deposits.

I'm not against all concepts of lending personally. Lending and borrowing is an important part of the economy. Thus, in my opinion, it's important to do what we can to grow the Monero lending and borrowing markets. We want to encourage everyone to list Monero so that there is strong competition and a healthy ecosystem.

However, Incognito holds XMR in a founder-controlled wallet. The security guarantees are very low then, since they can be stolen with little overall recourse. Further, the company is not a regulated institution. Users will be hurt if their funds are stolen.

So, is it a net positive or a net negative to recommend Incognito with certain caveats? What pressure can we put on Incognito to have better wallet security in the interim before they move to a more distributed custody solution? Luckily, they seem very interested in building a relationship with the Monero communities, so I expect them to make sensible changes if enough people ask.

ur_mothers_keeper

In the Monero world, security (and by proxy, privacy) is paramount. So there cannot be a net benefit to recommending a custodial service. Some might consider that Freewallet makes using Monero easier, but it is a custodial service (with a history of stealing money from users) and so cannot be recommended.

No, I wouldn't recommend it. Considering that the tech and protocols exist to create lending contracts where the collateral is not held by a custodian, the fact that the custodial route was chosen is suspect on it's own.

sgp_

ur_mothers_keeper would you also recommend against something like Kraken? Do you think custodial exchanges are damaging to the Monero ecosystem?

ur_mothers_keeper

sgp_ well, where you have to use institutional currencies you usually have a lot of institutional rules and no cryptographic assurances. So while I ideally like local exchanging or decentralized exchanging, centralized exchanges are useful and are only designed the way they are because of laws they have to follow.

This is different for on chain and decentralized systems, and so there's really no excuse to use a centralized, custodial collateralized loan system when the technology exists to use cryptographic assurances rather than someone's word.

I like Kraken. They're alright. They're my centralized exchange of choice. But I don't leave my money there.

AxeCapital

I think it is smart to be neutral now and wait to see how people's experience with it goes. If it is scamming people of XMR we will likley get posts in reddit as similar rates to people complaining about Changelly, Freewallet, or any of the other items on the avoid list. If people have positive experiences with Incognito, maybe they have an active representative in the community like vikrants & CakeWallet, then I think that changes things.