[HN Gopher] Luna Cryptocurrency Collapse: How UST Broke and Why ...
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Luna Cryptocurrency Collapse: How UST Broke and Why It Matters
Author : CharlesW
Score : 91 points
Date : 2022-05-13 19:53 UTC (3 hours ago)
(HTM) web link (www.cnet.com)
(TXT) w3m dump (www.cnet.com)
| BrissyCoder wrote:
| Doesn't seem to address the "why it matters" portion of the
| headline.
| woah wrote:
| I'd be interested in some analysis of whether Luna would have
| been more likely to work without the "Anchor protocol".
| wmf wrote:
| It likely would have limped along as a microcap wannabe coin
| that no one cared enough about to attack.
| memish wrote:
| USDD next? Just announced yesterday by Justin Sun. 40% APR!
|
| https://twitter.com/justinsuntron/status/1524726284399480832
| redisman wrote:
| There's a sucker born every minute. Anyone who sees 40%
| interest and doesn't think it's a scam would've lost that money
| on some other scam
| IdEntities wrote:
| There are only a few ways to make consistent >15% yields in
| this world:
|
| - Buy Treasury bonds in 1980
|
| - Invest in shaky emerging market debt
|
| - Be a credit card lender
|
| - Invest in the early phases of a Ponzi scheme before it blows
| up
|
| Good luck to USDD investors.
| mondoveneziano wrote:
| LUNA is trading at below $0.00001, that is below 1/1000th of a
| _cent_ right now. For many, getting rid of it may be much harder
| than just ignoring it. A few weeks ago the price people were
| willing to pay for it hovered around $100.
|
| I say "the price people were willing to pay" instead of "value",
| because now that nobody wants to speculate with LUNA, it did fall
| down to its intrinsic value: Practically zero. Nobody needs it
| for anything besides buying and selling it from and to other
| people, which is not happening anymore.
|
| Cryptocurrency is gambling, plain and simple. The difficulty that
| fiat currency faces is inflation, which roughly means diluting
| the economy that backs it too much. The difficulty with
| cryptocurrency is that there is nothing of worth backing it.
| Factor in the horrifying externalities, and its worth is
| negative.
|
| For Bitcoin, the most popular one, on the order of
| 100.000.000.000.000.000.000 of hashes get calculated to mine a
| single block, multiple trillion per second. Within ten minutes,
| only a single one of those 100.000.000.000.000.000.000 hashes is
| actually used, depending entirely on luck. The rest are thrown
| away entirely. They do not form part of the final hash or
| anything else, the energy spent on them is lost.
| donkarma wrote:
| You have contradicted yourself. By your own admission, Bitcoin
| is backed by the world's energy and computing resources (at
| least what is used on the network)
| mondoveneziano wrote:
| All energy and computing resources used on mining Bitcoin are
| spent and cannot be used for anything else. The concept of
| "backing" means that resources are available, and the entity
| backing them merely represents them. Stock is backed by the
| services and products a company provides. Fiat currency is
| backed by their respective part of the world economy.
| Resources are not depleted by backing those.
|
| Saying Bitcoin is "backed" by the world's energy and
| computing resources is like saying that a wildfire is
| "backed" by a state's forestry reserves.
| vyrotek wrote:
| What a mess. And now I just saw this. What?
|
| "Leading crypto exchange, Crypto.com, has announced that its
| users who traded embattled Terra's native token, LUNA, on May 12
| at around 12:40 - 13:39 (UTC) did so with the wrong price.
|
| Crypto.com, one of such exchanges, has revealed that traders
| involved in the concerned transactions _would have their
| transactions reversed_ , and a $10 reward in CRO, the native
| token of the platform, would be given to them as compensation for
| the inconvenience."
|
| https://watcher.guru/news/crypto-com-reverses-traders-luna-m...
| redisman wrote:
| Wild guess - the wrong price they were able to sell at was much
| higher than the 0.00001 it's at now.
| cheeze wrote:
| These people should just file a complaint with the regulator
| that manages this stuff.
|
| Oh, wait...
| px43 wrote:
| Crypto.com is a heavily regulated entity.
| ParksNet wrote:
| Encouraging Crypto to fail, and encouraging politicians to ban
| exchanges, is the quickest way to cut CO2 emissions and reverse
| chip shortages.
| immigrantheart wrote:
| A lot of crypto are moving to PoS.
| kova12 wrote:
| Isn't someone salty he didn't start mining early on
| greiskul wrote:
| You know, people elsewhere in this thread are asking for
| compassion.
|
| It's not enough to just show compassion to those that lost.
| Their money didn't get destroyed, they traded it for
| something they didn't understand, based on lies of the
| counterparty that sold them the crypto. If people that lost
| their money deserve our compassion, which I believe they do,
| those that took their money deserve our contempt.
|
| But I'm not worried. You sound like someone that hasn't fully
| cashed out yet. You are still in the ponzi. And you probably
| won't hear me. So keep your coins, since you are so smart.
| One day, they will be worth the actual value they bring to
| the world. Zero.
| ambrozk wrote:
| I interviewed with Terraform Labs less than a year ago. The guy
| interviewing me was a pretty standard eng manager who'd left
| Amazon for the excitment of a crypto startup. I tried to prep for
| the interview by researching their white papers to figure out how
| the various balancing and investment mechanisms actually
| functioned on a technical level. But it was difficult to make
| sense of their white paper, which was fairly general, and
| different portions of their documentation seemed to contradict
| one another. When I asked what I'd been misunderstanding, he told
| me that I hadn't misunderstood anything: their white paper was
| not a full spec, and their documentation was out of date. In that
| case, I asked, how could one actually understand the protocol?
| "It's probably not possible at this point," he told me, "These
| things are in motion all the time." I thought his answer was
| pretty eye-opening.
|
| Their interview question was: design a simple app which allows
| one to query the effect of crypto price changes on the supply &
| price of LUNA. I gathered that the upshot was, how big a movement
| would be required to break the $1 peg? I wonder if their models
| weren't good, or if their models were good, and they were just
| accepting a high level of risk?
| medo-bear wrote:
| i wonder if these kind of things happen within the cardano
| ecosystem given their focus on peer reviews
| leach wrote:
| I remember kicking myself for exiting LUNA at 20 dollars early on
| before it blew up. As I left I kept hearing whispers and sketchy
| things about it.
|
| In hindsight I'm glad I pulled out when I did.
| quickthrower2 wrote:
| You got lucky. Be happy enjoying an upward curve, you don't
| need to find the trough and peak.
| knodi123 wrote:
| if humans were any good at taking that _specific_ piece of
| advice, the world would be a better (and very different)
| place.
| jmyeet wrote:
| The very idea of an algorithmic stablecoin is beyond idiotic. A
| lot of Crypto Andys are former gold bugs who bemoan th eloss of
| the gold standard (fun fact: the US dollar was never 100% backed
| by gold). Collaterized currencies are better but gold bugs still
| miss the point of what makes the US dollar work.
|
| A currency only persists so long as people believe in it. That's
| it. As soon as that belief goes, it's all over. Even if it's
| collaterized that's true.
|
| What actually maintains the value of the US dollar is the long
| dick of the US government through the Fed obviously but also
| foreign and domestic policy. It's the ability to project military
| power anywhere on the planet. It's the nuclear arsenal.
|
| So it obviously sucks that people lost sometimes a lot of money
| on Luna (seriously the subreddit is a dark place now) and I
| believe at least some of the anecodtes of people losing their
| houses.. This probably shares a lot of pathology with gambling
| addiction (fun fact: gambling addiction has the highest rate of
| suicide of any addiction).
|
| But you also need to recognize that a lot of people who got wiped
| out by Luna were in it to get rich quick. I mean even the ~20%
| staking returns on Anchor should be alarming by itself. Who is
| paying for that 20% return? It's bound to be a Ponzi scheme.
| gfodor wrote:
| The idea of an algorithmic stablecoin is genius, time will tell
| if it works. But overall Luna's crash isn't too damning of the
| idea, because the root cause was a Ponzi scheme. (Which was
| identified and advertised as dangerous _within_ the crypto
| community.)
| SkyMarshal wrote:
| _> What actually maintains the value of the US dollar is the
| long dick of the US government through the Fed obviously but
| also the US government itself. It 's the ability to project
| military power anywhere on the planet. It's the nuclear
| arsenal._
|
| It seems fashionable among libertarians to attribute the US
| dollar's value to the US military, but that is at best a
| tangential reason, not the root reason.
|
| The root reason for the US dollar's value is that the robust
| and innovative US economy ensures enough consistent
| productivity, wealth creation, and economic growth for the tax
| base to service the interest on US Treasuries, which back the
| USD since Nixon took it off the gold standard in the 70s.
|
| That's it - the world trusts that it can hold US Treasuries,
| benefit from the interest they pay, and that US won't default
| on them - the risk-free rate of return, almost as risk-free as
| gold but with a more consistent and predictable return (as long
| as the USD doesn't undergo hyperinflation).
|
| A strong military is a side effect of a strong economy, not a
| cause of it. China is probably the best recent demonstration of
| that.
|
| You may argue the US economy depends on foreign oil and hence a
| military capable of guaranteeing that supply, but that's not
| entirely true either. In recent years the US vacilates between
| net importer and exporter of oil [1], and could be a solid net
| importer with enough political will and impetus.
|
| [1]:https://ycharts.com/indicators/us_oil_net_imports
| thrwyoilarticle wrote:
| Another fun fact: Bitcoin is fiat. You can't redeem it for
| anything.
| jmyeet wrote:
| Bitcoin isn't a fiat currency by definition. it's not issues
| by a government and is not legal tender. It's not even a
| currency. It's an asset.
| thrwyoilarticle wrote:
| It's literally called bit-coin.
| jmyeet wrote:
| And North Korea's official name is the _Democratic_
| People 's Republic of Korea ("DPRK").
|
| What's your point?
| thrwyoilarticle wrote:
| The analogy fails because calling it Bitcoin implies a
| desire for it to be viewed as a currency, not an asset,
| in the same way DRPK implies a desire to be viewed as D,
| P and R.
| MuffinFlavored wrote:
| > (fun fact: the US dollar was never 100% backed by gold)
|
| Go on please.
| jmyeet wrote:
| From [1]:
|
| > So we see that there never was a 100% reserve era in
| British or U.S. history. The 100% reserve gold standard that
| people sometimes talk about today is a fantasy.
|
| The gold standard was never about keeping 100% reserves. It
| was about maintaing a peg and that technically doesn't even
| require you to have any gold.
|
| [1]: https://www.forbes.com/2011/05/03/the-gold-reserve-
| myth.html...
| JumpCrisscross wrote:
| We were bimetallic and then fiat [1].
|
| [1] https://en.wikipedia.org/wiki/History_of_the_United_State
| s_d...
| TacticalCoder wrote:
| > What actually maintains the value of the US dollar is the
| long dick of the US government through the Fed obviously but
| also the US government itself. It's the ability to project
| military power anywhere on the planet. It's the nuclear
| arsenal.
|
| I started reading yesterday on DAI, an algorithmic stablecoin
| running since 2017. The thing is: a sizeable percentage of DAI
| is made of... USDC (a non algorithmic stablecoin created by
| Coinbase/Circle/Centre). They overcollateralize it and so far
| so good (since five years). They're even saying they're so
| overcollateralized they should widthstand USDC going to zero
| (or their USDC wallet being frozen by Coinbase, as Coinbase can
| do if asked to by the US authorities).
| mingw__ wrote:
| algostable != overcollateralized stable. Being an
| overcollateralized stable means it's actually backed by
| something, even if it's USDC. An algostable is backed by the
| sister token (eg: LUNA), and relies on faith and confidence
| in the sister token.
| TacticalCoder wrote:
| Wait, I'm confused by the terminology now: is DAI an
| "algorithmic overcollateralized stable coin", or is DAI not
| algorithmic at all?
| t_mann wrote:
| _Even if it 's collaterized that's true._
|
| Even for overcollateralized ones like Dai? There's an arbitrage
| mechanism that forces the overall backing to be greater than
| 150%. Now it may perhaps be somehow conceivable that the value
| of the backing drops by more than a third within a single
| block, but that still makes it an order of magnitude more
| stable than banks, which usually operate with ~5% equity (and
| that's post 2008 regulations, and based on rather optimistic
| book values; the market capitalisation is often significantly
| less).
| Vladimof wrote:
| "The cryptocurrency market isn't pretty right now. Look anywhere
| and you'll see red"...
|
| I saw green today just like on the stock market... and red
| yesterday just like on the stock market
| sub7 wrote:
| The idiots who yelled "have fun staying poor!" are now yelling
| "we're people too please have empathy!"
|
| Can't make this shit up
| the_jeremy wrote:
| > This matters for three reasons. ... First, over $15 billion in
| crypto value has been wiped out through luna and UST alone. ...
| Second, it raises questions about other stablecoins. ... Lastly
| and possibly most signifcantly[sic], the collapse of UST has
| caught the attention of powerful politicians and regulators.
|
| To oversimplify, it only matters if you care about crypto. And if
| you do, you already cared about this.
| kayamon wrote:
| Whenever people lose of money, that money has to be paid back
| to wherever they borrowed it from.
|
| Expect to see some more bank bailouts down the line to cover
| the cost of all this.
| gerikson wrote:
| There are very few banks lending money to crypto speculators.
|
| People may have mortgaged their houses etc., but in those
| cases the bank gets the house.
| rglullis wrote:
| The thing is that this "money" never existed in the first
| place. It was created out of thin air, and it vanished just
| the same.
| baersandbowlszs wrote:
| seanhunter wrote:
| There will absolutely be contagion into the rest of the
| economy. A lot of funds are long crypto, they will have
| received margin calls so will have to liquidate other assets
| driving those prices down etc. It's still to be seen how much
| contagion there will be, but there will be some.
| redisman wrote:
| Tesla and micro strategy for example holds billions in
| crypto. If that gets more common then that would cause major
| contagion
| woeirua wrote:
| Luna is a sideshow. Sad for the people who got caught up in it
| and lost their savings, but Tether is the real game. When Tether
| blows up the entire crypto system is going to blow up. And this
| is why Luna was important, because it caused a loss of confidence
| in stablecoins across the board. For a while this week, it looked
| like Tether might actually lose its peg and start a death spiral.
| px43 wrote:
| DISCLAIMER: Never hold Tether, for obvious reasons
|
| That said, Tether can't pop the way LUNA/UST did. UST was
| basically propped up by the value of LUNA such that when the
| UST peg is lost, more LUNA gets printed to buy back the
| difference. This causes the LUNA price to crash when the peg is
| lost, so people who know better try to sell before the
| rebalancing, crashing the price further, meaning more LUNA
| needs to get minted for every UST burned, causing rapid
| deflation. This is all done in a smart contract, and can't
| really be turned off.
|
| Tether is run by humans. Turning USDT back into USD requires
| actual human interactions. The peg can be lost, and maybe
| permanently, but it's not going to suddenly go to zero over
| night.
| RyanShook wrote:
| Isn't Tether actually backed by dollars though? Edit- here are
| current reserves: https://tether.to/en/transparency
| 0x53 wrote:
| People have been concerned about this for quite some time. It
| seems the answer that question is definitely not. Here is a
| somewhat dramatic write up:
| https://www.singlelunch.com/2021/05/19/the-tether-ponzi-
| sche...
| JumpCrisscross wrote:
| > _Isn 't Tether actually backed by dollars though?_
|
| No [1].
|
| [1] https://en.wikipedia.org/wiki/Tether_(cryptocurrency)#Que
| sti...
| smcl wrote:
| Oh good lord no. It's backed by something they originally
| said was dollars, they then relented after people poked
| around a bit and confessed it's just a basket of stuff they
| consider equivalent to dollars (plus probably some dollars I
| guess?)
| byecomputer wrote:
| assets: NFT of tweet, hubcap, the power of love, cracked
| iPhone 5
| akkartik wrote:
| I prefer Matt Levine from his newsletter today:
|
| _" Safe assets are much riskier than risky ones. This is I think
| the deep lesson of the 2008 financial crisis, and crypto loves
| re-learning the lessons of traditional finance. Systemic risks
| live in safe assets. Equity-like assets -- tech stocks, Luna,
| Bitcoin -- are risky, and everyone knows they're risky, and
| everyone accepts the risk. If your stocks or Bitcoin go down by
| 20% you are sad, but you are not that surprised. And so most
| people arrange their lives in such a way that, if their stocks or
| Bitcoin go down by 20%, they are not ruined._
|
| _" On the other hand safe assets -- AAA mortgage securities,
| bank deposits, stablecoins -- are not supposed to be risky, and
| people rely on them being worth what they say they're worth, and
| when people lose even a little bit of confidence in them they
| crack completely. Bitcoin is valuable at $50,000 and somewhat
| less valuable at $40,000. A stablecoin is valuable at $1.00 and
| worthless at $0.98. If it hits $0.98 it might as well go to zero.
| And now it might!_
|
| _" I have in the past told the story of TerraUSD and Luna by
| saying: The weakness in TerraUSD is Luna. One UST can be
| exchanged for $1 of Luna, but that only works if people continue
| to have confidence in Luna; if Luna goes to zero then TerraUSD
| will follow. But you could also tell the story by saying: The
| weakness in Luna is TerraUSD. Luna, as the cryptocurrency of a
| blockchain ecosystem, would rise or fall with the value of that
| ecosystem. But Luna, as the thing supporting a stablecoin, could
| go to zero in a week if that stablecoin needed support. Terra was
| so unstable because it was trying to be stable."_
| quickthrower2 wrote:
| Surely no one through stablecoins were low risk?
| iaabtpbtpnn wrote:
| Stable is right there in the name.
| lupire wrote:
| That's because thet are full of horsepuckey.
| quickthrower2 wrote:
| By the folks who put "safe" in safemoon.
| rglullis wrote:
| Including overcollaterized ones? They are not risk-free, but
| DAI has survived much worse market swings that the one from
| this week.
| jeromegv wrote:
| That's what the whole crypto industry has been saying for
| years. If they didn't think it was stable (or didn't want you
| to believe it was), it wouldn't be called stable. Millions of
| people at this point have been led to believe a stable coin
| is stable.
| dwater wrote:
| Yeah, as someone who didn't know about Luna or Terra a week ago
| I think he did a good job of explaining the system, and the way
| it would fail, pretty well 2 days ago on Wednesday:
|
| https://www.bloomberg.com/opinion/articles/2022-05-11/terra-...
|
| You can read down through where he details the Death Spiral. I
| also haven't paid much attention to other stablecoins, but I
| imagine the systems are similar, based on faith in the system,
| and only good as long as there's not a run on the system and
| more than some percentage try to get their money out.
| acchow wrote:
| Matt Levine is usually great. But the reason why UST at 0.98
| makes the whole thing collapse is not because people "rely on
| them being worth what they're worth". It's because you can sell
| UST into Luna for arbitrage minting new Luna in the process,
| thus inflating Luna.
|
| But Matt knows this. He describes the whole mechanics in his
| newsletter like 3 days ago. So not sure why the stretched
| analogy here...
| not2b wrote:
| Those weren't AAA mortgage securities that went bust in 2008,
| though some were fraudulently marketed as such. They were liar
| loans on second-rate properties chopped up into a bunch of tiny
| pieces and re-sold, based on the notion that real estate would
| only go up forever, so if people failed to pay the lender would
| foreclose and own real estate with more value than the original
| loan.
|
| Seems similar to some methods of stabilizing a "stablecoin":
| back it by a traditional cryptocoin and assume that this other
| coin can only go up.
|
| People who had only bank deposits didn't lose anything.
| codedokode wrote:
| General idea of having two balanced cryptocurrencies doesn't look
| bad by itself. But the promises to pay 20% of interest per year
| are super suspicious. Where would that money come from? What kind
| of goods or services do they produce? Do developers of
| cryptocurrency expect to receive exorbitant fees from users?
|
| If there is no valid business model explaining where that 20%
| come from then it is just a Ponzi scheme.
| redisman wrote:
| There are a ton of these schemes that promise 10-20%. At best
| it's like those 2008 loans that won't be paid back due to the
| crash, at worst it's a ponzi. Celsius and Gemini and a hundred
| others. There's a lot more tears left to be spilled
| mrintellectual wrote:
| The crux of the problem is not Luna itself, but the Anchor
| Protocol (19.5% yield), which enticed users to burn Luna by
| investing in UST through a, for lack of a better phrase, Ponzi
| scheme. I get it - people like decentralization. But without some
| form of regulation, either by the broader crypto community itself
| or by governments around the world, situations like the LUNA/UST
| collapse will keep happening.
|
| There are also rumors of a Terra fork:
| https://agora.terra.money/t/terra-ecosystem-revival-plan/870....
| Thanks, but no thanks.
| tptacek wrote:
| As I understand it: Anchor is the only reason UST was (briefly)
| workable to begin with. There wasn't enough liquidity in the
| UST/Luna system to support a major stablecoin; Anchor was how
| they dragged that liquidity in: by giving people free money to
| help prop it up.
|
| Take away Anchor and you're stuck at Step 7 of Matt Levine's
| Algorithmic Stablecoin Analysis: "if you do a good enough job
| marketing Luna, its price will not be zero. If the price is not
| zero, you're in business". As I understand it, the price of
| this whole ecosystem was driven largely by Anchor.
|
| https://twitter.com/tqbf/status/1524509243587575808/photo/1
| codedokode wrote:
| But do you need regulation? Promises to produce 20% interest
| out of thin air when banks don't offer a single percent are
| suspicious enough in my opinion.
|
| It doesn't make sense. If there was a risk-free way to get 20%
| income without doing anything then people could stop working
| and live just from their savings.
| kova12 wrote:
| Problem with regulation is that the term itself is ambiguous.
| What does it mean, who will do it, what are their limits and on
| what authority do they act?
|
| I am not familiar with this specific crypto, but when I am
| offered to join a business that pays 19% in USD, I immediately
| know it can not possibly not fail. Regulations or not, you
| can't offer such dividend without major risk.
|
| Then the subject of jurisdiction comes up. Who issued the
| tokens? If it is a USA company or person, it is one story, and
| they are likely already subject to some regulations. If it is
| an international community like ethereum, its another story.
| USA can probably ban it's distribution in USA, but not
| regulate.
|
| Then, why would the regulations have to be mandatory?
| Organizations can voluntarily approach SEC and ask them to
| regulate the crypto they are about to issue. Submit to the
| appropriate rules and be an investor grade business. No new
| laws are really required for that. This way you could have
| trusted that if Luna fails, someone would go to jail. It's just
| wouldn't have been 19% dividend in that case, following rules
| comes with a price tag.
| hristov wrote:
| It is a ponzi scheme. There is no production to provide for
| this 19.5% yield. It is all taken from incoming investments
| into the system. And it is well known that ponzi schemes
| collapse when the influx of new money starts becomes
| insufficient to pay the yield. It is very natural for ponzi
| schemes to collapse even without any government involvement.
|
| I think the article should have examined that possibility in
| addition to speculating about an attack.
|
| It is very possible that the $2 billion that was removed on the
| weekend was simply a holder that having seen worldwide retreat
| from risky assets had decided to pull his/her money out.
| phphphphp wrote:
| I disagree. Anchor was a dumb-money trap that increased the
| fallout of UST's collapse by at least an order of magnitude,
| sure, but it was not responsible for the collapse: algorithmic
| stable coins are fundamentally flawed, they're a perpetual
| motion machine, they're based on the belief that you can
| artificially create and sustain a market within a set of very
| narrow parameters. Luna was doomed to fail regardless of Anchor
| -- and the founders knew that, because they'd failed in the
| same way before, anchor was their attempt to shore up the ruse
| (which worked... until it didn't).
| px43 wrote:
| DAI works fine. Over-collateralization with a looming threat
| of liquidation has proven to be resilient against all
| imaginable forms of market turbulence. It still leans heavily
| on oracles that are basically run by humans, so there _is_
| risk, but the incentives seem to be about right to keep
| enough people honest.
|
| UST was an obvious bad idea. This exact scenario was warned
| about over and over again, and Do Kwon did what he could to
| try to delay the inevitable, but here we are.
| MuffinFlavored wrote:
| > Anchor was a dumb-money trap
|
| What % of current crypto climate/culture is "dumb money
| trap"?
| phphphphp wrote:
| Most of it, but it's not unique to the cryptocurrency
| industry, only the degree to which crypto is dumb money --
| many aspects of traditional finance are going down the same
| path, where it's no longer professional against
| professional, but professional shooting a bucket full of
| laymen.
| brtkdotse wrote:
| > people like decentralization
|
| I submit that very few people give a shit about
| decentralization. They want their currency to work and not drop
| 90% of its value overnight.
| cam0 wrote:
| Agreed. People like the idea of getting rich. And if they
| happen to get rich, they like the idea of getting richer.
| zucker42 wrote:
| Patrick Boyle argues fairly convincingly in my mind that the
| problem with this was the design of Luna itself[1]. TL;DW
| TerraUSD maintains its price by minting $1 worth of Luna in
| exchange for one TerraUSD coin. But this assumes that there are
| always going to be willing buyers for Luna, even if its price
| is in free-fall. When the price of Luna drops suddenly, desire
| to hold Luna decreases, causing TerraUSD to lose its peg,
| causing confidence in Luna to drop further, leading to the
| death spiral we currently observe.
|
| [1] https://youtu.be/iisPX_xVMV8
| smrtinsert wrote:
| Seems like something that should be so easy to catch in a
| simulation/test
| px43 wrote:
| A simulation? This flaw should be obvious to anyone who
| took 10 minutes to read how the system works.
|
| Synthetics backed by a 1:1 mint/burn are always going to
| crash and burn the same way. It's happened before, and it
| will probably happen again. High profile people have been
| shouting from the rooftops about this exact issue since
| launch.
|
| I have some friends who lost everything in this, and it
| sucks. I did my best to explain this exact scenario to
| people who would listen, and ended up getting some pretty
| high praise this week from people I saved, but you can't
| save everyone.
|
| We are now in a world where wealth is being rapidly
| redistributed from people who don't read the instructions,
| to those of us who do. The metaphorical sea levels on
| global finance are rising rapidly. Learning to swim now
| isn't just a recreational activity, it's a survival skill.
| zucker42 wrote:
| > We are now in a world where wealth is being rapidly
| redistributed from people who don't read the
| instructions, to those of us who do.
|
| Are the people who "read the instructions" really the
| ones who benefited here? The main winners here, as far as
| I can tell, are the employees and creators of Terraform
| Labs--who benefited from people investing in a project
| that was doomed to fail--and the people who got in early
| and out early--who are probably more lucky than smart.
| JumpCrisscross wrote:
| > _Seems like something that should be so easy to catch in
| a simulation /test_
|
| The system has two stable equilibria, one and zero. If one
| assumes zero is virtually permanently, the system always
| ends there. But it's highly sensitive to one's volatility
| assumption. _Ex ante_ there is no way to estimate that.
| huitzitziltzin wrote:
| Of all of the wildly implausible ideas to come out of the crypto
| area, algorithmic stable coins are the least plausible.
| TacticalCoder wrote:
| Yet, somehow, DAI (an algorithmic stable coin running on top of
| Ethereum as I understand it) has apparently managed to keep its
| peg since 2017. I read on it yesterday and I'm very intrigued.
| It's a gigantic target for dark hats and yet so far nobody
| found a way to attack it.
|
| And it's not small: $6bn of DAI worth 1 USD each circulating.
| zucker42 wrote:
| As I understand, Dai is an overcollaterized stablecoin.
| People mint Dai by locking up cryptocurrency into its smart
| contracts worth more than the Dai they get. I believe that
| collateral can be automatically liquidated in the case of a
| crash of those assets. This is different from an "algorithmic
| stablecoin" as the term is commonly used, since by that
| people usually mean a coin which doesn't utilize collateral.
| wmf wrote:
| DAI is overcollateralized ($10B of collateral for $6B of
| DAI). Generally the definition of "algorithmic stablecoins"
| is that they're undercollateralized.
| boppo1 wrote:
| How is it a dark hat target?
| ironSkillet wrote:
| People love trying to take down big fish. Even better if
| they can make money doing it. Not saying it's vulnerable,
| just that it's quite a big fish.
| rufius wrote:
| This article seems to assume it matters. It does not.
| whymauri wrote:
| Why doesn't it matter..?
| rufius wrote:
| Because it's a Ponzi scheme. It's interesting from a
| rubbernecking car crash onlooker perspective but we need not
| dwell on it.
| freedomben wrote:
| I think the elephant in the room is the self harm that is
| happening. It may be very rare, but it _is_ happening, and it
| happens in stock market crashes too (not just in crypto). Even if
| you don 't care about crypto, even if you think people who trade
| in crypto are idiots, please remember there are real humans
| behind these things.
|
| If you're licking your wounds, remember that things come and go.
| I know that's a shitty thing to deal with (I've lost my ass is
| crypto before too so I know first hand), but don't do something
| to yourself that is permanent and can never come back from. It's
| absolutely NOT worth it.
|
| If you dodged this one, now is the time to be full of compassion
| to your fellow humans, not dancing on graves and gloating in "I
| told you so."
| whatever1 wrote:
| What I want is these crypto charlatans who were giving
| malicious financial advice to go to jail.
| scoofy wrote:
| I've been angry about it since the beginning. _This was
| predictable_ , and now people are asking for compassion?
|
| _Compassion was us yelling about this since the beginning._
|
| _Compassion was the folks who developed Dogecoin as a satire
| coin to explain the problems involved in the system._
|
| Asking people to 'be full of compassion' is fine, and dancing
| on graves is terrible, but the time for compassion was the
| warnings that were years back, in the face of 'have fun being
| poor' taunts, while never ever folding or letting up. The
| sentiment here was the same type of _nice but not kind_
| nonsense that has gripped much of the culture.
|
| I try to think of the people I convinced _not_ to speculate in
| these markets. The fortunes _not_ lost because people came to
| me as a life long investor, asking my opinion of cryto markets,
| and me carefully arguing that they were a commodity, not an
| investment vehicle, and you don 't generally _invest_ in rocks,
| because rocks don 't produce anything.
|
| Those of us out there that saved people from losing their life
| savings will never be acknowledged, because humans do not care
| to think about the lives that were saved by safety precautions,
| only the lives that were lost due to negligence.
|
| https://twitter.com/jordonaut/status/1352363163686068226
| vmception wrote:
| I think its the time for education.
|
| Where are the news articles about the stablecoins functioning
| perfectly? There are a quite a few stablecoins functioning
| perfectly.
|
| You pressed play on your "oh a crypto thing" script about
| _anything crypto related and tradeable_. You're in
| comfortable and like company, but the issue with it is that
| it dilutes the conversation way from the one specific
| organization that launched Terra and Luna. This is the exact
| forum that should be talking about system designs, instead
| has all these odd anti-speculation rants. Half of this forum
| is paid in lottery tickets, its out of character.
| thrwyoilarticle wrote:
| Luna was functioning perfectly until it wasn't. Tether
| continues to function, for now.
| vmception wrote:
| If thats the depth of a rebuttal, its reinforcing my
| point.
|
| The conversation should be "why the seigniorage model is
| deprecated"
|
| "Smart contract audit post mortem"
|
| Just the exact same standard we put on other software
| discussions
|
| This is what happens everyday with developers, this is
| just one of the forums it should be happening on
| heartbreak wrote:
| I can't help but recognize that this is EXACTLY what
| 'scoofy is referring to.
| vmception wrote:
| I see that too, I think our takeaways are very different
| ahallock wrote:
| Netflix was doing great, then other services came along.
| Local restaurants were doing well, then covid hit. Most
| things have a life cycle and black swan events happen.
| Can't be avoided; you can only have a contingency plan.
| JumpCrisscross wrote:
| > _its the time for education_
|
| It's time for regulation. Financial institutions that can
| cause systemic damage are regulated and taxed to pay for
| (a) that regulation and (b) remediation should (a) fail. We
| need that for crypto.
|
| > _are a quite a few stablecoins functioning perfectly_
|
| If people believe this, we need special regulation for
| stablecoins. The one thing more dangerous than a risky
| asset is a risky asset pretending to be safe. (The
| regulator and its enforcers can be funded out of a special
| tax on stablecoin holdings by U.S. persons. Hell, make it
| revenue positive.)
| vmception wrote:
| There will always be things people can interact with
|
| instruction goes in, stablecoin comes out
|
| input output
|
| smart contracts are vending machines placed on the side
| of an ephemeral gas station
|
| what regulation would you like to see and how would it
| apply or prevent.. anything with that reality?
|
| I think instead of punitive taxes the regulators could
| try to make an approved framework seem more attractive,
| which just creates another additional option for the user
| JumpCrisscross wrote:
| > _what regulation would you like to see and how would it
| apply or prevent.. anything with that reality?_
|
| Publicly disclosed audited financials for stablecoin
| issuers and a tax on holders of crypto assets that funds
| enforcement and, possibly, restitution if _e.g._ someone
| goes homeless. Starting point would be casino regulation.
| scoofy wrote:
| Read up about wildcat banking system in the late-1800's
| early-1900's. That's what we need to educate people about.
| Not all the banks failed. Not all the notes were worthless.
| Many, many people still lost their life-savings.
|
| This is not new. This is not the first speculative bubble.
| _This has all happened before._
|
| There is nothing inherently flawed about the _concept_ of a
| stable coin. _They should still not be considered an
| investment vehicle_.
| not2b wrote:
| Stablecoins function perfectly until they don't. The others
| aren't immune to this kind of failure, though they may be
| more resistant. Once they become unpegged, you can get a
| "run on the bank", since there's no insurance to protect
| investors.
| vmception wrote:
| Then add insurance.
|
| Imagine the people in the 1920s that were like "you know
| what would be funny... what if we got the government to
| add confidence to our private business with public money
| and then we get all the customers and skim a little bit
| from them at every turn, I know I know its dumb but that
| _would_ be funny right"
| not2b wrote:
| For a bad enough crash, only governments can provide the
| necessary insurance.
| thawaya3113 wrote:
| This is why crypto needs to collapse sooner rather than
| later. To minimize the self harm.
| im_down_w_otp wrote:
| There are a variety of non-tech circles that I incidentally
| run in. Biking, skiing, gaming, etc. Because I'm the "tech
| founder" of the group I regularly get questions like,
| "Soooo... know of any good crypto I should invest in?"
|
| My response eventually consolidated to, "When making an
| investment, don't buy things you don't understand. Because
| odds are someone selling it to you as an investment does
| understand it, and that difference in your respective
| understandings is _their_ investment. "
| ahallock wrote:
| This is spot on and how whales take advantage of retail. Or
| influencers dump on their followers.
| lrvick wrote:
| Meanwhile I have a house and was able to lift out of poverty
| by ignoring people like you and saving in BTC instead of USD
| for the last decade.
|
| YMMV.
| nathanaldensr wrote:
| Even gamblers occasionally hit the jackpot.
| JumpCrisscross wrote:
| > _I have a house and was able to lift out of poverty by
| ignoring people like you and saving in BTC instead of USD
| for the last decade. YMMV._
|
| This is fine. But you acknowledge you gambled. If you'd
| lost, it would have been inappropriate to ask for others'
| sympathy or, worse, public support.
| gfodor wrote:
| One Bitcoin is presently worth $30,000.
| vecinu wrote:
| I'm generally curious about this question because it
| popped in my mind when I read your comment but what about
| the situation where someone builds or buys a house in a
| dense forest in California?
|
| Said house is destroyed in a fire, insurance can't pay
| everyone out (see Paradise fire) and then those same
| people end up begging others for support (Including
| GoFundMe) pages.
|
| Didn't they gamble on having a house in a high risk area
| and lost? Why do we only bail out certain people and not
| feel bad about it?
| jeromegv wrote:
| Just like houses built in known flooding zone.
|
| It's a good point.
| vel0city wrote:
| The tricky part is, a lot of flood-prone areas tend to
| also be very economically active overall. Lots of ports
| on the coasts or along riverbanks which need people to
| operate and deal with the economic activity of the area,
| but rivers do sometimes flood and hurricanes will push
| water inland.
| cableshaft wrote:
| Well presumably they have insurance, although I think the
| days of insurance companies offering insurance to just
| about anywhere in the western US are numbered, with the
| rapidly disappearing water and constant threat of
| wildfires. But people who bought LUNA didn't buy
| insurance.
|
| But generally I agree with you, there are definitely
| tragic events that happen to people that get more
| sympathy than other types of tragic events, even if
| they're pretty similar ultimately.
|
| But I'm also someone who "gambles" on nothing but "ponzi
| schemes", (i.e. I buy Bitcoin and Ethereum) according to
| HN. I don't have insurance though, if some black swan
| thing happened and I lost it all, then I don't have much
| recourse.
|
| Crypto is far from the only thing where that's a
| possibility, though. I'd say three of the startups I
| worked for have been even more of a gamble than my crypto
| purchases (all three shut down a little more than a year
| after I joined and I never made a dime more than my kind
| of low salary, and they didn't offer a 401k so I missed
| out on a lot of financial accumulation and security
| there).
| Mordisquitos wrote:
| That is in no way "gambling" and is in no way analogous
| to cryptocurrency investments.
|
| Everybody needs a home, and one way to have a home is to
| buy one. Investing one's savings in buying a home comes
| with the expected option that one can live in it
| indefinitely if one wants to. Fulfilling this expectation
| does not depend on others becoming homeless, nor on their
| home becoming worse, nor on others being unable to buy a
| home in the future.
|
| On the other hand, nobody needs to invest in
| cryptocurrencies. Investing one's savings in
| cryptocurrencies is done on the expectation that they
| will increase in value at least until one can sell them
| at profit. Being able to do this depends on others losing
| out by comparison, inasmuch as one expects others to buy
| the same amount of currency at a greater price.
| vecinu wrote:
| > Investing one's savings in buying a home comes with the
| expected option that one can live in it indefinitely if
| one wants to. Fulfilling this expectation does not depend
| on others becoming homeless, nor on their home becoming
| worse, nor on others being unable to buy a home in the
| future.
|
| I don't think any of this is true. You buying a home
| deprives someone of said home and drives the expected
| price up. We have a homeless crisis in California because
| we are not building enough and everyone is treating
| housing like an investment ("It can only go up!", "This
| is an investment!").
|
| Living in it indefinitely is also a pipe dream. You're
| paying taxes and fees that can increase or change at any
| moments notice if enough people agree. This requires the
| same consensus as fundamental algorithmic changes in
| cryptocurrencies. You can't bank of living somewhere
| "indefinitely" without agreeing that it's a
| gamble...nothing is guaranteed.
|
| Regarding the "need" to invest in cryptocurrencies, I can
| kind of agree. Shelter is a need because it helps us
| survive more efficiently but one could argue
| investing/growing wealth should also make life easier to
| live if it works out.
| notch656a wrote:
| The only way to not gamble wealth is not to have it.
| Leaving cash in the bank is gambling that government
| won't inflate it away. Buying equities is gambling that
| market conditions won't change. Buying bonds is gambling
| that the returns will outpace inflation and that the bond
| seller won't default.
| JumpCrisscross wrote:
| > _only way to not gamble wealth is not to have it_
|
| This is a false analogy between taking measured risks and
| gambling. Putting 100% of your assets into anything,
| particularly a cryptocurrency, is gambling.
| notch656a wrote:
| Putting 100% of your assets into one thing is bad
| gambling. Putting your assets into diversified, positive-
| sum assets is good gambling. I can play semantic games
| too :)
| JumpCrisscross wrote:
| > _Putting your assets into diversified, positive-sum
| assets is good gambling. I can play semantic games too_
|
| Semantics means arguing over definitions, not
| misunderstanding them. The difference between positive-
| and zero-sum systems is unambiguous. We can call
| participating in the latter, whether by trading
| cryptocurrencies or derivatives or playing slots, with an
| intent to profit gambling or wijiwogging or
| blurlippening, it doesn't matter, the expected outcome is
| the same.
| stuxnet wrote:
| You could say the exact same thing about the broader
| stock market volatility (read: downturn) we're
| experiencing. How one can be considered gambling and the
| other not?
|
| At least the crypto investors aren't expecting a
| wholesale bailout at any point, unlike "sophisticated"
| institutional investors as we saw in 08...
| thrwyoilarticle wrote:
| >How one can be considered gambling and the other not?
|
| Because stocks have inherent value in the form of
| dividends or the potential of future dividends (or the
| current/potential stock buybacks, which are
| mathematically similar).
|
| I think this misconception must be the root of the whole
| issue.
| TheOtherHobbes wrote:
| Stocks _appear_ to have inherent value if you don 't look
| at the entire planetary economy as a system.
|
| In reality dividends don't distinguish between productive
| innovation and wealth extraction.
|
| Innovative dividends are derived from the use value of
| new goods and services which increase freedom of action
| for the majority of the population. Wealth extraction is
| derived from zero-sum movements of capital, typically
| benefiting rentiers at the expense of productive
| employees, _decreasing_ majority freedom of action.
|
| But even the first can create externalities - which are
| real physical cost which are not accounted for.
|
| A house that burns down because of climate catastrophe is
| a _real physical loss._ A increase in the value of a
| house created by aggressive speculation is an _imaginary
| gain_ that only exists because the people in the game
| believe in it.
|
| Trad economics exists to hide these differences, and make
| a hallucinatory financial reality which seems more real
| than the physical world.
|
| Crypto is an obvious symptom of this hallucinatory
| mindset. Not only are the tokens imaginary, but the
| environmental costs are catastrophic.
|
| But the rest of the economy really isn't built on firmer
| ground.
| JumpCrisscross wrote:
| > _Stocks appear to have inherent value if you don 't
| look at the entire planetary economy as a system_
|
| Stocks have value because companies have value. You can
| buy the whole company and have something with positive
| value. Buying every outstanding derivative nets out to
| zero. Buying every cryptocurrency leaves you with
| something worthless.
| thrwyoilarticle wrote:
| The fact that there is wealth to extract implies that the
| ticket that allows you to control the extraction has
| value. The company has assets and the ticket gives you
| proportionate ownership of them and proportionate control
| of where they go.
|
| >A house that burns down because of climate catastrophe
| is a real physical loss. A increase in the value of a
| house created by aggressive speculation is an imaginary
| gain that only exists because the people in the game
| believe in it.
|
| And a house that is built creates real value by taking
| land, adding materials and labour, and creating something
| worth more than the sum of its parts.
|
| I don't need to forgive all of the economic system's sins
| to explain why stocks have value.
| JumpCrisscross wrote:
| > _How one can be considered gambling and the other not?_
|
| Positive- versus zero- or even negative-sum games.
| stuxnet wrote:
| That doesn't explain anything. The broader stock market
| valuation bears no resemblance to reality and hasn't for
| a while.
|
| Crypto does have value. Not all of it, but again we could
| make the same comparison with ridiculously overinflated
| stocks like PTON or CVNA.
| JumpCrisscross wrote:
| > _doesn't explain anything. The broader stock market
| valuation bears no resemblance to reality and hasn't for
| a while._
|
| This is irrelevant to the game dynamic. (Trading stock in
| the short term _is_ usually gambling, by the way, because
| trading _per se_ is a zero-sum game.)
|
| > _we could make the same comparison with ridiculously
| overinflated stocks like PTON or CVNA_
|
| One, I can buy a Peloton. People pay for Pelotons.
| Positive sum. Two, if you go all in on Peloton stock,
| yes, you're gambling.
| stuxnet wrote:
| You're arguing semantics. No one is arguing that dumping
| all your money into Bitcoin or PTON specifically is a
| good idea.
|
| > One, I can buy a Peloton. People pay for Pelotons.
| Positive sum.
|
| Yes and once Peloton runs out of people to sell
| overpriced bikes and treadmills to, the valuation will
| (hopefully) return to reality. Uber continues to lose
| money on every ride.
|
| If you're going down the "people pay for it" route, we
| could say that people also pay for NFTs of monkey
| pictures.
| JumpCrisscross wrote:
| > _If you're going down the "people pay for it" route, we
| could say that people also pay for NFTs of monkey
| pictures_
|
| I think NFTs are silly, but they _are_ positive value
| systems. Like art.
| danrocks wrote:
| You just got lucky. It is time everyone in crypto
| acknowledge that.
| kurthr wrote:
| Even if you think BTC with limited coinage is valid (vs
| Dogecoin which is unlimited), how can you believe an algo
| "stable coin" like UST is after the iron.finance failure?
| scoofy wrote:
| Good for you. People like you will make money. That's how
| _all_ speculative bubbles form... nobody would join them if
| there weren 't _highly visible_ gains in wealth, but they
| are effectively zero-sum. Unless the product creates value,
| independent from speculative value, _it 's a bad investment
| period_.
|
| The entire reason we were banging our drums was _exactly
| because_ people made money, but the music will stop, and
| when it does, all that value disappears. There is nothing
| wrong with crypo _as a commodity_. If you need it to build
| something with, fine, but _it 's not a wealth creating
| asset_. It's a commodity, which is effectively _never_ an
| investment vehicle.
| noahc wrote:
| Are there other examples of commodities that turned into
| investments? Tulips? Is that how all many bubbles form?
| bulkprotocol wrote:
| Unironically as a Nigerian Bitcoin has been a god send. I
| was and am completely skeptical about crypto given that I
| believe 99.9% are basically complete scams. However, the
| idea of a censorship resistant layer of money transfer
| with no intermediary has worked wonders when our
| government was restricting access to our own money in our
| bank accounts. Will Bitcoin be that in the future? Who
| knows, but the demand is there for sure if you live in a
| society like this.
| otterley wrote:
| Can't Nigerians open bank accounts in a foreign country?
| Why did you need cryptocurrency to achieve your goals?
| scoofy wrote:
| There are lots of books on the history of financial
| downturns.
|
| https://www.goodreads.com/book/show/6372440-this-time-is-
| dif...
| gfodor wrote:
| The crash was in a non-appreciating asset.
| jiggawatts wrote:
| "I played Russian roulette and won, you should try it
| too!" is not a very convincing argument.
|
| Nonetheless, the winners think they're winners because
| they made the right choices and will try to convince
| others to follow suit.
| lupire wrote:
| It's not Russian roulette. It's "let's all shoot each
| other and whoever wins gets all the stuff".
| kareemsabri wrote:
| Don't people trade in commodities though? Corn and soy
| and other things fluctuate in price because of their
| utility and changes in supply and demand, no?
| cam0 wrote:
| Trading != Investing
| scoofy wrote:
| The commodities trade is driven by _people needing those
| commodities_. Right? Like, Kellog and Absolut _need_
| wheat. They _need_ them because their business relies on
| them. They are willing to pay a premium, to make sure
| their supply will be there when it 's time to make cereal
| or vodka.
|
| (interesting aside, the best heuristic i ever learned on
| how to get good vodka, look up the manufactures
| headquarters/operations location on google maps, and if
| you don't see grain silos, don't buy the vodka)
|
| Who _needs_ bitcoin? Honestly not many people right now.
| The speculative boom is that, in the future, it becomes
| internet-cash. Then people will need it, they 'll want it
| a lot to buy things in the internet, _and that 's fine_.
| If they do, then the value will go up.
|
| However, _aside from the fact that bitcoin is absolutely
| not able to handle cash-like transactions at all_ , there
| is still no reason for _normal people_ to speculate on it
| now. If it becomes the _de facto_ internet cash of the
| future, then, cool, you just exchange for it in the
| future.
|
| The idea that anyone could ever anticipate the future
| demand of a trivially replaceable ledger of exchange
| is... honestly insane. I'm not saying it's not worth
| speculating on, but please, god, don't put any serious
| portion of your investment portfolio in those types of
| arbitrary bets!
| nostrademons wrote:
| "Who needs bitcoin? Honestly not many people right now."
|
| Worldwide, lots of people.
|
| There's folks in Venezuela and Zimbabwe who need Bitcoin
| because their national currencies are hyperinflating.
|
| There's folks in El Salvador who need Bitcoin because it
| _is_ their national currency.
|
| There's folks fleeing Ukraine who need Bitcoin because
| their nation is at risk of being swallowed by a large
| empire.
|
| There's folks in Russia who need Bitcoin because their
| nation is doing the swallowing and getting cut off from
| the world financial system as a result.
|
| There's folks in China (and other countries) who need
| Bitcoin because their nation can't be trusted not to
| interfere with private property and it's good to have a
| little insurance policy on a thumb drive, piece of paper,
| or memorized.
|
| I think that cryptocurrency is one of those areas where
| people in the developed world look at their own life
| experience and think "Who could ever need that?", not
| realizing that they represent a _tiny_ fraction of
| humanity and that the experience of most of the rest of
| the world is dramatically different. I work on a product
| (Android) with about 3B users. I work on a tiny segment
| of it (tablets & TVs), with about 12% market share
| combined, and we're always struggling to get the larger
| org to invest in developing us. But when you run the
| numbers, you realize that the 12% of Android users with a
| tablet or TV is about 340M, _more than the entire
| population of the United States_. Similarly, the number
| of mobile phone users with accessibility needs (largely
| vision difficulties) is _also_ larger than the population
| of the United States, yet it 's awfully hard to get
| people to consider screen readers and assistive
| technologies when developing.
|
| Americans in general are wildly unaware of what a tiny
| percentage of humanity they are (for reference: about
| 4%), and this comes up over and over again in HN threads.
| [deleted]
| greiskul wrote:
| Did new wealth get created? Cryptocoins are a negative sum
| game (trading is zero sum, but since mining wastes
| resources, total has to be negative). For you to have
| gained this wealth, a group of people have to have lost
| this wealth, they might not have realized it yet.
|
| A ponzi scheme doesn't stop being a ponzi scheme because
| your personally profited from it. It doesn't stop being a
| ponzi scheme because it uses complex technology that 99% of
| people don't understand.
| lupire wrote:
| Your money came from the people who ruined their lives
| gambling.
| jaakl wrote:
| Bad carma for 7 generations
| spoonjim wrote:
| Yes, but your story only exists because you found a bag
| holder who may or may not jump off a bridge when the
| chickens come home to roost.
| diegocg wrote:
| And someone lost their life savings so that you could have
| that.
| dabeeeenster wrote:
| Dude, where did you think that money came from?
| oarsinsync wrote:
| Let's see if the next decade delivers returns like the last
| decade. There's no guarantees of that, unless you believe
| past performance is an indicator of future success.
|
| I won't be getting a house unless it does, so here's
| hoping.
|
| I also won't be in trouble if it doesn't, so here's also to
| a sensible investment strategy.
| kurthr wrote:
| Yeah, when even cryptocoin bulls consider these ponzis... you
| have to wonder if there is any rational reason for holding
| them is a greater fool and a belief that you can get out
| faster than others. I do wonder how you calculate the psychic
| cost of constantly monitoring your "stable coin", or maybe
| the answer is just the 20% annual returns on Anchor?
|
| Almost the exact thing happened with ironfinance a year ago!
| https://ciphertrace.com/analysis-of-the-titan-token-
| collapse...
| WaxProlix wrote:
| Did you mis-paste? I don't know what that east coast west
| coast tweet have to do with anything? Seems like a non
| sequiter, unless I'm missing something?
| oarsinsync wrote:
| Read through whole thread. It's about the difference
| between being kind, and being nice, and how the two aren't
| necessarily connected.
| WaxProlix wrote:
| I've read it, the thread makes its way through the
| internet every week or so. In this case, it seems to just
| muddy the waters, but obviously others disagree.
| scoofy wrote:
| It's effectively a non sequitur, yes. The point is that
| "feeling bad" for people who lost everything _does not help
| them._
|
| It is not, in fact, compassionate, at all. Compassion is
| donating to funds that help these people. Compassion is not
| participating in tax-avoidance, and participating in gov't,
| so we can have a society where people can actually lose
| everything and move on with their lives in a reasonable
| way.
|
| "Feeling bad" isn't helping anyone and is actually just a
| way of making yourself feel faux-noble.
| WaxProlix wrote:
| I agree with your stance, but think the metaphor itself
| is very strained. FWIW I also think the call to action
| here was "don't be a dick" more than it was "feel bad".
|
| Of course being a dick while advocating for better
| protections from this kind of scheme is better than
| feeling bad and doing nothing.
| crowbahr wrote:
| Just pointing out 1 dogecoin is still worth 1 dogecoin.
|
| Wow!
|
| (Also 100% agree on the compassion thing: schadenfreude for
| ostriches who thought sticking their head in the sand would
| make the objections false is only natural.)
| scoofy wrote:
| I know you're being flip, but this is _exactly_ my point.
| If you needed doge to go out and buy an NFT (if that 's
| your cup of tea) _you can still go convert your money into
| doge to buy an NFT!_
|
| The _usefulness_ of the commodity doesn 't change, just
| like apples or steel, it's something you can go out and buy
| with your savings. _Just don 't buy apples because you
| think the value of apples is going to skyrocket forever!_
| At best, apples will go up for a temporary period and then
| find equilibrium.
| AmericanChopper wrote:
| > Just don't buy apples because you think the value of
| apples is going to skyrocket forever
|
| This is terrible advice. People speculatively trade
| commodities all the time, including agriculture
| commodities. They are just as valid of an investment as
| equities are.
|
| Your advice that commodities are "not an investment
| vehicle" is simply wrong, and can be proved wrong with
| very minimal effort. I wonder how everybody you convinced
| using this rationale is going to feel when they discover
| it is nonsense...
| encoderer wrote:
| Trading != speculation != investing
| Tao332 wrote:
| Is that you Do Kwon? Is this me?
| ambrozk wrote:
| What you're saying makes zero sense. What is this
| commodity that you think will skyrocket forever, that
| people should perpetually hold as an investment vehicle?
| AmericanChopper wrote:
| "Skyrocket forever" is clearly a hyperbole. But
| commodities can and frequently do go on sustained
| rallies.
| scoofy wrote:
| Commodities can be part of a general portfolio. They can
| be a reasonable hedge on inflation and, if you are well
| aware of their markets, reasonable to speculate on. I
| would surely explain this to anyone i talked to.
|
| That said. "Buy bitcoin/eth/avalanche/shitcoin" is not a
| nuanced understanding of commodities, and the people i
| was talking to were not asking if "a responsible
| percentage of their portfolio should be dedicated to
| commodities."
|
| These are multiple people in my life, people with no
| equity positions asking if they should put some of their
| precious savings into bitcoin or etherium, period, and
| asking which one. After that we had long talks about
| investment philosophy.
| AmericanChopper wrote:
| I think you need to get better at explaining your
| philosophy then, because the entire basis of your parent
| comment is that commodities are "not an investment
| vehicle". Advice that we now seem to agree is not
| correct.
| scoofy wrote:
| I am extremely precise when i explain it. If you're going
| to espouse a position that commodities are something that
| laypersons should be fine investing in, then i'm going to
| say we have very different points of view.
| AmericanChopper wrote:
| "You are not knowledgeable enough to invest in
| commodities" is probably good advice for most people. It
| is also honest and clearly demonstrates the way in which
| you're being (perhaps rightly) judgemental.
|
| "Commodities are not an investment vehicle" is incorrect,
| and the way you are presenting this argument it is
| intentionally deceptive.
|
| The first quote seems to be the advice you mean to give
| most people. The second one seems to be the advice you
| are actually giving, with the implication that you think
| it will be more effective when it's presented
| deceptively?
| vel0city wrote:
| > People speculatively trade commodities all the time,
| including agriculture commodities.
|
| Nobody HODL's avocados, there isn't an expectation for
| bananas to go to the moon eventually.
| gitfan86 wrote:
| I don't think this is the end of crypto. I expect it to become
| a permanent competitor to casinos and the lottery. So I hope
| that people who have been wiped out understand that they can
| jump in again someday and hopefully pick the next winner.
| drexlspivey wrote:
| the r/terraluna sub is pretty wild right now
| Barrin92 wrote:
| I think one can have compassion but there is also no need to
| infantilize people. It's not idiocy that drives people to this,
| it's _greed_. It 's the idea of obtaining wealth without work,
| of speculation, and the thrill of what is plainly gambling.
| That is a vice in many traditions for a reason, and we would do
| well rather than just being compassionate to create a culture
| that doesn't tolerate it.
| slg wrote:
| >It's not idiocy that drives people to this, it's greed. It's
| the idea of obtaining wealth without work, of speculation,
| and the thrill of what is plainly gambling.
|
| Is it greedy to have a 401k? People and companies have been
| pushing crypto as a reasonable investment for years. For
| example, it felt like crypto took the place of beer as the
| primary advertiser during this year's Super Bowl. It isn't
| all crypto assholes sitting at the top of Ponzi schemes who
| have been and will be hurt. Plenty of normal people only put
| their money in because they saw Matt Damon and Larry David
| talk about it on TV like any other traditional investment
| vehicle.
| femto113 wrote:
| Protecting people from foreseeable disaster is not the same
| as infantilizing them, and greed doesn't explain why we need
| laws requiring seat belts and prohibiting unsubstantiated
| claims on herbal "remedies" and warnings that hot coffee is
| hot. A big part of the value of society is the accumulated
| experience of "seemed like a good idea at the time but
| wasn't", but only if we make sure that experience is shared
| with the next generation of tulip bulb speculators or beanie
| baby collectors before things get out of hand again.
| sremani wrote:
| I will gloat and dance on graves of assholes who mocked me
| "ngmi". I would be graceful and compassionate to those crypto
| supporters who did not call others names. At the end of the
| day, the people you meet on your way up are the same people you
| meet on your way down. If you were asshole on way up, you made
| your bed.
| chillacy wrote:
| Case in point, some old tweets from Luna founder Do Kwon:
|
| https://www.yahoo.com/news/terrausd-founder-kwon-mocked-
| econ...
| anm89 wrote:
| Yeah, that guy definitely got what he deserved here. What a
| scumbag.
|
| He would respond to people pointing out these problems in
| the past by saying he doesn't talk to poor people.
|
| Hope he's bankrupt although I doubt it.
| AmericanChopper wrote:
| > I think the elephant in the room is the self harm that is
| happening
|
| What is this even supposed to mean? Any large enough
| institution that involves risk is going to involve suicide,
| because some people when harmed will choose suicide. Some
| sports fans are harmed when their team loses, some are harmed
| so greatly that they commit suicide. Is fan suicide the
| elephant in the room for professional sports? Some people are
| harmed when a relationship breaks up, _many_ of them are harmed
| so much that they commit suicide. Is suicide the elephant in
| the room of interpersonal relationships? Is there some
| fundamental problem with romance or sports that must be
| addressed to prevent further suicides?
| nullc wrote:
| Many people find it harder to be compassionate when they gave
| out reasoned warnings in advance only to find themselves
| targeted with vicious attacks.
|
| This doesn't take away from anything you said, -- but it might
| help understand why people who seem to be gloating aren't
| necessarily doing it because they enjoy anyone's suffering.
| aaomidi wrote:
| Honestly? Self harm is happening because we refuse to give
| everyone shelter and food.
|
| I really don't care what some rich asshole is going through.
| Well. Previously rich asshole.
| stickfigure wrote:
| Are there other algorithmic stablecoins? Who is next?
| [deleted]
| IdEntities wrote:
| The one I've seen mentioned most often is DAI.
| mingw__ wrote:
| DAI isn't an algostable. It's overcollateralized, so to mint
| $1.00 of DAI, you generally need $1.50 of crypto or
| centralized stablecoin.
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