[HN Gopher] Another stablecoin loses peg - DEI team working to r...
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Another stablecoin loses peg - DEI team working to restore the peg
Author : marban
Score : 190 points
Date : 2022-05-17 11:24 UTC (11 hours ago)
(HTM) web link (finbold.com)
(TXT) w3m dump (finbold.com)
| NelsonMinar wrote:
| Not to discount the hilarious news but DEI is pretty small beer,
| a market cap of about $65M before the collapse.
| https://www.bloomberg.com/news/articles/2022-05-16/another-s...
|
| Tether is the big stablecoin, about $76B now (down from $83B).
| They've consistently lied about how much real capitalization they
| have backing it. When it collapses it will probably bring most of
| the cryptocurrency market with them.
| Animats wrote:
| Yes, Tether's the big one.
|
| Tether broke its peg last week, but recovered. That was a
| shock.
|
| The risk for Tether is that, while people may not be dumping
| Tether, they're not likely to put new money into it. A slow
| outflow will eventually drain the partial reserves.
| zeven7 wrote:
| This coin is rank #2858 on Coin Market Cap. This is non-news.
| graeme wrote:
| Someone may be practicing for peg breaks and/or gaining capital
| for the big one (Tether). The more losses and panic, the easier
| an attack
| grnmamba wrote:
| DEI seems to be a really tiny coin.
| bandyaboot wrote:
| Isn't the point of a "stablecoin" to remain stable against its
| target? Why bother trying to restore the peg...even if they do,
| it doesn't change the fact that it's not "stable". You failed--
| give it up.
| fsociety999 wrote:
| I have noticed that people come on here to gloat about things
| like this due to the pure hatred of crypto flowing through their
| veins without realizing that they are cheering on regular people
| suffering ultimately at what will be the expense of big banks and
| Wall Street and governments.
|
| What I mean is when these cryptos have problems or are hacked,
| regular people are the ones who stand to lose everything in most
| cases.
|
| You can believe that people are dumb for "falling for the scam"
| in the first place and deserve it, but if you really believe that
| then I feel sorry for you.
|
| It's pretty obvious and has been for quite some time that the
| ultimate goal here is for a central bank digital currency (CBDC),
| and stories like this as well as the UST collapse play right into
| that hand.
|
| I guess what I'm saying is be careful what you wish for. A
| government/central bank issued digital currency will be far worse
| for privacy and security than any of these insignificant
| stablecoins. Imagine the government deciding when and where you
| are allowed to access your money or what you are allowed to spend
| it on and what items or stores you are allowed to shop for/in.
|
| I feel like it is even possible that Wall Street is BEHIND the
| collapse of these stablecoins. They couldn't pay for better press
| to help convince the public that a CBDC is necessary for the
| future. I suspect the CBDCs are already ready to go, but their
| last step is convincing the public they need one. The push for a
| cashless society has been going on for a number of years now and
| seems amplified lately.
| aabhay wrote:
| My opinion on why this particular community on HN is interested
| in crypto collapse stories is a) that we are probably embedded
| in the tech world already so a "happy" story (fund raise,
| adoption) just isn't notable enough. Same reason why cable news
| only covers disasters. Then b) because many folks like me
| genuinely believe that many crypto schemes are ponzis and our
| technical brains have a cognitive dissonance to something
| wrong/nonsensical being propped up as right. And then c) it's
| probably just the effect of a group dynamic whereby weakly held
| opinions are magnified in a shared setting making small things
| feel like large biases. I doubt most people here are actively
| protesting crypto or working towards its downfall.
| randomsearch wrote:
| Yes, you just nailed it. It's the cognitive dissonance. "That
| doesn't make any sense, huh" leads to getting annoyed when
| the world seems to disagree with something that you just
| can't figure out any other way.
| Jordrok wrote:
| > _It's pretty obvious and has been for quite some time that
| the ultimate goal here is for a central bank digital currency
| (CBDC), and stories like this as well as the UST collapse play
| right into that hand._
|
| I'm not really sure why you would say this. If anything, I
| would say that stories like these point much more strongly
| towards an entirely crypto-less future. Who is going to trust
| the crypto ecosystem as a whole after all these collapses?
|
| > _I feel like it is even possible that Wall Street is BEHIND
| the collapse of these stablecoins. They couldn't pay for better
| press to help convince the public that a CBDC is necessary for
| the future. I suspect the CBDCs are already ready to go, but
| their last step is convincing the public they need one._
|
| And now you're swerving into full-on conspiracy theory
| speculation territory. Get a grip, man!
| Nursie wrote:
| What I wish for is that governments hadn't sat on their hands
| when ordinary people were being scammed into these things in
| the first place. The entire cryptocurrency ecosystem represents
| a massive failure to regulate, and a massive victory of
| technical flim-flam salesmen in bamboozling the governments in
| the world into being afraid to regulate in case they strangled
| something valuable, when in fact they were allowing normal
| folks to get ripped off massively.
|
| If "regular people" are losing money, it's because "regular
| people" have been duped and regulators have been duped. It's
| sad they're losing money, but it's also entirely predictable.
|
| But do you know what? After years of being told I'm just a
| jealous idiot who doesn't understand cryptocurrency or
| blockchains by the oh-so-smart 'investors' in this space, I'm
| going to enjoy a bit of shadenfreude here, whatever you think
| of that.
|
| If the whole space collapses I will celebrate - hopefully fewer
| regular people will be duped in future.
| boplicity wrote:
| > privacy and security
|
| This is where I'm confused. What are the actual advantages that
| cryptocurrency provides that are superior to the Fed and
| similar central banks? So far, in practice, they seem to lack
| quite a lot, in terms of actual security. And, in terms of
| privacy, I don't understand how crypto provides any real-world
| advantages to most people that banks don't provide, unless you
| want to operate outside the law. What am I missing here?
| kayamon wrote:
| It's largely about inflation.
|
| Politicians can arbitrarily write blank checks to 'bail out'
| as many banks every year as they want, printing as much money
| as needed, but mostly that money goes to themselves and all
| their friends. They then lie about having done that, and if
| you press them on it they'll gaslight you to tell you that
| was all normal.
|
| As a result, all the world's evil, all the world's scams,
| they all just kinda bubble upwards. People pay off the debt
| from one stupid scam by borrowing more money. That money
| eventually comes from idk someone's 401K fund, which is 'too
| big to fail', more money gets printed, a bailout happens, and
| off we all go again.
|
| They shuffle the problems around the world so you don't see
| them. A problem in California would be a disaster, but if you
| can successfully shuffle the problem around the world to idk
| Syria, or uhh Ukraine this year isn't it, then you can simply
| drop a thermobaric weapon on them and then just carry on
| again.
|
| As long as there's a lunatic somewhere with his grubby
| thieving little hand on the money printer, furiously cranking
| out new dollars or rubles or whatever, then there's always
| more money to pay off the lies.
|
| Some people think it'd be nice if they could knock that shit
| off. It's kinda fucking up the world economy. Also some
| people may have perished.
|
| A form of money that works for everyone should be (a) freely
| tradable online, (b) backed by a real-world asset such as
| energy, (c) fair and randomly distributed in terms of
| inflation, not given to one madman, (d) open source and fully
| auditable, (e) voted upon by all parties so no one majority
| can seize power.
|
| We have this now, for this first time in our history, because
| of the Internet. It'd be nice to finally make use of it for
| something worthwhile. "The Times
| 03/Jan/2009 Chancellor on brink of second bailout for banks"
| coding_unit_1 wrote:
| How is the government (a publicly elected body that is subject
| to being held to account by that same public) telling when you
| can spend you money somehow worse than a private company
| (without any accountability) deciding their shitcoin is no
| longer allowed to trade or that they don't fancy pegging it
| properly anymore?
| svachalek wrote:
| I was with you at the beginning but let's be clear that
| algorithmic stablecoins are indeed scams. It's quite possible
| to create a perpetual motion machine, if you just forget
| friction exists, or entropy, or some other subtle law of
| physics. In the same way, algorithmic stablecoins let you sell
| nothing for something just by making the process complicated
| enough.
| zaphar wrote:
| I don't hate crypto per-se. Nor am I particularly gloating
| about it. However I _hope_ that the silver lining here is that
| this will be yet another in my evergrowing list of examples to
| share when I advise people not to get involved in crypto. It 's
| not a safe environment and the people getting hurt don't
| deserve to get hurt. The only weapon I have to help more people
| not get hurt is to use these cautionary tales to help inform
| them of the risk. The track record of crypto indicates that
| right now many governments are _better_ at the whole monetary
| policy thing than any blockchain.
|
| Will blockchains fix these problems and mitigate the worst
| facets of human nature? Maybe, but I have no reason to believe
| they will right now and every argument that they will is rooted
| in a faith based statement about the inevitability of
| technilogical progress. A faith I don't subscribe to and
| therefore is unconvincing to me.
| ourmandave wrote:
| _Will blockchains fix these problems and mitigate the worst
| facets of human nature? Maybe,..._
|
| Not sure how that will work when they power the coin of the
| realm for malware, human exploitation, etc.
| zaphar wrote:
| Like you I'm skeptical. But there are certainly things I
| have faith in that other people have no reason to believe
| so I'll allow other people their own faith based beliefs as
| well.
| stickfigure wrote:
| Due to Metcalf's Law (currencies are the poster child for
| network effects), there is room in the marketplace for only a
| small handful of cryptocurrencies. Therefore _bad_
| cryptocurrencies are effectively an attack on _good_
| cryptocurrencies.
|
| I am generally pro-crypto, but I cheer when bad
| cryptocurrencies fail. And there are is a _lot_ of bad right
| now...
| rtkwe wrote:
| The longer we prop up a crumbling tower the more people's money
| will be sunk into it when it inevitably falls. That's what
| happened in '08, we had this fantastical tower that was so big
| we couldn't let it fall so none of the people actually
| responsible felt any pain so we're building new dumber towers.
|
| https://www.smbc-comics.com/comic/the-village-and-the-tower
| biztos wrote:
| > It's pretty obvious ... the ultimate goal here is for a
| central bank digital currency (CBDC)
|
| How is that obvious, or maybe -- to whom?
|
| I think the whole CBDC idea as more like governments trying to
| pile on to the "blockchain" trend. We already have plenty of
| digitalization of our finances and it seems to be working ok,
| and while I'm sure there are some closet totalitarians who'd
| love to have a database of all transactions, I don't think CBDC
| is the way they're going to (try to) get there.
| FabHK wrote:
| > I think the whole CBDC idea as more like governments trying
| to pile on to the "blockchain" trend.
|
| No. Central bank digital currencies need not be implemented
| with inefficient blockchain technology. Privacy is a big
| issue, but the solution to that is not a public blockchain.
| CBDC could be huge in actually disintermediating many banks.
|
| Note that in some societies (eg Sweden) most transactions are
| already cashless, so the whole issue of privacy is orthogonal
| to CBDC.
| dsr_ wrote:
| A stablecoin can't lose a peg, because it is backed 1:1 with a
| fully audited deposit of the underlying currency.
|
| "But what about -" -- then it's not a stablecoin.
| jMyles wrote:
| Listen, I don't like stablecoins either.
|
| But what's the sudden obsession on HN with collateralization of
| blockchain assets?
|
| Algorithmic pegs are far more interesting and democratic. That
| scammers have discovered they can push ponzinomics out the door
| as well does not change this.
| rtkwe wrote:
| Algorithmic pegs are inherently vulnerable to mass down
| turns. Which makes them mostly useful for only very short
| term transfer use instead of even multiday holdings.
| jMyles wrote:
| DAI has just survived a massive down turn.
|
| I think your point is broadly sound, though. But it's not
| an argument against algorithmic pegs; it's an argument
| against stablecoins _in principle_. And on that point, I
| agree.
| FabHK wrote:
| No. A currency board (a stable coin that is 100% backed
| by the underlying) is theoretically sound, if boring. An
| algorithmic stable coin is fashionable nonsense.
| jMyles wrote:
| > theoretically sound
|
| "theoretically" here means, with cooperation from the
| local state, who agrees not to seize the assets. And
| cooperation from the local organized crime syndicate, who
| agrees not to seize the assets. And with a consensus-
| driven on-chain oracle representing the auditing process,
| the key custody of which is entrusted to... someone.
|
| I'm just baffled that on HN of all places we're saying we
| prefer violent paleo-economic solutions to mathematical
| verifiability.
| FabHK wrote:
| 1. There is no mathematical verifiability for a purely
| algorithmic stable coin. You're dreaming of a mirage. A
| perpetuum mobile.
|
| 2. Your mathematically verified coin offers no protection
| against the state or crime syndicate, either (see xkcd
| about 50 years ago).
| nemothekid wrote:
| > _" theoretically" here means, with cooperation from the
| local state, who agrees not to seize the assets_
|
| The local state is a boogeyman here to prop up the
| cyclical scams of stablecoins. There is nothing
| mathematical verifiable in meatspace; you only have
| trust. Somehow despite there being 0 cases of the USG
| seizing legitimate crypto assets, and several failures of
| algorithmic stablecoins, the "boring" option is still
| being fearmongered as unsafe.
|
| The mathematical verifiability of Terra was supposedly
| meant that it would only lose its peg once in a million
| years based off of thousands of simulations. Turned out,
| shockingly, mathematical verifiability and economics
| don't mix all that well and I won't be surprised if
| "mathematical verifiability" of any of these stable coins
| is NP-hard.
|
| But it's baffling than HN prefers paleo-economic
| solutions to trying to solve NP-hard problems.
| jMyles wrote:
| Casting the state as a phantom, rather than a real and
| challenging obstacle, is ignoring one of the primary
| motivations for ongoing development of the internet.
|
| Of course we don't want structures in this realm that
| rely on the predatory societal organization of humanity's
| childhood.
|
| The whole point is to move past that.
|
| I'm not saying blockchain tech does that on its own of
| course - and I think we all recognize that some of the
| asinine and childish habits of capitalism are leaking
| into crypto.
|
| Nevertheless, to be internally consistent certainly means
| that the role of the state (even if it has been on
| relatively good behavior in this limited aspect lately)
| needs to be taken seriously in the context of the system.
|
| It's far better to craft solutions that are more
| difficult for the state to compromise. How is this even
| in dispute?
|
| (Or have I misunderstood your argument?)
| jMyles wrote:
| > The mathematical verifiability of Terra was supposedly
| meant
|
| Yeah, but nobody believed that.
|
| Just like now, we all know the other shoe is going to
| drop on Tether. We all know it.
|
| Are you going to feign surprise when that happens too?
| rtkwe wrote:
| The bigger issue with the off-chain backed coins is
| verifying assets. I think it's pretty well accepted now
| that Tether was just lying about their cash reserves in
| the beginning and now don't even try to claim they're
| backed with cash but a dubious opaque mix of commercial
| debt, cash, and crypto.
| [deleted]
| Denvercoder9 wrote:
| The point of stablecoins isn't to be interesting, it's to be
| stable. Be as boring as possible, please.
| jMyles wrote:
| What proof do you need that collateralization, replete with
| shady or non-existent audits, is not a source of stability,
| and that something interesting, like approaches using pure
| mathematics, are more auditable and, in the short- and
| perhaps long-term, more stable?
|
| The dream collateralized stablecoin, audited in some
| transparent way, is still vulnerable to a good old
| fashioned heist.
|
| The gatekeeping of all projects that don't see the bank
| vault as the holy grail of community economics feels
| unbecoming of HN to me. This is creativity and science at
| work.
|
| Again, I understand that, in addition to sincere efforts to
| find an algorithmic solution, we get ponzi scum peddling
| their things. I don't understand why people buy those, and
| that's an element of human nature we can hopefully overcome
| as this process goes on.
|
| But you're watching collateralized coins fail, and your
| response is, "the only valid approach is
| collateralization!" ?
| ahtihn wrote:
| > that something interesting, like approaches using pure
| mathematics, are more auditable and, in the short- and
| perhaps long-term, more stable
|
| What approaches? Do you know of a known approach that
| isn't flawed in some way?
|
| Until proven otherwise, you can't create a stable coin
| with "pure mathematics".
| jMyles wrote:
| Obviously your comment is a sideways jab at DAI. But why?
| What's the problem? That it hasn't been able to scale? Or
| something?
|
| DAI is imperfect, but I think it's a sincere effort. It
| hasn't scammed anybody and doesn't appear capable of
| doing so.
|
| And more and better efforts will follow.
| [deleted]
| tinco wrote:
| You get it slightly wrong, the problem isn't that they're
| interesting. The problem is that they're marketed to be
| profitable.
|
| The most interesting stable coin is DAI. It's not
| particularly profitable, and it's stable and it will be
| stable no matter what.
| perryizgr8 wrote:
| If there were to exist such a stable coin, that is always 1:1
| with USD, wouldn't that negate the need for the coin? Just
| convert your crypto into actual USD whenever you want. Why have
| the intermediate stable coin step at all?
| zionic wrote:
| The good ones shouldn't be able to. What is up with HN posting
| about these nonsense "stablecoins" that are seemingly named to
| confuse people?
|
| USDT (tether) vs UST (terra), and now DAI vs the DEI.
|
| DAI kept its peg from ETH $1440 -> $50 last time and is battle-
| tested + over-collateralized. Why don't people use that?
| smiddereens wrote:
| zeven7 wrote:
| Direct backed stable coins require trust in the custodian.
| Algorithmic stable coins don't require the same trust, so there
| are benefits. And there are some that have been working well
| for a long time, and continue to work well in current market
| conditions. Look into DAI.
| AlexandrB wrote:
| In practice most people are trading one trusted party for
| another. Instead of trusting the custodian, algorithmic
| stable coins require trusting the designer/developer of the
| smart contract(s). Not just because the code could be buggy,
| but also because the developer could have missed (or lied
| about) a corner case that could lead to a death spiral as
| what happened with UST.
|
| That's not to mention that, as what's happening with DEI, the
| developers could do something like halt redemption making
| your holdings suddenly illiquid at the pegged price.
|
| DAI _seems_ safe given how over-collateralized it is. But a
| drop of 60+% in the collateral basket used by DAI is not
| inconceivable. In particular what happens if USDC 's
| custodian is found to be untrustworthy? And the value of non-
| pegged cryptocurrencies tend to be strongly correlated, so a
| mix of crypto assets is not a diverse as one would hope.
| zeven7 wrote:
| > But a drop of 60+% in the collateral basket used by DAI
| is not inconceivable.
|
| Dai has survived a 94% drop in the value of its backing
| collateral in 2018, and it maintained the peg well. It
| would, however, be a problem if the drop was _instant_ and
| sustained. But it should be able to handle the speed of the
| drop we saw in Luna.
|
| Your point is taken regarding trading types of trust with
| respect to bugs or backdoors. There is certainly a level of
| trust required there.
| AlexandrB wrote:
| Yeah, I was not aware of the liquidation mechanics used
| by DAI. Your other comment was very informative.
| salawat wrote:
| Yes, and how do you think that's attainable when the value of
| the dollar is always in flux, much of the collateral is
| corporate paper, and trying to liquidate will result in price
| movement of the underlying collateral?
|
| Frankly, it seems to me stablecoins are a market pipedream.
| rtkwe wrote:
| USDT doesn't even have to liquidate the corpo paper if it
| gets that far. Their agreement says they can just hand you
| the paper itself and call that settled, then it's up to you
| to turn that into real money.
|
| https://tether.to/en/legal/#:~:text=Tether%20reserves%20the,.
| ..
| ragingglow wrote:
| You're talking about backed stablecoins which are only a subset
| of stablecoins. In the common usage of the term, stablecoins
| include both backed stablecoins and algorithmic stablecoins.
| grey-area wrote:
| Unfortunately _none_ of these 'stablecoins' are actually
| backed 1:1 with a fully audited deposit at all.
|
| So when the crypto market crashes, some get exposed as a lie,
| which causes the crypto market to crash...
| zionic wrote:
| DAI is, it is in fact over-collateralized.
| grey-area wrote:
| We'll find out.
|
| I suspect you're wrong, unless by collateralized you mean
| they store other cryptocurrencies of questionable value as
| their collateral. In that case sure they're probably just
| overflowing with funds, until they actually need to use
| them during a crash.
| zeven7 wrote:
| Dai is backed by other cryptos, so 100% transparent, and
| it was around in the last crash in 2018 and held up well.
| At the time it was backed 100% by ETH (it is now multi-
| collateral) and maintained the peg as ETH crashed from
| $1400 down to $80/ETH.
|
| It's a very different system from UST. The backing is
| made up from collateral from borrowers. If the price goes
| too far down, their position is liquidated, with
| borrowers losing their collateral to maintain the peg.
|
| So the funds are all accounted for, and there's an active
| system to convert the funds to stabilize the peg. By
| design Dai will still be $1 when there's only $100 left
| of crypto backing the peg.
| AlexandrB wrote:
| I think this comment has it right:
| https://news.ycombinator.com/item?id=31414217
|
| DAI may still be vulnerable to a liquidity crisis. I.e.
| if there are no buyers for the collateral. This is
| probably not an issue if DAI is relatively small, but
| what if it becomes the dominant stablecoin?
| [deleted]
| _fat_santa wrote:
| I noticed that DEI is backed with BTC as one of the funding
| options. I think it's a bit risky to back a stablecoin with a
| non-stablecoin that can have wild price movements.
| kwertyoowiyop wrote:
| These are SchrodingerCoins: they may be stable or they may not,
| and until you open the box...
| whitesilhouette wrote:
| he he he
| davidcbc wrote:
| I agree, there is no such thing as a stablecoin
| lordnacho wrote:
| Wrapped coins are actually stable, aren't they? You get one
| for one, and both sides are on a blockchain.
|
| In real life there's no stablecoin. Even fully backed
| deposits can be traded at some other amount than 1:1, for
| whatever reason. Totally depends on whether you actually
| think the exchange can be done, and there are various reasons
| it might not.
| zionic wrote:
| DAI would like a word.
| davidcbc wrote:
| DAI is not backed by dollars, it is backed by other
| cryptocurrencies
| biztos wrote:
| But there could be, right?
|
| It's just that _actually_ backing your PLNC 1:1 with actual
| Zloty[0] you can actually retrieve, leaves very little room
| for the people behind the coin to get rich.
|
| [0]: https://en.wikipedia.org/wiki/Polish_zloty
| reedjosh wrote:
| Maybe someone should make a stablecoin that aims to trade
| $1 to $.9999 and the operators take their cut purely for
| auditing and maintaining the backing.
|
| Thus a true backed stablecoin where the operators have
| proper incentives.
| rsync wrote:
| Or you could run it exactly 1:1 with 7 day redemption-
| and charge varying extra percentage fees for faster
| redemption...
| reedjosh wrote:
| Sure, that'd be cool too. Basically just make the
| incentive not about using the backing to gain money.
| tyrfing wrote:
| That's a unicorn that doesn't exist because after you set
| up your Proper Incentives and take it to the Proper
| Government Agencies to get Proper Approval, they'll tell
| you "no". Then the project gets shut down and you get
| back in line to wait another 5 years for government
| regulations to maybe happen.
|
| And that's how you get sketchy companies in Bermuda
| holding $100 billion in Schrodinger's assets, as well as
| other oddities like mining companies holding billions in
| assets because an ETF holding billions in assets would be
| illegal.
| TheCoelacanth wrote:
| Why would anyone bother running a real stablecoin? Even
| real banks don't maintain 100% reserves, because if they
| did there would be no way for them to profit.
| rsync wrote:
| Because it would be fun ?
|
| If I wasn't fully occupied with rsync.net I would love to
| run some kind of utility exchange/market/bank service ...
|
| ... and I'm not involved or invested in crypto in _any
| capacity_.
| TheCoelacanth wrote:
| That would be a very expensive hobby.
| criddell wrote:
| In the US, banks also pay FDIC insurance premiums. A
| stable coin could run the same way - buy insurance on the
| portion of the deposits that they gamble with.
| davidcbc wrote:
| Yet again cryptocurrency advocates independently
| rediscover why financial regulations exist and are good
| lm28469 wrote:
| It reminds me of junior devs reimplementing existing
| functions thinking they'll be faster just to discover
| that they're either slower or not completing the task,
| but instead of losing a few hours of work we're playing
| with billions of $
| scoopertrooper wrote:
| Wouldn't really work. Stablecoins operate in highly
| correlated markets, so if one goes down then presumably,
| others should go down.
|
| Also, the government is a highly diversified insurer that
| can create more the underlying asset it is insurring.
| criddell wrote:
| > Stablecoins operate in highly correlated markets
|
| Do they have to? Is there any reason they couldn't hedge
| that money?
| gbrits wrote:
| DAI did _not_ loose peg. This story is completely fabricated.
| There 's a tendency on HN to hate on everything crypto, but come
| on. Please just look at the data.
|
| In fact, along side USDC and BUSD, DAI is (or at least has been)
| trading at a slight premium the last couple of days.
| Animats wrote:
| DEI, not DAI.
| gbrits wrote:
| mea culpa
| MrMan wrote:
| the price was hardcoded into the code, ha ha. now they changed
| the hardcoded price to .85 or something.
| bogomipz wrote:
| The post states:
|
| >"Deus Finance uses DEUS and DEI tokens for their DeFi protocol,
| where minting 1 DEI requires $1 of collateral. When redeeming,
| for instance, one DEI, users would get 80% of the value in USDC
| and 20% in DEUS if USDC was used as collateral for the creation
| of DEI in the first place."
|
| I've read this same passage 5 times now and I still don't
| understand it as this sounds very circular. Shouldn't you be able
| to redeem a stable coin for $1 in whatever currency it is pegged
| to? Could someone explain how this works?
| Animats wrote:
| Trading has been forcibly slowed down.[1] Coin goes into a
| screaming dive, volume jumps up as people exit or speculate on a
| rebound. Normal. Then, volume drops way off within an hour and
| price stabilizes around US$0.58. Not normal. With the bridges out
| of DEI offline, exiting must be harder. But that also means the
| US$0.58 price is not a real market price.
|
| [1] https://coinmarketcap.com/currencies/dei/
| [deleted]
| zivkovicp wrote:
| Stablecoins will all collapse eventually, and then take down all
| but a few of the cryto currencies.
|
| To my understanding (I am not a crypto expert, just a casual
| observer) Stablecoins basically collateralize a certain
| percentage of the outstanding coin in order to provide the
| "peg"... so maybe 1:10 coins is backed by USD, Btc, real estate,
| or whatever... and then the exchange rate is set and as long as
| everyone plays along, it works. If an actor starts redeeming a
| significant percentage of coin for collateral, then there is less
| and less collateral to prop up the coin. Same effect if that
| collateral loses value.
|
| It is also my opinion that most crypto "has value" only because
| it is relatively liquid and can be "cashed out" to USD via an
| exchange or stablecoin. When people start to recognize the
| stablecoin scam, the price of all crypto will collapse because
| the liquidity and USD exchange will disappear in an instant.
|
| edit: same thing happened with the USD when it lost the gold
| backing (and too much redemption led to the decoupling, not
| enough collateral). In the crypto world, I would say that BTC is
| the gold equivalent that provides the collateral and legitimacy,
| so maybe a temporary panic will provide a good BTC buying
| opportunity? We will see.
| jcfrei wrote:
| The DAI algorithmic stablecoin has been around for over 2 years
| now and hasn't broken its peg (though it has fluctuated around
| $1 a lot in the beginning). All these stablecoins breaking
| their pegs usually promise some crazy yield one way or another
| and are therefore much less stable than they appear to be.
| DebtDeflation wrote:
| The whole idea of stablecoin yield is a scam.
|
| Generating yield by staking is a literal ponzi scheme.
| Generating yield by loaning means taking on default risk so
| your stablecoin is no longer stable in that you can lose
| principal.
|
| The regulators are asleep at the wheel. All the people
| posting "Yoooooooo! 20% yield on my stablecoin. Living
| large!" on Instagram will be the first to demand that the
| government "do something" when their life savings evaporates
| overnight.
| polygamous_bat wrote:
| > The DAI algorithmic stablecoin has been around for over 2
| years now and hasn't broken its peg
|
| Past performance doesn't guarantee future rewards. This same
| sentence could be said for Terra/UST up until sometimes last
| week.
|
| Afaik the two differences between DAI and UST is 1. DAI is
| backed by Eth instead of Luna, and 2. DAI is ideally backed
| to 200%, although the requirements have been adjusted
| downwards (so < 200%).
|
| So explain to me what's backing DAI except for hopes and
| prayers of cryptobros worldwide that Ethereum is gonna change
| the world someday, very soon (and probably around when it
| moves over to Eth 2.0 sometimes in the next 18 months, this
| time for sure!)
| vmception wrote:
| DAI is primarily backed by USDC actually, and then ETH.
| There is a funny argument to be made _about that_ , but you
| didn't make it.
|
| My thoughts are that the MakerDAO (DAI) community existed
| too early and didn't have other backing options, so
| gravitated towards centralized collateral for their
| decentralized stablecoin, despite the irony.
|
| There are newer communities of stablecoins with a similar
| design to DAI that chose different decentralized collateral
| options, and are functioning just as well.
|
| None of them are perfect though, usually some baggage with
| the founding team, or a shitty governance platform. But
| they're working okay.
|
| My only point here is let's just criticize the accurate
| thing.
| zaphod12 wrote:
| So that's just 1 kind of stablecoin. The other is algorithmic -
| Terra was in that model. There are many excellent descriptions
| online, but essentially the backing entity buys and sells
| another coin (Luna in the case of Terra) whose value can
| fluctuate to maintain the price of their stablecoin. They are
| kinda genius in theory and so far rather messy in practice.
| zivkovicp wrote:
| No doubt, there are a lot of brilliant minds at work in this
| space and I hope it becomes more mainstream.
|
| I'm still a bit of a skeptic though when it comes to anything
| other than Bitcoin and tend to believe that it's all just a
| liquidity game and if you can maintain the illusion of USD
| liquidity, you will keep the ball rolling and rake in a lot
| of money. Ultimately they do it so they can exchange their
| coin for USD, or maybe buy real estate, etc.
| PKop wrote:
| > a certain percentage of
|
| > ...Btc, real estate, or whatever
|
| USDC is over-collateralized by cash and US government
| securities. There is a difference between centralized (at
| least) 1:1 tokens backed by dollars, and "decentralized" algo-
| stablecoins that use convoluted exchange mechanisms and often
| lose their peg.
|
| You can deposit USDC at Coinbase, circle, other exchanges and
| get cash easily.
| SemanticStrengh wrote:
| Correct comments should not be downvoted.
| zivkovicp wrote:
| It's HN, even a slightly unpopular opinion will result in
| half of your comment history getting downvoted, especially
| on topics with fanatical followings like crypto.
| -\\_(tsu)_/-
| SemanticStrengh wrote:
| In fact I have a high respect for people that have
| negative karma accounts because of this
| zivkovicp wrote:
| I did not know that. +1
| Vladimof wrote:
| > Stablecoins will all collapse eventually, and then take down
| all but a few of the cryto currencies. To my understanding (I
| am not a crypto expert, just a casual observer) [...]
|
| These two sentences appear to contradict each other...
| zivkovicp wrote:
| I don't agree, but I see your point.
|
| The reason I say it is because currency pegs in practice
| never last forever, they all fail eventually... even the USD.
| My criticism is not toward the crypto space or any coin in
| particular but rather the idea of maintaining a long term
| stable peg.
|
| In general I'm rather bullish on the long term prospects of
| crypto currencies.
| Vladimof wrote:
| I don't know if that's true or not, but I'm glad I don't
| have to use "pegged" coins... unless they have 100% backing
| from what is being pegged.
| jerf wrote:
| This is possibly one of those rare cases when knowing a bit
| less is actually helpful.
|
| Any "stablecoin" not based on 100% hard asset redemption is a
| financial perpetual motion machine in proportion to how much
| of its market cap is not backed by hard assets. It can work
| for a while but it is fundamentally unstable and
| fundamentally guaranteed to collapse after a certain point.
| Knowing "too much" about the cryptocurrency mechanics and
| this algorithm and that detail of how they redeem and all the
| other mechanical details really reminds me of people who put
| forth very complicated mechanical perpetual motion machines
| and basically meet all objections about how perpetual motion
| is not possible by pointing at their machine and saying (in
| essense) "But look how complicated that is! You can't prove
| it doesn't work, it's too complicated!"
|
| But I don't have to. I don't need to learn the details of the
| exact obscure magnetic effect you're using or delve deeply
| into your exotic dark-matter-catalyzed fusion or theory about
| how your machine captures zero point energy or take out my
| crystals to examine your machine's chi. All I need to see is
| that energy is conserved and/or your machine is not actually
| putting out any power across long terms.
|
| Stablecoins are not possible in the long term. I don't need
| to know the exact financial machinations of this or that
| stablecoin to know that. They are fundamentally castles in
| the sky.
|
| The other problem "stablecoins" have is that there is very
| little incentive for anyone to create a coin that is actually
| hard-backed by 100% assets. In that situation, all the backer
| is doing is signing up to lose the assets once the market
| burps, the stablecoin appreciates even a bit, and everyone
| redeems them. There's this fundamental mismatch between
| incentives, a fundamental inability to peg one asset to
| another by fiat, a number of fundamental impossibilities,
| really.
|
| I find myself wondering if it comes back to the fundamental
| misapprehension shared by so many crypto advocates that
| money's value is just completely arbitrary, and easily
| changed. If so, why not just arbitrarily declare that this
| stable coin is worth one dollar? We shouldn't even need any
| backing to that claim _at all_ , since money's value is so
| arbitrary, so 10% backing in dollars and 30% backing in other
| cryptocurrencies should be _more_ than enough, right? Well,
| even if money 's value is an "opinion", it turns out the
| collective opinion of millions of people and numerous
| governments still provides the system rather a lot of mass,
| and it doesn't move around easily as they think and isn't as
| arbitrary as they think. Certainly it isn't infinitely
| strong; I'm rather a dollar skeptic myself lately. But
| there's a big difference between the concepts of a completely
| arbitrary value of low mass and any value with the mass of
| millions or billions of people and governments behind it.
| [deleted]
| WalterBright wrote:
| Pegging has never worked for fiat currencies, and I don't know
| why anyone thought this would work for cryptocurrencies.
|
| One classic example is when the US dollar was pegged to gold, and
| then the fiat dollar was inflated until the banking system
| collapsed, resulting in the Great Depression.
|
| Earlier examples are every attempt at bimetalism.
| mtoner23 wrote:
| Traders arent taking advantage of the situation. They are doing
| what they're supposed to to bring back the peg. You are supposed
| to buy up the stablecoin to restore the peg. The fact that this
| causes a death spiral is why people keep saying these projects
| are worthless.
| marban wrote:
| Can someone ELI5 why we need more than one fiat-collateralized
| stablecoin?
| ipnon wrote:
| People need a way to make dollar denominated transactions on
| blockchains. The Fed doesn't provide a way to do this natively,
| so companies have stepped in to solve the problem in various
| creative and fraught ways.
| petesergeant wrote:
| I think people are starting to think we don't even have one
| kwertyoowiyop wrote:
| "The answer to all your questions is money" - Don Ohlmeyer
| 542458 wrote:
| The big reasons I could see would be that
|
| a) you don't trust the people behind the first one (or the
| country they're based in, etc)
|
| b) the underlying technology of the new coin is more appealing
| (tx/s, smart contracts, fees, etc)
|
| That said, this is all Wild West and trusting any of these
| vendors to actually do what they say seems very risky.
| marban wrote:
| Seems like I trust neither a nor b.
| charcircuit wrote:
| For b) you can get around that by creating wrapped versions
| of a more trusted stablecoin.
| joosters wrote:
| 'Wrapping' a coin implies trusting some other person to not
| run away with them.
| charcircuit wrote:
| You can easily create a smart contract that can wrap and
| unwrap tokens. This requires no extra trust.
| pigeons wrote:
| Trust in the contract code and execution environment
| polygamous_bat wrote:
| If they exist in two different chains, they need a bridge
| which is very centralized.
| UncleMeat wrote:
| You missed c) you want to make a lot of money by creating a
| new stablecoin and granting some percentage of it to
| yourself.
| wiredfool wrote:
| The ability to create money out of thin electrons can't be
| undervalued.
|
| If you're 80% collateralized and 1% is fu money, there's no
| defense against going to 78% collateralized if the code
| allows it.
| zaphar wrote:
| The code can't exactly prevent it unless your collateral
| is another crypto asset but then you can't peg against
| something like the Dollar because the crypto asset is
| guaranteed to fluctuate in price. Code can't enforce
| anything outside of the blockchain. It has to rely on an
| oracle and oracles can lie.
| phire wrote:
| It's profitable to launch new stablecoins.
| FabHK wrote:
| I think fully collateralised stable coins (the only ones that
| are stable) are not very profitable, in particular in times
| of negative rates. The Swiss central bank, for example,
| charges 0.75% p.a. to hold onto your CHF.
|
| https://data.snb.ch/de/topics/snb/cube/snbgwdzid
| itsoktocry wrote:
| Because every second one is failing.
| NovemberWhiskey wrote:
| ... and why the most popular one (i.e. Tether) would be the
| sketchiest one?
|
| Stablecoins ought to be exceedingly boring and non-sexy. The
| key requirement ought to be "obvious, abundant and solid
| collateral", and nothing else should matter.
| dqpb wrote:
| Evolution
| zivkovicp wrote:
| So whoever is running it can scam you out of your money.
| dsr_ wrote:
| It's not a stablecoin if it doesn't have a fully audited 1:1
| reserve. There aren't any of those, so the first one will be
| the only one.
|
| "stablecoin loses peg" is an absolute proof that it wasn't a
| stablecoin any more than tranches of CDOs made high-quality
| bonds out of junk.
| mschuster91 wrote:
| > "stablecoin loses peg" is an absolute proof that it wasn't
| a stablecoin any more than tranches of CDOs made high-quality
| bonds out of junk.
|
| In the end, it's statistics (assuming that 10 out of 100
| similarly sized debts default, the expected value for such a
| CDO is 90% of the face value of all its debts) and the
| assumption there will not be any major market issues such as
| a bank run, a pandemic or war that suddenly increase the risk
| of debts going bad - or in this case, the stablecoin running
| out of the liquidity it needs to maintain the peg.
|
| CDOs and all forms of coins are essentially bets.
| whimsicalism wrote:
| Everything is a bet, even holding actual dollars.
| pru567 wrote:
| GUSD is fully backed and audited.
|
| https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-
| do...
| dsr_ wrote:
| If the statements made there are correct and complete then
| I agree that GUSD is an actual stablecoin.
| wallaBBB wrote:
| some new news while we're all waiting for USDT to lose its peg...
| prionassembly wrote:
| Banking is older than trigonometry, or even writing. All of this
| has happened with clay tablets; all of this will happen again.
| tintedfireglass wrote:
| AFAIK banking started in Italy during the Renaissance. Which is
| quite young imo. Trigonometry is way older than that.
| prionassembly wrote:
| https://michael-hudson.com/2000/03/how-interest-rates-
| were-s...
| TedShiller wrote:
| Can we at least not call them stablecoins anymore?
| thaway2839 wrote:
| Distributed Finance:
|
| > Deus Finance reacted by halting the redemption process in order
| to try and stabilize the coin
|
| The Aristocrats!
| ceejayoz wrote:
| The _losses_ are distributed.
| [deleted]
| jmyeet wrote:
| Once again, the only thing that maintains value in an asset is
| the collective belief of said value. This applies to currencies
| and other assets. It doesn't matter what assets you have backing
| a peg because there's always a trust element. Even if, say, the
| US dollar was 100% backed by gold, there'd still be a trust
| element that the government would honor redemptions. Once again,
| the US dollar has never been 100% backed by gold. It was a peg,
| which doesn't even require you to hold any gold. And FDR changed
| the peg, which was a sovereign devaluation. The same thing
| could've happened with 100% gold reserves.
|
| And what gives the US dollar its value is really the long dick of
| the US government.
|
| What we're seeing here once again if Crypto Andys learn exactly
| why the financial system is the way it is.
|
| An algorithmic stablecoin is ridiculous. Collateral helps but it
| all boils down to trust. Consider this quote:
|
| > Deus Finance reacted by halting the redemption process in order
| to try and stabilize the coin.
|
| This is exactly the sort of intervention a central bank performs
| when managing a currency. So what exactly are we gaining with
| crypto?
| dqpb wrote:
| > It doesn't matter what assets you have backing a peg because
| there's always a trust element.
|
| Presumably if you have enough assets backing it, then if people
| start mass selling you can just buy back the currency for the
| price it's pegged at.
| kristjansson wrote:
| > Traders are taking advantage of this arbitrage mismatch, buying
| up DEI coins and exchanging them for $1 worth of collateral,
| making matters worse
|
| Really? Isn't that the mechanism as intended? Why is anyone still
| selling to them at .64 if there's really an arb?
| cycrutchfield wrote:
| Who wants to play musical chairs and be left standing when the
| music stops?
| kristjansson wrote:
| No one, but the question is why a ton of arb _buyers_ were
| pushing the price _down_.
| logifail wrote:
| > Traders are taking advantage of this arbitrage mismatch, buying
| up DEI coins and exchanging them for $1 worth of collateral,
| making matters worse. Deus Finance reacted by halting the
| redemption process in order to try and stabilize the coin.
|
| Good luck with that.
|
| Who else is reminded of the story of George Soros "[making] $1.5
| billion in just a single month [in late 1992] by betting [that]
| the British pound and several other European currencies were
| priced too richly against the German deutsche mark"[0] ?
|
| [0]
| https://www.forbes.com/sites/steveschaefer/2015/07/07/forbes...
| IAmEveryone wrote:
| I don't quite understand how these traders are "making matters
| worse" by using the defining characteristic of a "stablecoin".
| If anything is making matters worse, it would seem to be the
| "reaction" of halting the redemption process.
| Tenoke wrote:
| Presumably because it would be more likely to stabilize if
| they didn't take advantage but it's designed so they would so
| one can't really complain about that.
| sp332 wrote:
| Yes, normally buying DEI would help drive demand and thus
| price back upward. The article mentions that arbitrage bots
| do this all the time and it helps maintain the peg. It's only
| a problem when it's too difficult to mint new DEI (putting
| collateral into the system).
| pas wrote:
| could you explain this in a bit more detail? why it's
| difficult to mint new DEI, or why it's difficult to put
| collateral into the system?
|
| is the incentive that "currently it trades below 1.0, so I
| buy it, then redeem it for 1.0" which should drive the
| price up, right?
|
| where does the money come from to finance this arbitrage?
| is there a redemption pool that shrinks every time someone
| executes this cycle?
| jbverschoor wrote:
| The same way we can do by organizing bank runs.
|
| They're illegal, but in reality the system is just broken
| logifail wrote:
| > The same way we can do by organizing bank runs. They're
| illegal [..]
|
| Source?
|
| Imagine we're all back in early September 2008, and one of
| us were to post that Lehman Brothers was suffering
| unprecedented losses due to the subprime mortgage crisis.
|
| Would you count that as organizing a bank run?
|
| > in reality the system is just broken
|
| Indeed. Yet another system which only reveals just how
| broken it is when you apply enough pressure.
| salawat wrote:
| Modern finance would argue it isn't broken and is working
| as designed. You're running perilously close to an
| Austrian school of thinking about currency for daring to
| suggest that everyone _should_ in theory be able to get
| their money out at the same time!
|
| Think of all the businesses you'd hamstring! All of the
| exec bonuses that wouldn't happen! Think of the traders,
| and speculators!
|
| ...I'll admit I do, and the ensuing chaos and having to
| come to terms and actually having to adjust the the
| economic vote of no confidence is a favorite pass time of
| mine.
| logifail wrote:
| > You're running perilously close to an Austrian school
| of thinking about currency for daring to suggest that
| everyone should in theory be able to get their money out
| at the same time!
|
| With the amount of financial stimulus that governments
| have done in the last two years, in the event of a bank
| run there are possibly finance ministers who would simply
| _print_ the required money and drop it from helicopters
| on the mobs waiting outside the banks.
| jbverschoor wrote:
| https://www.recht.nl/44735/oproep-tot-bank-run-strafbaar
|
| 4 years of jail
| logifail wrote:
| I'm sorry I don't think I can access that content.
|
| Is it along the lines of jurisdictions that have laws on
| the books to try to prevent rumor or malicious speech
| from causing runs on the banking system?
|
| What if you're _telling the truth_ when you say a bank
| (or some other financial institution or vehicle) is
| bankrupt and that investors should withdraw their money?
|
| A bit like shouting fire in a crowded theatre, when the
| theatre actually is on fire... not a crime, more of a
| public duty.
| mytailorisrich wrote:
| These so-called 'stablecoins' are bound to end badly, frankly.
| It's the same story repeating itself again and again, just need
| to wait long enough for a new generation to come of age and
| think that past history does not apply to them.
| haasted wrote:
| Sounds a lot like the same mechanism that undid the Iron
| Finance stablecoin [0]:
|
| > One IRON token is always redeemable for $1 worth of
| collateral, which on IRON is a mixture of TITAN and the Circle
| and Coinbase-created stablecoin USDC.
|
| [0] https://thedefiant.io/iron-finance-implodes-after-bank-run/
| lalaland1125 wrote:
| It's also the same problem that UST had.
|
| Algorithmic stablecoins don't work
| yokem55 wrote:
| _Undercollateralized_ algorithmic stablecoins that use
| their own issued coin as a '1:1' collateral don't work
| because they depend on ponzi growth to maintain the
| illusion of it working.
|
| _Overcollateralized_ algo stables such as DAI are much
| more sustainable. They require substatially more of a user
| 's unrelated capital (whitelisted assets not based on the
| stablecoin's issuing protocol such as eth or wbtc which
| also have relatively deep liquidity available on the
| market) to be locked up and held as collateral to mint the
| stablecoin. And that makes drawing down the supply much
| smoother when times get rough as folks with their capital
| locked up will repay their debt on their own or have the
| market do it for them in a liquidation of locked capital.
| This repayment is what burns the supply and keeps the
| stable from falling far below peg. In fact historically,
| DAI's problem was that it would go way over peg during
| drawdowns because damand for DAI to stave off or
| participate in liquidations would push the usd price of dai
| way up.
|
| It is highly capital inefficient model, as it takes roughly
| at least $1.50 of the other asset to mint $1.00 worth of
| stablecoin, and users will usually go for a much higher
| ratio to prevent the liquidation threshold from kicking in.
| And this capital inefficiency really kneecaps growth since
| you can't mint anywhere near as much of the stablecoin, but
| it also means the protocol and thus the stablecoin is much
| more robust in downturns.
|
| Now it still has real risks because the protocol still
| depends on lively and accurate oracles to watch and report
| the collateral values, and that liquidations execute
| properly when collateral values fall enough to trigger
| them. But those risks are much more manageable compared to
| the risks undercollateralized stablecoins present.
| lalaland1125 wrote:
| Yep. DAI is stable, although I wouldn't really call it an
| algorithmic stablecoin.
| boc wrote:
| DAI _has been_ stable because the assets that are used to
| defend the 1:1 peg have been liquid. In the event of a
| credit crunch /liquidity freeze, the assets that need to
| be sold to defend the DAI peg aren't going to have an
| acceptable buyer, thus breaking the peg and causing DAI
| to fail.
|
| Everyone is thinking way too hard about this. There's no
| mathematical or economic way to create a parallel US
| currency that won't break in a credit crisis. It's called
| the Impossible Trinity [1] because it's empirically
| impossible to do the following all at once:
|
| 1. Setting a fixed currency exchange rate
|
| 2. Allowing capital to flow freely with no fixed currency
| exchange rate agreement
|
| 3. Autonomous monetary policy
|
| If you do number 1 (set a fixed currency exchange rate,
| aka 1 DAI : 1 USD), you CANNOT allow for the free flow of
| capital in and out of your exchange regime. It will
| eventually break every. single. time. Even if you're a
| massive sovereign nation, you still can't defend a peg
| against the Trilemma [2]
|
| Crypto investors should understand that they aren't up
| against ideology here or "haters", they are up against
| empirical mathematic principles.
|
| [1] https://en.wikipedia.org/wiki/Impossible_trinity
|
| [2] https://www.thebalance.com/black-wednesday-george-
| soros-bet-...
| SilasX wrote:
| DAI sacrifices 3 [A] so it should be able to meet 1 and
| 2, though, right? Much the same as GUSD maintains one by
| obligating itself to honor redemptions.
|
| [A] policy is not autonomous; new units can only be
| issued for sufficient collateral and must be destroyed
| when value falls too low, a constraint that would make a
| central bank not be regarded as autonomous.
| AlexandrB wrote:
| Interesting, this reminds me of how perpetual motion
| machines can be dismissed out of hand by citing the 2nd
| law of thermodynamics. As with plausible-seeming
| perpetual motion machines, the key to a popular
| stablecoin seems to be to make it complicated enough that
| it's difficult to analyze from first principles.
| boc wrote:
| I think you've hit the nail on the head. Stablecoins
| exist in the non-crypto world [1] and they all are slaves
| to the Trilemma - there are trillions at stake if someone
| could figure out a way around this, but, much like the
| 2nd law of thermodynamics, you can't make the math work.
| Crypto doesn't offer a technology solution to this issue
| since it's not a matter of tech, but rather financial
| math.
|
| If you're a fan of crypto and still reading, here's a
| hint at the next financial innovation after pegged
| currencies that you can try to replicate in the
| cryptoverse: XDR [2]
|
| [1] https://en.wikipedia.org/wiki/List_of_circulating_fix
| ed_exch...
|
| [2] https://en.wikipedia.org/wiki/Special_drawing_rights
| [deleted]
| [deleted]
| SilasX wrote:
| Special Drawing Rights was one of the stablecoins on the
| (recently defunct) Terra platform.
|
| You present yourself as deeply knowledgeable about these
| topics, I'm surprised you missed it:
|
| https://www.investopedia.com/terra-5209502
| Ekaros wrote:
| Isn't entire point of stablecoin that you can redeem it for the
| face value at any time? Not being able to redeem it seems like
| violating the contract or changing the rules while game is
| running...
| DebtDeflation wrote:
| Yes, a true "stablecoin" would be 100% backed by deposits in
| a known and verifiable money market account and able to be
| withdrawn into USD or other real currency on demand at a 1:1
| ratio. None of the things called stablecoins today meet this
| very simple set of criteria.
| FabHK wrote:
| Does USDC not fit that description?
| DebtDeflation wrote:
| https://en.wikipedia.org/wiki/USD_Coin
|
| >The wording on the Circle website changed from the
| previous "backed by US dollars" to "backed by fully
| reserved assets" by June 2021.
|
| >USDC reserves are regularly attested (but not audited)
| by Grant Thornton, LLP
|
| This is the same bullshit that Tether has repeatedly
| pulled.
| FabHK wrote:
| Ah, thanks for the info. I thought Coinbase was more
| reputable.
| noneeeed wrote:
| What's the difference between "attested" and "audited" in
| this context. That really sounds like a linguistic cop-
| out.
| DebtDeflation wrote:
| Read the actual report to see what they are attesting to:
|
| https://www.centre.io/hubfs/PDF/2022%20Circle%20Examinati
| on%...
|
| 1) There are 51.39 billion USDC in circulation.
|
| 2) On a particular day (the Report Date) Circle held an
| amount of USD-denominated assets at least equal to the
| number of USDC in circulation in a segregated account.
|
| Note what is absent: No statement as to what these assets
| are. No statement as to where they came from and whether
| they were in the account the day before or the day after
| the Report Date.
| Animats wrote:
| On a particular date _and time_ - 11:59 PM on March 31,
| 2022.
|
| In the crypto world, where you can borrow a few billion
| dollars for a few seconds cheaply, that doesn't mean
| much.
| vkou wrote:
| My understanding is that an attestation that you have a
| billion dollars looks at your bank balance, and observes
| that you have a billion dollars in your accounts.
|
| An audit looks at the history of your overall financials,
| to ensure that you didn't just borrow that billion
| dollars two days ago for the sole purpose of passing the
| audit. Or that you didn't, like, cash a half-billion
| dollar check from yourself to yourself, and have the
| money immediately show up in the destination account,
| before it was debited from the source account.
| dylan604 wrote:
| I attest that the last time I looked under the cushions,
| there was money there, but nobody has audited my claims.
|
| Has anybody trusted the attestations, but verified
| (audited)?
| ceejayoz wrote:
| > What's the difference between "attested" and "audited"
| in this context.
|
| Attestation: "Person X has $50 million dollars in an
| account."
|
| Audit: "Person X has $50 million dollars in an account,
| and we know how it got there, who has claims on it, and
| whether it's fairly likely to still exist tomorrow."
|
| As a concrete example:
|
| https://ag.ny.gov/sites/default/files/2021.02.17_-_settle
| men...
|
| > On the morning of September 15, 2017, Tether opened an
| account at Noble Bank. Later that day, Bitfinex
| transferred $382,446,847.71 from Bitfinex's account at
| Noble Bank into Tether's account at Noble Bank. Friedman
| conducted its verification of Tether's assets as of 8:00
| p.m. EST.
|
| https://ag.ny.gov/press-release/2021/attorney-general-
| james-...
|
| > On November 1, 2018, Tether publicized another self-
| proclaimed 'verification' of its cash reserve; this time
| at Deltec Bank & Trust Ltd. of the Bahamas. The
| announcement linked to a letter dated November 1, 2018,
| which stated that tethers were fully backed by cash, at
| one dollar for every one tether. However, the very next
| day, on November 2, 2018, Tether began to transfer funds
| out of its account, ultimately moving hundreds of
| millions of dollars from Tether's bank accounts to
| Bitfinex's accounts. And so, as of November 2, 2018 --
| one day after their latest 'verification' -- tethers were
| again no longer backed one-to-one by U.S. dollars in a
| Tether bank account.
|
| An audit would've flagged this. An attestation does not.
|
| It's like a kid who answers "are you eating cookies
| before dinner" with "no" because they stopped when you
| asked the question and are not _currently_ eating one.
| bcaffrey wrote:
| The market cap of USDC is something like $52 billion. No
| bank or banks would allow Circle to hold all that in a
| commercial bank account, so they diversified into holding
| treasuries. I don't really see the issue with that.
| DebtDeflation wrote:
| Then why not replace "US dollar denominated assets" with
| "cash and short-dated U.S. government obligations,
| consisting of U.S. Treasuries with maturities of 3 months
| or less" in the actual report and have Grant Thornton
| attest to that?
| bcaffrey wrote:
| Their website says: "USDC is fully backed by cash and
| short-dated U.S. government obligations". I'm sure they'd
| absolutely love an official audit of that, but given the
| murky regulatory environment for crypto, I'm also sure
| that Grant Thornton is refusing to do anything more than
| it already is.
|
| I admit I'm biased, I've used USDC personally &
| professionally, and I know people involved with running
| USDC. They're not evil geniuses. And even if they were,
| you could make so, so much money by breaking it ala Soros
| & the Bank of England, that I think it would've happened
| by now.
| DebtDeflation wrote:
| I'm sure Grant Thornton would be happy to do a full audit
| of Circle's assets IFF Circle was willing to hand over
| all of their banking/brokerage statements and allow them
| to contact those institutions. Verifying the quantity of
| cash and Treasuries sitting in an account, the length of
| time they have been there, and the counterparties to
| their largest transactions is trivial and doesn't
| compromise any trade secrets which is why it's such a
| huge red flag for Circle (and Tether) that they refuse to
| do this while continuing to tease that they will do it at
| some point in the indeterminate future.
| zepolen wrote:
| You don't see an issue that USDC has not had a real audit
| for that $52 billion?
|
| I could say my pencil is worth $52 billion and therefore
| I have the assets to cover $52 billion USDC and that
| would be the same as their 'transparency' reports which
| don't itemize a single asset, just an 'attestation' that
| the amount is covered.
| pojzon wrote:
| > Yes, stable currency would be 100% backed by gold
| deposits in a known and verifiable storage facility and
| able to withdrawn at on demand ratio.
|
| > None of the things called "real world currencies" meet
| today this very simple set of criteria.
|
| ---
|
| I dont own crypto but Im able to see the hypocrisy in our
| current global financial system.
| omnibrain wrote:
| > Yes, a true "stablecoin" would be 100% backed by deposits
| in a known and verifiable money market account and able to
| be withdrawn into USD or other real currency on demand at a
| 1:1 ratio.
|
| But where would be the money in that?
| lokedhs wrote:
| You could invest it in bonds issued by the central bank
| for the currency you're tied to. But that would only
| provide a stable income with essentially zero risk (since
| your binds are denominated in the same currency you're
| linking to).
|
| But that won't be enough money for these people, of
| course
| tdhoot wrote:
| That's not without risk -- you might have to sell the
| bonds at a loss if there is a run on the currency.
| izzydata wrote:
| Yea, but to me it sounds like the same problem as a bank run.
| If everyone tried to retrieve their money from the bank at
| the same time they wouldn't have enough money.
| trompetenaccoun wrote:
| That's true for banks but it's not a similar mechanism in
| any way. You should look into the term 'algorithmic
| stablecoin', these are basically a scam and don't work,
| which is why they keep losing their peg. There are other
| examples long before the media started paying attention and
| people in the crypto space have warned about this for ages.
|
| Of course, some might call fractional reserve banking a
| scam as well but what these algorithmic stablecoins are
| doing isn't the same thing as the credit creation by
| private banks. It's more like they tried to create a
| "decentralized" central bank. I put that in quotations
| because the ones I know aren't actually decentralized
| either, they just use such buzzwords to trick traders.
|
| Not all stablecoins work that way. There are more reputable
| ones like DAI or USDC. Actually the first stablecoins were
| all collateralized, the shananigans started in 2017 during
| the last bubble and now there are even more of these scammy
| projects because the market has grown so much. Adoption
| brings in a lot of newbies with money, and that in turn
| attracts charlatans of course. You can get a feel for what
| level of education the general public has when even in a
| tech forum most people don't understand anything about the
| economics and mechanisms of all these projects.
| salawat wrote:
| Correct. These exchanges are banks, which are reliant on
| statistical multiplexing. There is quite literally zero
| difference between the sets of failure states that
| "stablecoins" are vulnerable to.
|
| ...which makes you wonder: why the cryptographic overhead
| at all? Oh wait... Because places want to be banks, without
| adhering to the regulations thereof...
| throwanem wrote:
| > statistical multiplexing
|
| "Fractional reserve."
| SilasX wrote:
| I think that's confusing means and ends.
|
| The point of stablecoins is to have something that's the same
| value as a dollar, but which can interface with ("all the
| wonderful magic of") smartcontracts.
|
| One _way_ to achieve that is to have a big trusted
| organization honor redemption on demand. (GUSD and, I think
| but don 't quote me, USDC.)
|
| Another way is for an org to consistently honor _enough_
| redemptions (but not on an on-demand basis) that it trades at
| par (USDT, for now).
|
| Another (dubious, increasingly unreliable) way is for some
| cryptocurrency to automatically buy the stablecoin when it
| falls below par (TerraUSD/UST with LUNA, already failed).[1]
|
| Yet another is to issue the stablecoin only in return for a
| significant collateral buffer (with other cryptocurrencies)
| and force sellbacks when the collateral gets too close to
| critical (DAI and, I think, FEI, not to be confused with the
| DEI in this story).
|
| [1] TerraUSD's platform had the Ponzi-esque Anchor paying 20%
| returns, but is stabilizing mechanism did not (attempt to)
| depend on this in any direct sense.
| phire wrote:
| cowtools wrote:
| Well, the users did agree to the code when they bought
| $cryptocurrency
| phire wrote:
| Are all the users programmers, are they fluent with the
| language and frameworks? Could they even read the code if
| they wanted to?
|
| Even if they could read the code and understand that
| there is a mechanism in place that allows designated
| humans to pause redemption, the code says nothing about
| when and how this mechanism should be used.
|
| The user might reasonably expect such a mechanism would
| only be used in an emergency, like the network has been
| hacked, or there is a bug. They might expect that it
| would never be used for the financial advantage of the
| network operators simply because the coin has depegged
| and redemption is acting as expected.
| reedjosh wrote:
| Users that don't understand these things shouldn't jump
| into the market and buy the hottest thing.
|
| They should probably stick to long lasting products like
| BTC, ETH, or XMR.
|
| > The user might reasonably expect such a mechanism would
| only be used in an emergency
|
| A de-peg event is an emergency if there's not enough real
| value to back it.
|
| The USD was depegged from gold in the seventies for very
| similar reasons.
|
| In both cases the printer got ahead of the backing.
|
| Today we use a currency that survived a de-peg event due
| to military backing.
| coding_unit_1 wrote:
| You've neatly captured why TradFi regulation is a thing.
| ibejoeb wrote:
| > Are all the users programmers, are they fluent with the
| language
|
| That's a fair criticism, but isn't it the status quo in
| the industry in general? Surely most people with stakes
| in the markets don't truly understand the regulations or
| the innate dynamics of them.
| ipnon wrote:
| What makes central bank currencies special is that
| institutions like the Fed can "mint" or "burn" dollars
| whenever they please to maintain the "peg". In reality
| they're targeting a 2% floating rate of inflation, and the
| "minting" is done by making loans to banks that are
| motivated by economic stability instead of profit. Crypto
| stable coins don't have this luxury because this mechanism
| is founded upon trust in the central bank's governance and
| the underlying government.
| umanwizard wrote:
| Correct. You've discovered one of the many disadvantages
| with cryptocurrencies relative to traditional finance.
| stickfigure wrote:
| Also the advantage! Sometimes central banks screw up the
| minting process and severely damage the currency (see:
| Argentina, Venezuela, Zimbabwe). Historically, currencies
| are a mixed bag and we should be glad there is more than
| one.
| Fnoord wrote:
| Right, and you can add Russia to that list most likely,
| but I live in a relatively stable country.
| davidcbc wrote:
| The big stablecoins have terms of service that say they don't
| guarantee you can _ever_ redeem them.
| djbusby wrote:
| What!? how is there a TOS on a coin? Maybe TOS on a gateway
| site?
| E4YomzYIN5YEBKe wrote:
| A coin is code and the code for pretty much every stable
| coin allow the creator to prevent coins from being sent
| to/from blacklisted addresses.
|
| Tether freezes $150 million in USDT
| https://cointelegraph.com/news/tether-
| freezes-150-million-in...
|
| Circle Confirms Freezing $100K in USDC at Law
| Enforcement's Request
| https://www.coindesk.com/markets/2020/07/08/circle-
| confirms-...
| aabhay wrote:
| stable coins with redemption must be centralized at the
| point of fiat exchange.
| FabHK wrote:
| There are
|
| 1. purely algorithmic stable coins (on-chain), such as
| UST. Voodoo, if you ask me. Can be decentralised.
|
| 2. (over)collateralised stable coins (on-chain), such as
| DAI (not DEI, which is at issue here). Collateralised by
| other crypto, smart contracts, and what have you. Can
| still be decentralised.
|
| 3. collateralised stable coins (off-chain), such as USDC
| or (allegedly) USDT. Those are collateralised by good old
| USD (or treasuries or commercial paper). Those need a
| central authority that holds on to the USD (or whatever
| form the collateral takes). So, makes sense that they
| have TOS.
| Spivak wrote:
| I'm sure in the contract it says they have the right to
| "delay" redemption. Really is amazing that the crypto world
| is finally discovering bank runs.
|
| We're truly living like it's 1929.
| jMyles wrote:
| The "entire point"? What, in your mind, does redemption mean
| for an algo stable?
|
| Obviously, as we've seen, algo stables are subject to their
| own engineered ponzinomics, but I don't think redemption is
| "the entire point", or even a cognizable concept.
| zzleeper wrote:
| Wouldn't it had made more sense for the "market makers" to buy
| the coins themselves at half the price instead of waiting for
| arbitragers to just pocket the extra money?
| [deleted]
| icambron wrote:
| > buying up DEI coins and exchanging them for $1 worth of
| collateral
|
| Doesn't seem like this would be possible? When the peg fails,
| wouldn't all the people holding the coin flood the redemption
| process, immediately draining it of all USD?
|
| Or put it this way: those traders buying the coin for 80 cents
| and then redeeming it for a dollar...who are they buying it
| from and why wouldn't _they_ redeem it? They just left 20 cents
| on the table. I feel like I'm missing something.
| vkou wrote:
| I'm just guessing, here, but it's possible you're missing the
| exit strategy where the insiders are calmly walking towards
| the escape pods.
| SemanticStrengh wrote:
| for DEI there is no redemption..
| UncleMeat wrote:
| "Cryptocurrencies are trustless, distributed, and
| uncensorable."
|
| "The team behind cryptocurrency X has halted a primary use of
| the tokens."
|
| Hmm...
| EdwardDiego wrote:
| Has Binance "gone down for maintenance" yet?
|
| Typically happens when the market's scary.
| Tenoke wrote:
| The market isn't 'scary', this is a small stablecoin, and
| overall the crypto market is up today[0]. Also exchanges do
| have issues when the volume is much above the norm but this
| if anything happens as or more often when there's a lot of
| buying pressure. It's also much more of an issue with e.g.
| Coinbase than Binance. Binance are more likely to let you
| trade as you wish but temporarily disable withdraws while
| they move funds around.
|
| 0. https://www.coingecko.com/
| logifail wrote:
| > Binance are more likely to let you trade as you wish
| but temporarily disable withdraws while they move funds
| around
|
| I was under the impression that providers being able to
| "temporarily disable withdrawals" [due to lack of
| liquidity, political pressure, or indeed any other
| reason] is one of the key things that crypto didn't
| suffer from?
| Tenoke wrote:
| On-chain sure. I am not sure why you'd expect guarantees
| off-chain. If you let me handle an asset for you instead
| of handling it yourself you are bound by how I operate,
| not just how the asset itself operates. Though I am also
| not sure why you'd think liquidity doesn't matter, that's
| neither here nor there.
| logifail wrote:
| > If you let me handle an asset for you instead of
| handling it yourself you are bound by how I operate, not
| just how the asset itself operates
|
| Is it possible (just for example) to exchange fiat for
| crypto, or crypto for fiat, or indeed one crypto for
| another, without having to involve an "off-chain"*
| counterparty which comes with no guarantees?
|
| In the fiat world it would appear one can do an exchange
| "old school" by going to a physical bank branch and
| exchanging [physical] fiat for fiat (USD to EUR or
| whatever) and not have to worry that the transaction is
| going to be halted half way through due to "temporary
| restrictions" leaving you unable to access your capital.
|
| * I'm not sure I properly understand this phrase as
| you've used it
| Tenoke wrote:
| >Is it possible (just for example) to exchange fiat for
| crypto, or crypto for fiat, or indeed one crypto for
| another, without having to involve an "off-chain"*
| counterparty which comes with no guarantees?
|
| Fiat exists inherently off-chain, so you can't not
| involve an off-chain as you put it, unless you count
| stablecoins (government or non-government issued) as
| fiat. Crypto for crypto or crypto for stablecoins you can
| exchange purely on-chain via DEXs.
|
| >In the fiat world it would appear one can do an exchange
| "old school" by going to a physical bank branch and
| exchanging [physical] fiat for fiat (USD to EUR or
| whatever) and not have to worry that the transaction is
| going to be halted half way through due to "temporary
| restrictions" leaving you unable to access your capital.
|
| When you involve a bank or brokerage or paypal you do
| face those same risks (but possibly to a lesser extent)
| with fiat.
| logifail wrote:
| > When you involve a bank or brokerage or paypal you do
| face those same risks (but possibly to a lesser extent)
| with fiat.
|
| Aren't money exchange services fairly heavily regulated,
| for precisely this reason?
|
| I'm asking specifically about _unregulated_ counterparty
| risk. Which there seems to be quite a lot of in the grey
| area between crypto and, well, everything else that isn
| 't pure crypto.
| cassepipe wrote:
| There actually is a p2p marketplace for buying and
| selling of crypto called Bisq. You don't need a third
| party wallet. All trades are from/to BTC. It's a native
| Java app and it relies on the Tor Network.
| zapdrive wrote:
| Yes, you can trade crypto assets on-chain with
| decentralized exchanges like uniswap, sushiswap etc. Of
| course you can not fiat-crypto trading on chain , but you
| can do USDT-crypto trading.
| emptysongglass wrote:
| Folks, nothing has been said by the commenter that is
| non-factual. Please contribute to making HN a space of
| curiosity.
|
| The commenter didn't even take a stand on crypto vs fiat.
| The market isn't scary. The stock market also halts
| trades when things get rough.
| cycomanic wrote:
| I think the point of criticism is (as alluded by the
| previous poster) that crypto (I can't believe that this
| term now means cryptocurrency, not cryptography)
| proponents like to say that they are different from
| traditional markets which are "corrupted" by those with
| power.
|
| That said, I agree that this should be a point to debate
| not downvote.
| lalaland1125 wrote:
| This one is too small to have a larger effect on the
| market. Only 2% the size of Terra UST
| FabHK wrote:
| Sorry, I saw on Coinmarketcap a market cap of around $4bn
| for DEI, which is about 25% of UST, or 2.5% of the entire
| USD stable coin "market" (while UST was about 10%). Is
| that what you meant?
|
| https://coinmarketcap.com/currencies/dei/
| lalaland1125 wrote:
| That market cap is inaccurate because it doesn't
| represent the true supply.
|
| Note the red explanation marks that indicate how the data
| is inaccurate.
|
| https://www.coingecko.com/en/coins/dei-token has a better
| estimate.
|
| At peak, DEI was only around $100 million or so. Compared
| to roughly $20 billion for UST.
|
| You could also look at the volume. UST frequently had
| $500 million of volume each day. DEI only had a couple
| million at best. (Volume is of course also a flawed
| metric and can be faked, but the lack of effort in faking
| volume is a signal in and of itself.)
| kristjansson wrote:
| Interesting. Coingecko is basically reporting #(float) *
| price for a coin, while Coinmarketcap is reporting
| #(minted) * price. Neither of which feel perfectly
| accurate for token pricing, but do seem like reasonable
| high and low endpoints, with the gecko version closer to
| an estimate of 'other peoples money' involved in the
| coin.
| lalaland1125 wrote:
| Coinmarketcap isn't reporting the minted numbers.
| Coinmarketcap is just reporting the theoretical maximum
| in the protocol. It's a really bad estimate.
| kristjansson wrote:
| Oh, wow, really? That's even worse.
| Fargoan wrote:
| I just checked coingecko and the highest market cap Dei
| ever had was barely over $100 million
| Animats wrote:
| This is when which blockchain it's on really matters. DEI is
| on Fantom. Unclear who controls that. It's a "consensus
| blockchain", which means some group of operators has control.
|
| With UST, the issuer controlled the blockchain and shut it
| down completely.
| charcircuit wrote:
| >With UST, the issuer controlled the blockchain and shut it
| down completely.
|
| The issuer didn't control Terra. The Terra blockchain is
| unable to come to connesus about creating a new block if
| 33% of the staked Luna goes offline. You just have to get
| the largest validators to agree to go offline and it will
| stop.
| gonzo41 wrote:
| I heard on the radio a financial planner talking about the
| desperate need for regulation in the crypto space because of
| the terra/luna crash. I laughed, I mean I really laughed. I'm
| a happy no coiner, and I don't know why people are so excited
| to experience banking in the 1820's.
|
| "What do you mean the bank is out of money?"
| teekert wrote:
| Banking from 1820? I'm currently listening to a podcast,
| streaming back 40 sats per minute, supporting indie content
| creators using the btc lightning network. Banking from the
| 1820's jeez.
| hinkley wrote:
| It's easy for me to see how the 'supervillain origin story'
| for some bad actors can start with looking at how naive
| young people are and deciding to exploit it.
|
| We don't want to study history. It's boring. The immersive
| experience of doing the historical re-enactment is much
| more intense, and something you can talk about for years to
| come. Eventually to the next batch of people who want to
| learn things the hard way, until it's happened so often
| that you turn into that old person you swore you'd never be
| when you were that age.
|
| These aren't games though. Learning things the hard way can
| mean death, chronic illness or crippling debt that affects
| the entire rest of your life. School needs history lessons,
| and more of them, but there's also quality vs quantity (how
| do you make history interesting to kids who think this is
| just an old story and not a parable?)
| gitfan86 wrote:
| Same thing with DAOs democratizing governance. Have you
| been to a city council meeting? You want ANYONE to be able
| to create a proposal that everyone else has to vote on?
| krageon wrote:
| The alternatives are a corporatocracy, a dictatorship,
| etc. All of those things will be bad for you to live in,
| except if you are at the top. If you are at the top now,
| you should not weigh in here. As such, I have to assume
| you are not at the top - which makes me wonder why you
| hate yourself so much you believe you should have no
| voice. Doesn't sound healthy to me.
| gitfan86 wrote:
| No I'm not a president or dictator, so no I'm not at the
| top of anything. I would describe myself as a realist.
| And in the real world it is extremely ineffective for
| everyone to have an equal voice in all matters.
|
| Have you ever seen a road? Do you think everyone got an
| equal say and vote if and how that road was built? Cities
| that operate well and are not total disasters to live in,
| have governments that can improve infrastructure without
| having to include everyone's opinions equally. Obviously
| I think that is unfair, especially if I am the person who
| doesn't want brighter street lights on my street, but I
| don't want my city to end up like San Francisco where
| apartments cost 2 Million dollars and are surrounded by
| tent cities and taxes are super high.
| jkubicek wrote:
| I have a voice, I vote with my feet. I don't get to
| choose what products Apple makes or what games Nintendo
| releases, but I do get to choose wether I engage in their
| ecosystems.
|
| In any system I'm not obligated to participate in, I
| prefer benevolent dictatorships. If I disagree with the
| dictator, I can take my business elsewhere.
| aaroninsf wrote:
| * in the form of code.
|
| As if procedural hacks were not enough (leveraged seizure
| of stake sufficient to exploit anyone...?),
|
| who could possibly both be smart enough to _write_ a
| contract, yet dumb enough to entrust it with _their own
| money_?
|
| Trick question. That's the crypto koan of rue. The answer
| is no one. The rest is an exercise a lot of students are
| learning the hard way.
| alasdair_ wrote:
| Yes. With some kind of minimum number of initial votes
| pledged towards it and some other anti-spam measures.
| wing-_-nuts wrote:
| Yes I do. We could accomplish so much more with a direct
| democracy. This Roe v Wade thing? We could have a
| referendum and be done with it. Instead it will be fought
| over by ineffectual politicians for the next decade and
| accomplish little.
|
| Yes I realize that sometimes referendums give sub-optimal
| results (i.e. brexit), but I'd much rather live in a
| truly representative democracy that occasionally gets it
| wrong than a republic that doesn't represent the people's
| wishes _at all_.
| pohl wrote:
| Or, just like everything else, the same forces that
| brought us to this point would weaponize direct democracy
| as a denial of service attack against itself and we'd
| still be able to accomplish nothing.
| fredgrott wrote:
| funny thing about stable governments, we need irrational
| actors to slow down popular impulses to make immediate
| drastic changes.
| treeman79 wrote:
| That's what the court ruling is. The law makers need to
| decide the issue. Not the court.
| mook wrote:
| There's enough support on either side to have a
| referendum on the same topic every week. I don't see how
| that's going to be helpful in any way...
| handmodel wrote:
| Agree. Especially if you change the wording a bit.
|
| I do think something like Brexit is fine for a
| referendum. It's a singular issue and clearly very
| important. In California we have referendums for weird
| tax issues that become impossible to be informed on and
| it leads to bad outcomes.
| formerly_proven wrote:
| Brexit was decided by like, what, 1 % margin? For that
| kind of decision? Nevermind the ... "meddling" by
| foreigners and of course populists...
| kd913 wrote:
| Brexit was fine for a referendum? Are you kidding me?
|
| This Country hasn't held a fair, informed referendum.
| Whether that be the AV , Scottish independence or brexit.
|
| The game has changed, you have social media companies,
| Russia, Palantir and Cambridge Analytica types
| weaponizing misinformation.
|
| The electorate got pushed to voting against their
| interests for both Brexit and AV by absolute bullshit
| lies. (E.g. 350 million to the NHS, AV referendum killing
| babies...)
|
| At this point in time, we have seen the same thing happen
| in India, Brazil, the US, UK...
| ALittleLight wrote:
| With direct democracy we have people voting on issues
| they don't understand. With representative democracy we
| have people voting on politicians, whose positions the
| voters don't understand, to deal with issues the voters
| don't understand. Why is the latter better?
|
| Also, I would very much like to see a 5 hour free form
| interview with major political candidates. I feel like
| politicians mostly just repeat prepared remarks and don't
| really have a thorough understanding of issues and/or are
| not that smart.
| handmodel wrote:
| California essentially has a referendum system. But it's
| very confusing. Every ballot has like ~20 of them so as
| an informed person I have views on many of them. But then
| there are ones like "Should we fund this stem cell
| research project for 4B that looks into this" and people
| have no idea how to vote. Things sound good and then you
| realize it was funded by very specific group of people
| and the money would go to their own project. Even though
| we shit on legislators having super well-informed people
| with staffs actually does lead them to work out kinks and
| negotiate good policy that pleases a larger swath of
| people.
| zeven7 wrote:
| Exactly, I don't want to have to be an expert on every
| issue that needs to be decided. And I don't want to trust
| regular people with other jobs and areas of focus to be
| those experts either. Job specialization was an important
| invention. Let's give people the job of figuring out
| policy, and let's hold them accountable by regularly
| voting on whether they stay in office.
| boc wrote:
| Direct democracy is great unless you're a minority (or
| hold an unpopular policy stance) and the majority keeps
| voting to make your life worse.
| tlear wrote:
| You think voting on Roe vs Wade would solve it? Not a
| snowball chance in hell. Republic is there to make it so
| that wishes of different parts of the state that do not
| align at all do not rip the state to pieces and lead to a
| civil war. Governing by simple majority in long term
| never worked and never will.
|
| Everyone likes to talk about will of the people. Well
| here is news. Different people have different desires, in
| different regions of the country majority wants to do
| different things. Only way to keep lid on this without
| the whole thing blowing up is to have representation of
| the this and slow the process down as much as possible,
| quick changes are the most disruptive/dangerous.
| alasdair_ wrote:
| >Different people have different desires, in different
| regions of the country majority wants to do different
| things
|
| Sure. But there is a big problem when the _minority_ of
| people in an area end up getting what they want because
| the system that is in place isn 't able to properly
| enfranchise the majority.
| WalterBright wrote:
| > This Roe v Wade thing? We could have a referendum and
| be done with it.
|
| I don't think "be done with it" on abortion is remotely
| possible. The two sides are completely intractable. In my
| long life I've never heard anyone be persuaded by the
| other side.
|
| Besides, overturning RvW will not federally prohibit
| abortion. It will leave it up to the states, which will
| decide democratically.
|
| This satisfies nobody.
|
| For example, here in Washington State, there is no chance
| that abortion will be outlawed by the State. But that
| hasn't stopped major demonstrations protesting the
| Supreme Court.
| tombert wrote:
| I think part of the fear is that they will not stop at
| _just_ overturning RvW. Once it's overturned, there's a
| risk of a federal ban being proposed by congress.
| vmception wrote:
| The "two-sides" were created by Roe v Wade. There were
| always other sides, a 50 year false dilemma where you
| couldn't even bring it up because "yeah but which side
| are you on?" Glad that's over! Kind of sad about the
| inconvenience for people in areas where they expected
| something different, and I'm moderately annoyed at the
| next decade where people try to recreate the two sides at
| the state and congressional level. But it does force room
| for inspiration!
| logifail wrote:
| > It will leave it up to the states, which will decide
| democratically. This satisfies nobody.
|
| Not wishing to be unnecessarily provocative, but if each
| state were to have to set the policy isn't it likely it
| would be that which is most popular _in that state_?
|
| Wouldn't more people be satisfied overall? Even if some
| states end up hating each other a bit more ... than they
| already do
| rglullis wrote:
| I was pro-choice until my early-20s and I changed my
| view. I've met others who were in favor of complete
| freedom for abortions and now oppose them because they
| see as veiled eugenics. Not to mention the countless
| stories of women who attempted or had abortions and
| regretted it for the rest of their lives and became vocal
| opponents of it.
| [deleted]
| chasd00 wrote:
| isn't direct democracy basically a "3 wolves and a lamb
| voting on lunch" scenario?
| arcticbull wrote:
| > Yes I do. We could accomplish so much more with a
| direct democracy.
|
| Absolutely not, lol.
|
| The world is way, way too complicated for every
| individual to have a meaningful and informed opinion
| about every particular topic. That's why we delegate to
| experts in the field. There's no way I want some corn
| farmer in Iowa voting on monetary policy. Most people
| _here_ haven 't the faintest idea how monetary policy
| works. The comments here are horrifying, and this is a
| pretty elite group to begin with.
|
| Similarly there's no way I want some city-slicker who's
| never held a hoe to vote on farm policy.
|
| That's _before_ we even start in on civil rights.
|
| It's a flawed, backwards idea best left in the dustbin of
| history. It just doesn't stand up to scrutiny.
| Specialization is good. Delegation is productive.
| andreilys wrote:
| Most economists have no idea how monetary policy or
| macroeconomics works.
| arcticbull wrote:
| That's a great opinion, but even if so - you know who has
| less idea? You and me. And you know who has even less
| idea? Some random corn farmer.
|
| So why on earth would you advocate for the people who
| know the least about a topic to make the decisions? It's
| bananas.
|
| There's no janitorial staff on Apple's board. There's no
| cooks on the Facebook board. There's no software
| engineers on the Twitter board. At least in industry
| we've - more or less - accepted that the folks with the
| relevant experience should be making the relevant
| decisions. This should be no less true in governance.
| charcircuit wrote:
| >There's no software engineers on the Twitter board
|
| Yes there is. 3 out of the 11 members the board are
| clearly software engineers.
| arcticbull wrote:
| Formerly, not actively. Now they do thinks like sit on
| boards.
| ZoomerCretin wrote:
| There is currently no need to get 50%+1 voters on board
| with any arbitrary policy that
| politicians/corporations/others want passed. Hence the
| current mismatch between the policies that are passing
| and their current popularity.
|
| If 50%+1 of voters becomes the metric to hit, it will
| almost certainly be achieved. Looking at California's
| ballot referendums, it's clear that it's no impossible
| task to get voters to approve something against their
| best interest or ostensibly against their stated
| political values and beliefs.
|
| See: The ballot initiative exempting commercial property
| from Prop 13 that failed: (https://ballotpedia.org/Califo
| rnia_Proposition_15,_Tax_on_Co...), and the initiative to
| overturn California's law requiring ride share drivers to
| be classified as employees that passed:
| (https://ballotpedia.org/California_Proposition_22,_App-
| Based...).
| cycrutchfield wrote:
| Ah yes, the wonderful California ballot proposition
| system is really something that we should extend to all
| of government.
| ralusek wrote:
| Roe v. Wade being overturned is making it so states can
| vote on their own abortion policies. That's closer to a
| direct democracy and closer to local democracy. You've
| also referred to Brexit as a suboptimal result, when
| Brexit was a move about breaking away from a large
| bureaucratic body of mostly unelected decision makers.
| The EU is the least democratic body in the West, so I'm
| having a very hard time understanding exactly what it is
| you want.
|
| Also, just wanted to point out that you said you'd rather
| live in a "representative democracy" when talking about
| direct democracy. Representative democracy is another
| term for a republic.
| alasdair_ wrote:
| >Representative democracy is another term for a republic.
|
| Not really. Since we're talking about Brexit, it's worth
| noting that the UK is a representative democracy but is
| definitely not a republic.
| [deleted]
| fredley wrote:
| UK citizen here. We implemented direct democracy by
| having a largely ill informed and sometimes deliberately
| misled population vote on the highly technical and
| complicated matter of EU membership. Ask us how it's
| going.
| gitfan86 wrote:
| I would like to hold a referendum to decide the
| organization's official stance on what is more attractive
| on a man between these two options:
|
| A. Hitler Mustache
|
| B. KKK Hood
|
| Do you think everyone should have to vote on that?
| wing-_-nuts wrote:
| I don't think you understand how referendums work. They
| require a certain number of signatures to even be
| considered. There would obviously be a filtering
| mechanism for trolls.
| ceejayoz wrote:
| Until you recruit enough trolls.
| jefb wrote:
| The perquisite to successful DAO's is actually a strong
| centralized universal identity system (which is
| ironically counter to cryto-bro anarcho-capitalists
| philosophies).
|
| From there it's pretty easy to associate real political
| capital with digital decisions.
|
| E.g. Automatic n+1 "ban proposing user" option added to
| all proposals. If after n votes (where n is large) the
| sum(ban proposing user) > 0.25*sum(all other options),
| proposal is removed and user is banned until a proposal
| to unban is passed.
| duskwuff wrote:
| > Same thing with DAOs democratizing governance.
|
| Is "plutocratizing" a word? Because that's what most of
| them are actually doing -- granting power to whoever has
| purchased (or rented!) the largest number of tokens.
| pphysch wrote:
| Too many people are married to the idea of how
| "democracy" and "decentralization" works in ideal
| conditions and turn a blind eye to their practical
| faults.
|
| Makes em easy to dupe...
| idiotsecant wrote:
| Yes, many crypto projects are permissioned scams. The few
| that aren't just may change the world yet. There are plenty
| of people who continue to work on these projects as markets
| fluctuate and crypto trends come and go.
| ipnon wrote:
| The smart contracts are still ironbound to whatever they end
| up compiling to. It's the pesky humans who are ruining
| things. It can be easily argued that any cryptocurrency
| involving human intervention is vulnerable to ... human
| intervention.
| mavu wrote:
| Oh, don't worry about it, with the amount of (increasing)
| energy demand and the resulting pressure on climate change,
| Crypto is working hard at removing that bad influence.
| kybernetikos wrote:
| Yeah, those attributes describe just one point in the design
| space of tokens running on distributed ledgers. It's
| perfectly possible to create tokens that require trust, that
| have centralised elements or that can have their transactions
| easily censored.
| superkuh wrote:
| Yep. Pretty much nothing created after 2015 is an actual
| cryptocurrency. It's just the normal finance scammers
| dressing their scams up with cryptocurrency buzzword camo. It
| hasn't been possible to organically grow a cryptocurrency
| from the vulnerable starting state to usefulness in nearly a
| decade.
| driverdan wrote:
| Nice No True Scotsman fallacy.
| anonporridge wrote:
| No.
|
| This is a stablecoin which has a centralized management
| team that can halt and control activity on the
| blockchain, which is fundamentally different from a
| bitcoin or monero which is a truly decentralized system
| with no controlling organization that can change anything
| without slow bulding, mass consent of all participants in
| the network, and is anyway naturally very stable because
| of its simplicity and extremely conservative and risk
| averse development process.
|
| It's more like an Englishman yelling out that they're a
| Scotsman as they ransack the public square. It's not a
| fallacy to point out that they're simply not a Scotsman.
| [deleted]
| Spivak wrote:
| I hate this meme, "No True Scotsman" is not the same
| thing as language being descriptive and evolving over
| time. There are two concepts the parent is describing:
| the set of things described as crypto made before 2015
| and the set of things described as crypto made after
| 2015. The two groups are well defined.
|
| The fact that there isn't a formal name for the era of
| "pre-finance-bro crypto" or "first wave crypto" doesn't
| mean it's has anything to do with the scotts. The
| parent's language might be a little ambiguous but that's
| to be expected when trying to describe yet unnamed things
| and their meaning is clear enough.
|
| Willfully misunderstanding someone's words to create a
| logical flaw that isn't there should be its own fallacy.
| master-lincoln wrote:
| superkuh did not specify what exactly changed. Saying
| nothing created after 2015 is an "actual cryptocurrency"
| without justifying that somehow makes me think this might
| be a "no true Scotsman" argument.
|
| What constitutes these eras? And why do you bring that up
| when it was about a class of products not being "an
| actual cryptocurrency". I would have thought there are
| properties to the product that make it belong to the
| class, not merely when it was created.To me these unnamed
| things and their meaning you talk about are absolutely
| not clear enough.
|
| I believe you two have a point. But it doesn't come
| across...
|
| PS: I would argue in 2015 "crypto" was mostly known as
| abbreviation for cryptography and had nothing to do with
| decentralized public ledgers.
| Spivak wrote:
| I'm in no way trying to argue that the parent's
| classifications or conclusion make sense, just that it's
| not NTS because the parent isn't trying to make some
| universal assertions about crpyto in general and denying
| the exceptions but comment that the "scene" has changed
| drastically and the word cryptocurrency along with it.
|
| NTS would be something like
|
| * "All things people are calling cryptocurrencies made
| after 2015 are just finance-bro scams."
|
| * "But what about TotallyLegitCoin, it's not a scam."
|
| * "But that's not _really_ a cryptocurrency. "
| nix0n wrote:
| > organically grow a cryptocurrency ... to usefulness
|
| You might be right, but the only thing they were ever
| useful for, was money laundering.
|
| So, I don't think that drawing a greater distinction
| between the first wave of money-laundering crypto, vs the
| current wave of Ponzi crypto, is really a defense of
| either.
| superkuh wrote:
| Oh? Is that what I've been doing all these years paying
| my VPS bills and buying computer hardware? I was money
| laundering? Was it also money laundering when I donated
| to wikileaks after the US Dept. of Justice forced the
| credit card companies to blacklist them? All those
| donations to the internet archive: just money laundering.
|
| And little did I know that others were laundering their
| money through me when they donated to my websites'
| bitcoin addresses.
|
| I guess everything that isn't some incorporated third
| party transfering the money for you must be money
| laundering. Corporate persons transfer money. Human
| persons launder. Got it.
| jfb wrote:
| I mean, language is descriptive, and while it's useful to
| be able to maintain a distinction between what the world
| called "cryptocurrencies" in 2015 and what we call
| "cryptocurrencies" today, that ship has sailed.
| pas wrote:
| at the same time they are not really currencies, they are
| "stablecoins" on a many-times replicated digital machine
| playground where you can pay to add your own machine to
| interact with the others, and sometimes it turns into
| Robot Wars and the little coins get mercilessly cut up
| into bits of worthless parts that are then sold for scrap
| in the actual currency that runs the playground
| hinkley wrote:
| The first principle is that you must not fool yourself, and
| you are the easiest person to fool.
|
| While some people are really good at lying or dodging
| direct questions, many more are very good at lying to
| themselves. If you believe your own bullshit it's
| remarkably easy to look sincere while spewing it.
|
| There are certainly many scammers out there, but also some
| people who believe their own marketing material. But the
| thing is that once you start picking apart one infinite
| growth pyramid, then you start seeing them everywhere, and
| eventually respectable people start trying to draw lines
| and claim that the bullshit on this side of the line is
| obvious and bad, but the bullshit on the other side is okay
| because reasons (reason #1: we can keep this running for at
| least another 100-200 years at which point I will be long
| dead)
| formerly_proven wrote:
| > Deus Finance reacted by halting the redemption process in
| order to try and stabilize the coin.
|
| Nothing to see here, move along
| webinvest wrote:
| > Investors should keep an eye on USDT as the largest stablecoin
| and how its prices move in relation to other major coins to
| determine the direction of the markets.
|
| Has anyone here already done this analysis?
| nikolay wrote:
| In the cryptocurrency space, everything is false advertising!
| Stable coins are neither stable, nor coins!
| empathy_m wrote:
| Looking forward to seeing what's next for YC-backed Stablegains.
|
| (Glad I invested with them instead of buying UST myself as I got
| out early in the de-peg at 1:1. Thanks to investors for funding
| that and for the 15% APY while the good times lasted.)
| Fargoan wrote:
| I've been into crypto since 2012 and have never heard of this
| coin. USDX on Kava lost it's peg too but there are no articles
| about that because it's another small cap coin. Though USDX never
| was meant to follow the dollar exactly it is down significantly
| more than normal.
| vmception wrote:
| USDX is a casualty of UST implosion and bad coding. People
| found a way to arbitrage the low value UST for something in the
| USDX system.
|
| Press F to pay respects.
| bzxcvbn wrote:
| If I wanted to own something that I could always redeem for $1, I
| would buy $1.
| out_of_protocol wrote:
| you also need a bag and a plane/bus/etc ticket to give that
| heap of dollars to a desired seller. X bank dollar is not the
| same as USD, you can be locked out of your money quote easily.
| Plus all the other regular points if you want to buy or sell
| some crypto
| polygamous_bat wrote:
| I keep hearing this narrative
|
| > you can be locked out of your money quote easily.
|
| But I am curious, do you have examples that show that this is
| really the corner case I should be worried about?
| out_of_protocol wrote:
| Google examples, there are a lot of very much different
| cases, sometimes wild ones. As example, whole country of
| Russia was locked out of all non-RUB assets in their banks
| (at this moment restrictions are partially lifted), in
| Belarus you need 10+ work days to take at most 10K USD and
| 3K EUR out of bank per month.
| hef19898 wrote:
| In bith cases we talk about international sanctions. So
| you are saying that one of crypto's advantages is,
| basically, illegal finance. Nice.
| out_of_protocol wrote:
| > international sanctions
|
| Not really, in these cases banks themselves decided to
| not give away "their" money
| roenxi wrote:
| The problem is, when discussing international sanctions,
| that most of the finance is probably illegal. The US
| bans, say, economic activity in Iran. Iran bans economic
| activity in the US. Now all the finance in both economies
| is illegal.
|
| Something being illegal doesn't really say what can and
| cannot be done. Or what is a good idea. Or what is moral.
| It is a vague signpost and really only matters as far as
| things can be enforced.
| FabHK wrote:
| That is indeed one of the main "innovations" of
| cryptocurrencies: the circumvention of rules and
| regulations. (Reminds me of Uber.)
| pavel_lishin wrote:
| Yes: https://www.yahoo.com/news/canada-says-freeze-bank-
| accounts-...
| salawat wrote:
| Canada would essentially lock down financial system access
| for members of an unpopular demonstration.
|
| Sanctions are literally "your money no longer exists". Or
| it does, but we refuse to allow you to transact with it.
| Financial access is a hugely powerful diplomatic/political
| tool.
| jacobsenscott wrote:
| Certainly you can find cases of government overreach if you
| look hard enough but they aren't common. The USD is backed
| by faith in the US Government, and it would be financial
| suicide for the wealthy to destroy that faith by just
| randomly locking people out of their bank accounts.
|
| Meanwhile people get "locked out" or just lose their crypto
| far more regularly. Lost passwords, crashed drives, hacked
| online wallets, rug pulls, crashing values, fake "pegs",
| misplaced decimals during transactions, etc. 20% if bitcoin
| is forever inaccessible, and that percent will only go up,
| never down.
|
| The "you can be locked out of your fiat" cohort are the
| climate deniers of the financial world "If the earth is
| warming why was there a record low temperature somewhere
| yesterday?". "Your fiat isn't safe - just look how those
| donations to the truckers in Canada were reversed!"
| ptudan wrote:
| https://en.wikipedia.org/wiki/Convertibility_plan#Abandon
| men...
|
| Entire countries have had access to a currency completely
| pulled. Not just the US wants to use USD.
|
| Plenty of people can lose access to their money, not just
| alleged domestic terrorists (and isn't alleged is a scary
| word?).
| jacobsenscott wrote:
| I'm certainly no expert on Argentina, but I'm talking
| about dollars backed by the US government, not pesos that
| the Argentine government was pretending were worth a
| dollar. I'm sure even when the hard peg was in effect it
| would have been impossible to actually convert the bulk
| of the pesos to dollars - I'm sure no foreign bank would
| cooperate. This was no different than some crypto coin
| pretending to be worth a dollar.
| jacobsenscott wrote:
| Or you can back your "stablecoin" with dollars. For each coin
| issued put a dollar in a vault. There is no other asset on
| earth pegged to the dollar, so it is impossible to back it
| with anything other than dollars.
| vmception wrote:
| There are plenty of times when I don't want to use FEDwire,
| SWIFT, VISA, you name it. Its all dollar centric.
|
| I have plenty of clients that _only_ want to use SEPA (europe
| and some european country colonies), because they 're familiar
| with it and for some specifically because its not dollar
| centric. People fear the US will try to establish jurisdiction
| over them or inconvenience their ability to transact now or in
| the future, whether that is unfounded or not. (They're not
| legal experts, they just have chain letters forwarded around
| whatsapp)
|
| I'm sure you only want to use things that are familiar as well
| and would scoff at any client trying to do commerce in a system
| that isn't common to you.
|
| WISE (Transferwise) has extremely arbitrary limits, holdups,
| freezes, opaque issues, and a ridiculous terms of service if
| you've ever looked. Revolut is the same way.
|
| Western Union is expensive, and cumbersome.
|
| Paypal is a worse version of WISE, and is known for its
| international issues and patch work of countries it services.
| Let alone arbitrary freezes.
|
| Crypto is fast, exposure to any crypto is as short or as long
| as you want (worth saying because its a common imagined issue
| people have with using crypto because they think it'll change
| value alot over the time period they need it. its a very simple
| understanding). And people can convert it to something more
| liquid in their local economy with their local offramps. For
| many years I've basically used crypto to circumvent using
| international wires, the same transaction becoming a domestic
| wire and therefore less room for error and less arbitrary
| scrutiny. There are probably zero statistics on this. Client
| overseas pays me, I wire to USD domestically same day.
| hippich wrote:
| Similarly, if I wanted to pay someone a $1, I would give them a
| $1. Except I am trying to send some cash to my retired mother
| in Belarus for a month and a half. She is not under any
| sanctions, her bank is not sanctioned. Yet wire transfer stuck
| in some Fed's system (for the second time, first time i sent
| it, it was just returned 3 weeks later without explanation, and
| only now I know the real reason.)
|
| Traditional money transferring companies all exited Belarus
| (PayPal, Western Union, etc.) Now we exploring ability to send
| some kind of crypto, either bitcoin or stablecoin, in Belarus
| as a last ditch effort to send over some $1s...
| pphysch wrote:
| Stay safe
| BetaDeltaAlpha wrote:
| This was one of the original use cases of Crypto!
|
| Have you looked at the Stellar Project? They've got a lot of
| remittance systems running on it that may suit you. Algorand
| is also a low-cost alternative, if you're looking to
| frequently send small amounts (assuming your mother has
| access to a fiat off-ramp like Binance).
| hippich wrote:
| Unfortunately, most (all?) international transfers are no-
| go for her. So we are looking for someone inside Belarus
| who can do a cash transaction or local bank transfer
| instead.
| BetaDeltaAlpha wrote:
| Sorry to hear, best of luck
| LegitShady wrote:
| If you wanted to trade some other crypto for USD without
| incurring taxation issues, you could get a "pegged" stablecoin
| and hold that without incurring any taxation since you haven't
| redeemed anything for money, and maybe trade it for other coins
| later on if you so chose.
|
| There's function in the stablecoins in terms of crypto trading,
| but of course there's risk that your always pegged stablecoin
| isn't.
| sonicggg wrote:
| But what if you're trying to avoid tax?
| a2800276 wrote:
| Cash
| consp wrote:
| The coin will compensate you by removing your wealth so you
| avoid tax by not having any.
|
| Anyway: You will lose either by the tax agencies finding out
| (when you actually try to buy stuff) or this way.
| bliteben wrote:
| Bonus if you do both
| once_inc wrote:
| Unfortunately, dollars aren't digitally native, or easily
| transportable. It requires gatekeepers to give permission,
| which often isn't processed in real time.
| paulgb wrote:
| From the article:
|
| > Deus Finance reacted by halting the redemption process in
| order to try and stabilize the coin.
| out_of_protocol wrote:
| good thing smart contract can be checked before buying any
| amount of that coin. Also, DAI exists, which don't have
| such downside
| FabHK wrote:
| So, UST was halted, DEI was halted, but DAI won't/can't
| be halted? Good to know.
| ck_one wrote:
| DAI highly depends on USDC, ETH and BTC. If there is a
| bank run on DAI, they have to sell their collateral which
| leads to price drop in BTC/ETH which will make the
| situation worse. USDC, their other collateral, is
| controlled by a US company and therefore to some extend
| by the US government.
| out_of_protocol wrote:
| UST, USDT/USDC, DAI all use widely different methodology
| to keep themselves stable
| dralley wrote:
| >which often isn't processed in real time
|
| Crypto transactions aren't processed in real time. Most
| networks can only handle, what, less than 10 transactions per
| second? Even when you start adding additional layers there is
| only so much you can do.
|
| Realtime transactions with traditional currencies are a
| solved problem. The UK has had this for years in their
| banking system, the US will have it by the end of 2023
| (FedNOW network).
| davidcbc wrote:
| If you don't want gatekeepers I've got some bad news for you
| about stablecoins.
| whimsicalism wrote:
| Nobody is gatekeeped from buying Dai, what bad news do you
| have?
| davidcbc wrote:
| For now, until they decide to "pause" the blockchain like
| Terra. Stablecoins are centralized and your ability to
| use them is entirely dependent on the central authority
| letting you.
| out_of_protocol wrote:
| > "pause" the blockchain
|
| Good luck stopping Ethereum
|
| > Stablecoins are centralized
|
| Only some, like USDT, USDC.
|
| Just google what DAI is and how it managed.
| davidcbc wrote:
| Fine, there's one that's a DAO instead of a central
| authority, it's hard to keep track of all the different
| flavor of crypto scams. This one will collapse when a bug
| is found and someone gains full control instead.
| ironlake wrote:
| Can Ethereum Classic be stopped?
| tromp wrote:
| It can be effectively stopped as long as you control 51%
| of its hashrate. Then you can just keep appending empty
| blocks to your longest chain...
| whimsicalism wrote:
| Neither can be stopped unless you control the miners,
| what do you mean?
| whimsicalism wrote:
| you can't halt Ethereum, the only central authority is
| the dao
| polygamous_bat wrote:
| It's backed by volatile assets that can be wiped out in a
| flash crash and we all saw how well volatile asset backed
| securities work in 2008.
| whimsicalism wrote:
| > volatile assets
|
| It's backed by a multi-collateral set of assets. If they
| drop below the vault threshold for over-
| collateralization, they will be automatically auctioned
| off.
| salawat wrote:
| Auctioning causes price movement which can cascade. If
| markets were straightforward, economics would not be "tge
| Dismal Science".
| whimsicalism wrote:
| Which is why the auctions are triggered while eth still
| has considerable room to fall and also why Dai is multi-
| collateralized.
| FabHK wrote:
| What process is in place to guarantee (!) that the price
| of the collateral does not gap down below the value
| required to secure the peg? You realise that a stop loss
| order sell order triggered when an asset hits 100, say,
| turns into a market order and might be executed at
| basically any value.
| whimsicalism wrote:
| There is no guarantee. We are talking about auctions so
| your discussion of different types of orders is
| irrelevant.
|
| if it dips below $1.45 in collateral for $1, the auctions
| will be triggered and Dai collateral will shift to USDC &
| RWA. If the price slips 50% before the auction bots can
| bid (it is close to instantaneous, so it would have to be
| an extremely fast crash of more than 50% - which I'm not
| sure we've ever seen in eth/btc), then you are shit out
| of luck. This is a risk.
|
| But it's not as big of a risk as the stupid reasons these
| other stablecoins have been failing.
| FabHK wrote:
| Glad you see it: there is a risk.
|
| Note that to go from 1.45 to 1 is a drop of 31%.
| whimsicalism wrote:
| Dai is at 166% collateralization, so closer to 40%
| PKop wrote:
| USDC
| whimsicalism wrote:
| Not always an option, depending on where you live.
| onlyrealcuzzo wrote:
| It's always an option if you have a meaningful amount of
| money.
| tgv wrote:
| Or if you need to evade taxes and other tyrannical measures.
| Yes, being sarcastic.
| koonsolo wrote:
| Sometimes you don't want to have large quantities in cash. So
| you store it in a bank. But sometimes you want it outside of
| the (possibly corrupted) legal system, or want to take money
| outside of the (corrupted) country. In that case, a stable
| cryptocurrency seems to do fine.
|
| It's truly online without any government being able to
| confiscate it (if you play it smart).
|
| It all depends on the use-case.
| qgin wrote:
| I don't know enough about crypto to understand what it means that
| the team is working to restore the peg. Unless something is
| literally 100% collateralized by the thing it is pegged to, what
| code changes are there in the world that can legitimately
| maintain that peg under all conditions?
| LegitShady wrote:
| The only way to peg it is to always be willing to give someone
| a $1 for one, which will drive the price towards a $1 assuming
| you can convince people to buy them.
|
| The problem is that this coin won't give you $1 - assuming
| they're allowing redemption at all, it will give you .80c worth
| of coinbase's USDC and .20c worth of DEUS tokens. If you
| believe DEUS is going to crash, that means the value of DEI is
| 80c maximum through USDC.
|
| Coinbase is of course is dire straits as its stock has
| plummeted from ~$360 (it's all time high) in early november to
| $130 in early may and is currently sitting at around $70, so
| while it isn't a coin, the future of USDC is tied to coinbase
| and the future of USDC is unknown especially if its parent
| company is floundering and stock is down to ~20% of its high in
| november and down ~73% YTD. I would describe their situation as
| "volatile".
|
| DEUS had already lost more than 50% of its value between the
| beginning of April ($1100) and the beginning of May ($420 ha!),
| and its continuing on its way down ($200 currently).
|
| So not sure how they can maintain a peg when 20% of that peg is
| in 'currency' that is in free fall, and the other 80% is tied
| to coinbase whose stock is in freefall this year. They never
| had any currency backing it at all - it was always coinbase's
| USDC and DEUS which is the 'luna' of DEI's 'terra'.
| jacobsenscott wrote:
| There is exactly one way to peg a currency to the USD. It is to
| simply declare it is pegged, and have a super power sized
| military to force people to act like it is. Even then you are
| constrained by the geography your military controls.
| qgin wrote:
| Sounds like the dev team has a lot of work to do then
| NovemberWhiskey wrote:
| When I read "working to restore the peg" I read either
| "frantically looking for a bailout" or "frantically looking for
| a way to turn this into a rug pull".
| joosters wrote:
| > _what code changes are there in the world that can
| legitimately maintain that peg_
|
| None. But I guess it sounds good to pretend to be doing
| something useful!
| calltrak wrote:
| "There's a sucker born every minute." -- P. T. Barnum
| turtledove wrote:
| You love to see it. Every one of these is a joy to behold.
| joosters wrote:
| coinmarketcap.com says there are 7.46 billion DEI coins out there
| => a 'market cap' of about $4.4B, yet coingecko.com says there
| are only 89 million coins (implying $52M) - that's a huge
| difference. Which one is right?
|
| FWIW, there doesn't appear to be any 'real world' exchange that
| handles DEI.
| charcircuit wrote:
| >Which one is right?
|
| 88,867,859.101631 DEI
|
| https://ftmscan.com/token/0xDE12c7959E1a72bbe8a5f7A1dc8f8EeF...
|
| >there doesn't appear to be any 'real world' exchange that
| handles DEI.
|
| SpookySwap is the largest DEX on Fantom.
| timcavel wrote:
| antupis wrote:
| Tether is also brink of collapse
| https://www.ft.com/content/db9c3f32-cd91-4149-9788-95b2046be...
| eli wrote:
| Has been for years but it does seem like an extended bear
| market will finally do it and unravel most crypto
| mcintyre1994 wrote:
| Not clear. Tether is back at $0.9988, and the 9% decrease in
| that headline is market cap not price - it never got anywhere
| near 9% below peg. I'm very skeptical of Tether's collateral,
| but it seems to have withstood this and maintained its peg for
| now.
| pavlov wrote:
| As you say, there's reason to be very skeptical of their
| collateral. We know 9% of market cap has been paid out in a
| matter of days. If they were only, say, 10% collateralized by
| liquid assets, then they would be on the edge of collapse
| right now. That may be pessimistic but we can't know because
| they don't provide audited reports.
| JamesSwift wrote:
| Exactly, thats the thing people seem to look past. A
| stable-coin could theoretically be entirely stable up until
| they were absolutely insolvent. They just allow redemption
| and treat everything as business as usual until their
| collateral runs out. Then they close up shop and everyone
| else gets 0.
| FabHK wrote:
| Plus: Say everyone assumes that USDT is about 60%
| collateralised with very liquid stuff, and everyone
| holding USDT is comfortable with that
| undercollateralisation. Now USDT has just lost 10% market
| cap, so now they're just 55% collateralised (before:
| 60/100, now: 50/90). You might still be comfortable with
| that cushion, but some people might not. They'll redeem
| their USDT.
|
| Etc., we have a classic bank run.
| thaway2839 wrote:
| It's consistently 1/10th of a cent below the peg.
|
| That's not maintaining its peg. That being said, it has been
| stable at that price for several days now, but let's see what
| the next few weeks hold.
| soared wrote:
| It's peg is isn't entirely accurately described as $1.
|
| > Tether charges a 0.1% fee for withdrawals up to a maximum
| of $1,000, which means Tether is redeemable at $0.99 for up
| to $1 million, and then $1 above $1million in terms of
| money in the bank.
|
| Plus a $100k minimum to withdraw and a $150 fee for KYC.
| TheAlchemist wrote:
| This is due to the redemption fee. Per se, it's not an
| alarming sign.
|
| There are more than enough red flags with Tether already !
| phphphphp wrote:
| I'm as cynical about Tether as any sane person, but it's
| important to disambiguate between value on an exchange and
| redeemable value. If USDT is $0.90 on every exchange, but
| you can still redeem 1 USDT for 1 USD from Tether, then it
| is maintaining its peg. UST's value on an exchange was the
| peg by design, because it was algorithmic, but that's not
| true of non-algorithmic stable coins -- i.e: Tether.
| AlexandrB wrote:
| IIRC to redeem you need a minimum of 100,000 USDT. So
| being a little off the peg still loses a bunch of
| "retail" investors money.
| soared wrote:
| That is correct, and additionally:
|
| > Tether charges a 0.1% fee for withdrawals up to a
| maximum of $1,000, which means Tether is redeemable at
| $0.99 for up to $1 million, and then $1 above $1million
| in terms of money in the bank.
| ShamelessC wrote:
| Wait, so they charge an _actual_ transaction fee in
| addition to whatever "gas fees" are already in place?
|
| I mean I get it, it's all a scam. But, this feels
| so...callous.
| Tenoke wrote:
| 'Bring of collapse' is likely an exaggeration. Tether might
| fall but this is weak evidence, it lost 4-5 cents of peg for a
| few hours or less and people pulling out a few billion is not
| something it hasn't survived before.
| charcircuit wrote:
| No, it's not. It just means that the demand for tether has gone
| down.
| [deleted]
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