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The Supply of Tethers at 27 November 2017 is $675M

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Re: The Supply of Tethers at 27 November 2017 is $675M

#11

Post by wslh »

55555 wrote: post #9
wslh wrote: post #4

Earlier quoted context omitted.

What do you mean with auditing the reserves yourself? Can I check your bank account to see if the amount is equal to the price*qty of your token? Regarding the auditing, not anyone, indeed very few, has the capability to audit an smart contract. Was your smart contract, oracle, and software in general audited by a recognized and third party entity? I am not saying that your approach is not correct but you need a lot…

> Can I check your bank account to see if the amount is equal to the price*qty of your token? People deposit BTC and ETH and other cryptos, and the smart contract uses the conversion rate between these and USD in order to gauge its reserve in USD. Sounds risky but definitely sounds useful and like a step in the right direction!

You answered the question yourself below but you cannot peg a currency to another if you don't have the reserves, less with cryptocurrencies where you don't have a central bank who can rescue you. This is economy 101 not an opinion. Fractional reserves can work in fiat currencies but not in the cryptocurrency world. For more information you can check research about this topic: https://scholar.google.com.ar/scholar?hl=en&as_sdt=0%2C5&q=c...

Re: The Supply of Tethers at 27 November 2017 is $675M

#12

Post by brepl »

jatsign wrote: post #3

The fatal flaw in Tether is that you have to trust the company behind it. The whole point of cryptocurrency is you shouldn't have to trust anyone. And the company itself is so opaque it should send you running to the hills. I've been working on a new cryptocurrency pegged to the dollar. It's implemented as a smart contract on the Ethereum blockchain, so you can audit it's reserves yourself, at any time, instantly. Yo…

> The fatal flaw in Tether is that you have to trust the company behind it.

How is Unum any different? Looking at the contract:

1. Contract owner can withdraw the ETH balance at any time.

2. Contract owner can control the Oracle.

3. If there's not enough ETH balance in the contract, you can't change your unum tokens back to ETH.

Re: The Supply of Tethers at 27 November 2017 is $675M

#13

Post by jatsign »

brepl wrote: post #12
jatsign wrote: post #3

The fatal flaw in Tether is that you have to trust the company behind it. The whole point of cryptocurrency is you shouldn't have to trust anyone. And the company itself is so opaque it should send you running to the hills. I've been working on a new cryptocurrency pegged to the dollar. It's implemented as a smart contract on the Ethereum blockchain, so you can audit it's reserves yourself, at any time, instantly. Yo…

> The fatal flaw in Tether is that you have to trust the company behind it. How is Unum any different? Looking at the contract: 1. Contract owner can withdraw the ETH balance at any time. 2. Contract owner can control the Oracle. 3. If there's not enough ETH balance in the contract, you can't change your unum tokens back to ETH.

1) Contract owner CANNOT withdraw ETH. 2) True. The Price Oracle is a separate contract that I want to modify to be more like Ark's superdelegate method - a certain number of delegates stake Unum and get to control the price oracle, and in return get to collect the fees from the Unum contract. There's a bit of a chicken-and-egg problem with that for now - it requires people who are interested in collecting a part of the Unum fee. 3) True, but the contract is backed by more than ETH. If the entire crypto market tanks, you'd have to wait for a recovery before you could sell your Unum.

Re: The Supply of Tethers at 27 November 2017 is $675M

#14

Post by Mouse47 »

jatsign wrote: post #8
Mouse47 wrote: post #7

Earlier quoted context omitted.

Stupid question - how do you peg your currency to the dollar if you're holding ETH, etc?

When you buy Unum, the smart contract looks up the price of ETH and gives you a dollar equivalent of Unum. So if you send in $400 worth of ETH, you get 400 Unum. Then, a month from now, if you want to sell Unum and get ETH, maybe the price of ETH is $500. So you send in your 400 Unum, and get .8 ETH.

So isn't it possible that Unum becomes insolvent? Forgive me if there's an easy place to read up on this :)

In other words, you send in $400 of ETH for 400 Unum, and if the price of ETH goes down to $300 and they try to cash out all 400 Unum...?

Re: The Supply of Tethers at 27 November 2017 is $675M

#15

Post by jstanley »

jatsign wrote: post #3

The fatal flaw in Tether is that you have to trust the company behind it. The whole point of cryptocurrency is you shouldn't have to trust anyone. And the company itself is so opaque it should send you running to the hills. I've been working on a new cryptocurrency pegged to the dollar. It's implemented as a smart contract on the Ethereum blockchain, so you can audit it's reserves yourself, at any time, instantly. Yo…

I'm glad people are working on improvements to Tether. While your project doesn't solve every problem with Tether, it still has merit as an improvement compared to Tether, at least in some aspects.

Re: The Supply of Tethers at 27 November 2017 is $675M

#16

Post by jstanley »

Mouse47 wrote: post #14
jatsign wrote: post #8

Earlier quoted context omitted.

When you buy Unum, the smart contract looks up the price of ETH and gives you a dollar equivalent of Unum. So if you send in $400 worth of ETH, you get 400 Unum. Then, a month from now, if you want to sell Unum and get ETH, maybe the price of ETH is $500. So you send in your 400 Unum, and get .8 ETH.

So isn't it possible that Unum becomes insolvent? Forgive me if there's an easy place to read up on this :) In other words, you send in $400 of ETH for 400 Unum, and if the price of ETH goes down to $300 and they try to cash out all 400 Unum...?

Yes it is possible. That doesn't make it meritless.

You might equally say "isn't it possible that Tether could just print Tethers out of thin air"? And the answer would be "yes", but people still find utility in it.

Re: The Supply of Tethers at 27 November 2017 is $675M

#17

Post by jstanley »

wslh wrote: post #11
55555 wrote: post #9

Earlier quoted context omitted.

> Can I check your bank account to see if the amount is equal to the price*qty of your token? People deposit BTC and ETH and other cryptos, and the smart contract uses the conversion rate between these and USD in order to gauge its reserve in USD. Sounds risky but definitely sounds useful and like a step in the right direction!

You answered the question yourself below but you cannot peg a currency to another if you don't have the reserves, less with cryptocurrencies where you don't have a central bank who can rescue you. This is economy 101 not an opinion. Fractional reserves can work in fiat currencies but not in the cryptocurrency world. For more information you can check research about this topic: https://scholar.google.com.ar/scholar?hl…

It's a different set of tradeoffs compared to Tether.

You gain the risk of insolvency, but you lose the risk of corruption.

Re: The Supply of Tethers at 27 November 2017 is $675M

#18

Post by Mouse47 »

jstanley wrote: post #16
Mouse47 wrote: post #14

Earlier quoted context omitted.

So isn't it possible that Unum becomes insolvent? Forgive me if there's an easy place to read up on this :) In other words, you send in $400 of ETH for 400 Unum, and if the price of ETH goes down to $300 and they try to cash out all 400 Unum...?

Yes it is possible. That doesn't make it meritless. You might equally say "isn't it possible that Tether could just print Tethers out of thin air"? And the answer would be "yes", but people still find utility in it.

I wasn't saying it was meritless, I'm just a big finance noob.

So basically Unum is trading "risk of value going down/up" for "risk of smart contract bank run"?

EDIT: Also, I'm really interested since this is the first smart contract use case that I've managed to understand. Which is good since I'm all-in on ETH :)

EDIT 2, for anyone reading this thread: here's the announcement thread, answers all the questions I had here: https://bitcointalk.org/index.php?topic=2473877.0

Re: The Supply of Tethers at 27 November 2017 is $675M

#19

Post by jstanley »

Mouse47 wrote: post #18
jstanley wrote: post #16

Earlier quoted context omitted.

Yes it is possible. That doesn't make it meritless. You might equally say "isn't it possible that Tether could just print Tethers out of thin air"? And the answer would be "yes", but people still find utility in it.

I wasn't saying it was meritless, I'm just a big finance noob. So basically Unum is trading "risk of value going down/up" for "risk of smart contract bank run"? EDIT: Also, I'm really interested since this is the first smart contract use case that I've managed to understand. Which is good since I'm all-in on ETH :) EDIT 2, for anyone reading this thread: here's the announcement thread, answers all the questions I had…

Compared to holding ETH, yes, that's the tradeoff.

Compared to holding USDT, the tradeoff is that Tether can't print themselves free USDT's, but you have a risk of a smart contract bank run.

Re: The Supply of Tethers at 27 November 2017 is $675M

#20

Post by jstanley »

jatsign wrote: post #13
brepl wrote: post #12

Earlier quoted context omitted.

> The fatal flaw in Tether is that you have to trust the company behind it. How is Unum any different? Looking at the contract: 1. Contract owner can withdraw the ETH balance at any time. 2. Contract owner can control the Oracle. 3. If there's not enough ETH balance in the contract, you can't change your unum tokens back to ETH.

1) Contract owner CANNOT withdraw ETH. 2) True. The Price Oracle is a separate contract that I want to modify to be more like Ark's superdelegate method - a certain number of delegates stake Unum and get to control the price oracle, and in return get to collect the fees from the Unum contract. There's a bit of a chicken-and-egg problem with that for now - it requires people who are interested in collecting a part of…

If I'm interested in becoming one of your price oracle delegates, what do I do?
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