Basecoin, aka the Basis Protocol • Hacker News Board

Re: Basecoin, aka the Basis Protocol

#21

Post by AlexCoventry » Wed, Apr 18, 2018, 5:03 PM UTC

drcode wrote: post #13

chrisco255 wrote: post #6

MakerDAO's DAI coin (currently collateralized by ETH) has already proven quite stable in the face of several black swan events and the price of Ethereum crashing nearly 70% over the past couple of months. They're in the process of adding more assets to back the currency to improve stability. The supply is capped by a debt ceiling. There are sound principles behind the currency, and it being an ERC20 token, it's got a…

DAI coin is just diversifying risk by using multiple underlying assets- So instead of a 10% chance of the value dropping 90% due to a failure of an asset guarantor, it will just have a 90% chance of dropping 10% in value. The MakerDAO organization can likely cover this 10% loss in asset value by using their enormous capital, but this is not a sustainable strategy for creating a stable synthetic asset. I think sustain…

> sustainable synthetic blockchain assets are possible

Want do you have in mind?

Re: Basecoin, aka the Basis Protocol

#22

Post by natch » Wed, Apr 18, 2018, 5:04 PM UTC

>In English:

...(proceeds to use latin)...

Re: Basecoin, aka the Basis Protocol

#23

Post by jjallen » Wed, Apr 18, 2018, 5:05 PM UTC

The crazy thing about stable-coins is that they're really trying to replace/disrupt fiat money, more so than normal cryptocurrencies like Bitcoin or Ethereum.

"Normal" cryptocurrencies are way too volatile to actually be a store of value, as of yet, so stable coins really do fill a void and have one of the features of a fiat currency such as the U.S. dollar, that of relative stability.

Re: Basecoin, aka the Basis Protocol

#24

Post by nebulous1 » Wed, Apr 18, 2018, 5:12 PM UTC

Regarding Tether, you can be rightly suspicious but it's not just the exchange run by its corporate parent that you can trade it for a dollar on.

Re: Basecoin, aka the Basis Protocol

#25

Post by drcode » Wed, Apr 18, 2018, 5:14 PM UTC

AlexCoventry wrote: post #21

drcode wrote: post #13

Earlier quoted context omitted.

DAI coin is just diversifying risk by using multiple underlying assets- So instead of a 10% chance of the value dropping 90% due to a failure of an asset guarantor, it will just have a 90% chance of dropping 10% in value. The MakerDAO organization can likely cover this 10% loss in asset value by using their enormous capital, but this is not a sustainable strategy for creating a stable synthetic asset. I think sustain…

> sustainable synthetic blockchain assets are possible Want do you have in mind?

Well, maybe something like an ethereum on-chain dollar ETF and a decentralized oracle for determining the exchange rate, which is built out of bonds that allow people to get leverage against the underlying ether currency in exchange for providing collateral for the ETF. The problem with such a construct is that (1) the people providing the collateral will insist on high fees and (2) the amount of collateral provided will need to be limited for enough people to participate, so the design would always have a risk for a "broken peg" during extreme fluctuations.

Re: Basecoin, aka the Basis Protocol

#26

Post by mattbeckman » Wed, Apr 18, 2018, 5:16 PM UTC

This guy doesn't give Bitshares enough credit.

His review from 2014 may hold water in a low liquid scenario, but even for a mildly strong market, it's always been a better alternative than, say, the magically backed world of Tether.

Re: Basecoin, aka the Basis Protocol

#27

Post by drcode » Wed, Apr 18, 2018, 5:20 PM UTC

wellboy wrote: post #14

Why can't you simply make a stable coin where you bet long and short at the same time? Bitcoins goes up 5x, you gain from your long and lose from your short. Then, you find an algorithm that balances it out properly, done.

This scheme will always have one of these problems: (1) people will be required to lock a large amount of collateral to cover their bet that is uneconomical or (2) the peg will break during extreme fluctuations.

Re: Basecoin, aka the Basis Protocol

#28

Post by zodiac » Wed, Apr 18, 2018, 5:21 PM UTC

TD-Linux wrote: post #20

chrisco255 wrote: post #6

MakerDAO's DAI coin (currently collateralized by ETH) has already proven quite stable in the face of several black swan events and the price of Ethereum crashing nearly 70% over the past couple of months. They're in the process of adding more assets to back the currency to improve stability. The supply is capped by a debt ceiling. There are sound principles behind the currency, and it being an ERC20 token, it's got a…

The author of the OP has an article about DAI too: https://prestonbyrne.com/2018/01/11/epicaricacy/ Doesn't seem so hot to me, and what happens when the bot runs out of capital?

He has a weird definition of "break". At no point did the value of collateralized ether backing each DAI go below $1 or even anywhere close to that.

There are valid arguments to be made against a DAI-like system like capital inefficiency, the appropriateness of the bounded volatility assumptions, and maybe sell spirals, but Preston Byrne's articles include a lot of invalid arguments.

Re: Basecoin, aka the Basis Protocol

#29

Post by nebulous1 » Wed, Apr 18, 2018, 5:21 PM UTC

hisabness wrote: post #4

Preston takes an insulting tone towards the basis team. Fine to critique, but assumes the visionaries of this project are uneducated, or haven't given things proper thought. I assure you they are thoughtful...

If they actually wrote "one day, Basecoin might become so widely used as a medium of exchange that it actually starts to displace the USD in transaction volume" then they deserve whatever is thrown at them

Re: Basecoin, aka the Basis Protocol

#30

Post by zodiac » Wed, Apr 18, 2018, 5:22 PM UTC

wyas wrote: post #11

Stablecoins are fundamentally broken and unsound. Ignoring the tech-stack that achieves price stability, and looking at them purely economically, the math simply breaks down. This is a great writeup on Basecoin, but there's another player in town called Carbon ( https://www.carbon.money/ ). Directly from their whitepaper: "Carbon utilizes a decentralized schelling point scheme to achieve distributed con- sensus on Ca…

> Stablecoins are fundamentally broken and unsound. Ignoring the tech-stack that achieves price stability, and looking at them purely economically, the math simply breaks down.

You seem to be making a claim about the space of all possible stablecoin designs, and then then proceeding to demonstrate weaknesses in one particular stablecoin design.