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Basecoin, aka the Basis Protocol

prestonbyrne.com

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Re: Basecoin, aka the Basis Protocol

#31

Post by thesausageking »

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…

> several black swan events

That word doesn't mean what you think it does. Nothing that's happened since it launched is that unexpected.

Re: Basecoin, aka the Basis Protocol

#32

Post by JumpCrisscross »

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, but they will always have complicated risk/reward profiles that won't fully mirror the underlying asset they are designed to model

We figured out this doesn't work in the 19th century.

Reserves don't remove volatility, they just hides it. This is how banks work. And like a bank, a system of keeping "enormous capital" on the sidelines, ready to buy, works 90% of the time. When it doesn't, however, when people fear "enormous" is not enormous enough, they withdraw (i.e. sell), which prompts more selling, until eventually, since "enormous" isn't 100%, the buck breaks and the cards come crashing down.

Also people like to steal the "enormous capital," which is why we have regulations.

Re: Basecoin, aka the Basis Protocol

#33

Post by monochromatic »

mattbeckman wrote: post #26

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.

Damning with faint praise.

Re: Basecoin, aka the Basis Protocol

#34

Post by [deleted] »

zodiac wrote: post #30
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.

[deleted]

Re: Basecoin, aka the Basis Protocol

#35

Post by JumpCrisscross »

zodiac wrote: post #30
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.

Stable coins are unstable because they're inherently leveraged. This is a problem that traces back to the original "stable coin," bank deposits.

Re: Basecoin, aka the Basis Protocol

#36

Post by [deleted] »

Retric wrote: post #9
pdog wrote: post #5

Earlier quoted context omitted.

Public investors lost much more than $27B. (Private investors made money.) There were thousands of IPOs during the 1996-1999 period. Hundreds of billion of dollars were raised. The impact of the dot-com bubble in terms of actual losses was hundreds of billions or even trillions of dollars.

Net losses are different from nominal losses. If someone buys at 10, the stock hits 15$ then drops to 5$, they lost 5$ a share not 10$ a share. We are easily talking about 100's of billions in losses, but 1.7 trillion is an over estimate.

[deleted]

Re: Basecoin, aka the Basis Protocol

#37

Post by theptip »

drcode wrote: post #25
AlexCoventry wrote: post #21

Earlier quoted context omitted.

> 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…

It's not quite the same thing, but Stellar allows the implementation of pegged Assets (e.g. USD), though they are issued by an anchor that you must explicitly trust to redeem those deposits. That could be a bank or other well-capitalized institution however.

This is basically the BTC Tether model, except hopefully some anchors will step up that can actually complete an audit without breaking up with their auditors.

I'm not all that convinced that it will be possible to create a stable synthetic blockchain asset without either explicitly pegging to fiat (a la Stellar) or having a big and diverse enough slice of GDP flowing through the system so that speculative activities are a minority of transaction volume.

Re: Basecoin, aka the Basis Protocol

#38

Post by hackme1234 »

mkirklions wrote: post #12

After being shilled on /r/cryptocurrency, I dont trust any alt coin now. While this is probably going to be an economic disaster based on the redistribution, its merely another alt coin solving a non-existent problem.

>While this is probably going to be an economic disaster based on the redistribution, its merely another alt coin solving a non-existent problem.

There's plenty of demand for a stable coin so that you can trade crypto easily or save money in a stable manner.

Re: Basecoin, aka the Basis Protocol

#39

Post by JumpCrisscross »

Cryptocurrencies have reached the 1980s, with "stable coins" attempting to achieve the "impossible trinity" [1] of a fixed foreign exchange rate (i.e. "stable"), free capital movement (i.e. liquidity) and an independent monetary policy (i.e. reasonable collateral rates).

Prediction: to prevent a breakdown of stability, the marketing point for these schemes, we'll see, for coins without a centralized bottleneck, stupid collateral rates, and for coins with one, redemption restrictions.

[1] https://en.wikipedia.org/wiki/Impossible_trinity

Re: Basecoin, aka the Basis Protocol

#40

Post by simias »

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...

>I assure you they are thoughtful...

I thought you were arguing from a position of authority but looking at your comment history all I can find is "I'm a blockchain investor at [redacted]" which leads me to a placeholder website. You'll have to come up with something a little more convincing if you want us to trust your judgment.

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