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MakerDAO gets stress tested as ETH price plummets

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Re: MakerDAO gets stress tested as ETH price plummets

#61

Post by fastball »

ForHackernews wrote: post #53
Latty wrote: post #48

Earlier quoted context omitted.

People buy 1USD of Paypal account value for 1USD all the time, do you say the same thing to them? I'm not saying I definitely think Dai is a good idea, but fundamentally the value isn't the only thing that matters. The ability to transfer that value is important and Dai offers something different to USD there.

Yes, Paypal is also terrible[0] and you'd have to be pretty dumb to deliberately keep a large fraction of your savings "invested" in a paypal balance. [0] http://paypalsucks.com/

Who is using DAI as an investment instrument?

Re: MakerDAO gets stress tested as ETH price plummets

#62

Post by Lldjjxnn »

cryptica wrote: post #50

One of the main purposes of cryptocurrency IMO is to replace the concept of debt. So I find the idea of using blockchain to implement debt to be ridiculous. Why do you need debt if any group of people can create a cryptocurrency and raise money that way? Debt is an outdated concept and a dirty hack on the financial system, it allows one person to lend money to another person to run their business without owning any p…

What planet do you live on?

> If you lose, your downside is not limited

Your downside is limited to the amount lent

The other aspects which you see as deal breakers that make business impossible are actually all negotiated terms to maximize the likelihood of success for both parties.

Re: MakerDAO gets stress tested as ETH price plummets

#63

Post by perl4ever »

rolltiide wrote: post #14
maccam912 wrote: post #3

Earlier quoted context omitted.

Minimal? My understanding is someone was able to pull ETH out at near zero DAI. Nothing the contract didn't allow, but unforseen use of it which caused some people who had invested that ETH to essentially lose their life savings!

I dont think it was an unforeseen use. People that execute these smart contract dark patterns knew for a long time and didnt steer public discussions that way. The very foreseen problem was that people dont show up to governance decision in crypto. Yes you can use a blockchain for voting but nobody shows up. The real problem is that there are no alert protocols built into wallets and client side defi apps. Now people…

"Everyone with dollar signs now is going to research that and bid $1 until the order book is populated and it never happens again."

Not familiar with this, but your comments sound like "we have a proof of concept that this issue could be solved, therefore it is solved".

Re: MakerDAO gets stress tested as ETH price plummets

#64

Post by perl4ever »

_7fvc wrote: post #38

When you are involved long enough with crypto, you'll see a lot of stupid ideas. DAI is one of them. For those who don't have time to get into the weeds, DAI is a "digital native" stable coin. It wants to create a 1-1 peg to USD using an underlying volatile asset, Ethereum. If you want to use USD, it's probably most efficient to go get USD. :) But for some ideological reasons (decentralization), DAI wants to be USD b…

"It's kinda like building a stable house on a shaky foundation"

Maybe it's kind of like building your house on sand and believing that with powerful enough hydraulic actuators controlled by fast computers and sensors, you can keep it stable. Dynamic instability is proven to work on fighter jets, right?

Re: MakerDAO gets stress tested as ETH price plummets

#65

Post by perl4ever »

cryptica wrote: post #50

One of the main purposes of cryptocurrency IMO is to replace the concept of debt. So I find the idea of using blockchain to implement debt to be ridiculous. Why do you need debt if any group of people can create a cryptocurrency and raise money that way? Debt is an outdated concept and a dirty hack on the financial system, it allows one person to lend money to another person to run their business without owning any p…

If there were no debt, how would that work for individuals? Would you sell a share of your income to pay for a car, instead of borrowing?

Re: MakerDAO gets stress tested as ETH price plummets

#66

Post by ForHackernews »

fastball wrote: post #61
ForHackernews wrote: post #53

Earlier quoted context omitted.

Yes, Paypal is also terrible[0] and you'd have to be pretty dumb to deliberately keep a large fraction of your savings "invested" in a paypal balance. [0] http://paypalsucks.com/

Who is using DAI as an investment instrument?

Elsewhere in this thread posters are talking about users losing their "life's savings", but you're right perhaps they weren't investing. Maybe they just wanted to park money someplace they viewed as safer than a traditional savings account or treasury bonds.

Re: MakerDAO gets stress tested as ETH price plummets

#67

Post by fastball »

ForHackernews wrote: post #66
fastball wrote: post #61

Earlier quoted context omitted.

Who is using DAI as an investment instrument?

Elsewhere in this thread posters are talking about users losing their "life's savings", but you're right perhaps they weren't investing. Maybe they just wanted to park money someplace they viewed as safer than a traditional savings account or treasury bonds.

I think the issue is that people are using DAI to leverage what is an "investment" (or gambling, depending on your perspective) in ETH. But this isn't a failing of DAI. DAI merely allows you to leverage an existing position in ETH into a higher risk / higher reward investment, the DeFi way. This is only one of DAI's use-cases.

That's probably not a good idea given how risky ETH is on its own, but again, it is not a unique failing of DAI when people use it in very risky ways. For example, you could take out a personal loan to achieve the same level of financial irresponsibility (as many people did when they used their student loans or whatever to buy crypto).

Re: MakerDAO gets stress tested as ETH price plummets

#68

Post by vinniejames »

ppf wrote: post #60
vinniejames wrote: post #33

Earlier quoted context omitted.

No one lost 100% They lost their collateral and got to keep the loan the took out against it. If I stake $2000 of Ethereum, and in return get $1500 in a stablecoin, when my $2000 in collateral gets liquidated I still have 75% of that in the loan I took out and can walk away. The people with the 100% loss story are being deceptive

That's not the complete story. They have lost one asset with a certain set of liquidity characteristics, and unexpectedly gained one with another set.

There was nothing unexpected here. Users traded their eth X days ago for dai, with the full intention of adjusting their liquidity characteristics

What happened here simply precluded the possibility of the reverse trade when the loan became under collateralized, this was not unclear to anyone involved

Re: MakerDAO gets stress tested as ETH price plummets

#69

Post by perl4ever »

nootropicat wrote: post #47
nullc wrote: post #42

Earlier quoted context omitted.

> average person with a smartphone could realistically generate several blocks a day, I seem to recall the proposed staking minimum being around $200,000... Eth's administrators must have a kink for kidnapping. It's far from clear that "PoS" can result in a system which is both secure and decentralized: https://download.wpsoftware.net/bitcoin/pos.pdf ... the limited academic work attempting to demonstrate such things…

>I seem to recall the proposed staking minimum being around $200,000... No, it's 32 eth, which is a bit over $4k. > https://download.wpsoftware.net/bitcoin/pos.pdf Stake grinding is an obsolete attack (solved by randao, in the future strengthened with VDF asics). The second argument that weak subjectivity is somehow unsafe is at odds with reality: it assumes some far away hermit that runs an old node after 10 years o…

"mining would became fully regulated with enforced kyc on every transaction"

Aren't they prosecuting bitcoin mixers as money laundering right now?

Re: MakerDAO gets stress tested as ETH price plummets

#70

Post by cdiddy2 »

Benmcdonald__ wrote: post #49
baby wrote: post #22

> leading to oracle’s price updates not going through with the gas price they chose wait so the thing relies on oracles? I always thought that MakerDAO was a decentralized stablecoin. Does this mean that it is centralized then? > This put the system in a $4 million deficit So is this proof that MakerDAO does not work in practice?

Yes they are centralised. You cannot have a truly decentralised price data

You could use something like uniswap and use their ETH/USDC pool as a source of price data for ETH. This is a bad idea because its easy to manipulate that one price feed but that is technically a truly decentralized price feed.
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