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SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

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Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#401

Earlier quoted context omitted.

> As long as everyone agrees i see absolutely no problem. They didn't all agree, though. Now there's Ethereum (the people who agreed with the fork) and Ethereum Classic (the people who didn't agree).

Some agreed, others didn't and they decided to create a fork. Consensus doesn't require everyone to agree, just the majority

You're literally talking across yourself, at least that's how I read it.

Your first comment [1]

> As long as everyone agrees i see absolutely no problem

and now

> Some agreed, others didn't...Consensus doesn't require everyone to agree, just the majority

So you literally just said there is a problem.

[1] https://news.ycombinator.com/item?id=27666781

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#402
post #275

Earlier quoted context omitted.

This argument does not help. Those same folks cannot carry around a crypto-buck either. There are plenty of mobile-only banking solutions that are widely used in non-western worlds, and that's likely a model for emerging economies. When electronic banking comes, OP is saying that standard banking ("perfected over millenia TM") is honestly quite preferable over algorithmic contracts.

> This argument does not help. Those same folks cannot carry around a crypto-buck either. I'm commenting on this as well as sibling and descendant comments: There are First World countries (several in Europe) in which credit cards are both uncommon and pretty much inaccessible to the majority of the population while at the same time crypto services apps and wallets are ubiquitous. The reason why credit cards are not…

Let's hear about the several European countries where crypto of much more popular than credit cards.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#403

Earlier quoted context omitted.

You are aware that the vast majority of financial market trading is run by algorithms that govern not advise vast amounts of capital in an irreversible way. Sometime these algorithms break or are exploited. Often in spectacular disasters. Knight lost half a billion dollars in 30 seconds. Nobody reversed though, even though it was clear error. If you have a 401k I guarantee you that a significant amount of your money…

> If you have a 401k I guarantee you that a significant amount of your money was traded by an algorithm that if broken would have lost everything How so? My 401k is invested in a fund that just owns a broad index of stocks, not an algorithmic trading hedge fund.

Even that has an "algorithm" behind it - they have to manage inflows & outflows, the heartbeat trades if it's an ETF, etc. Vanguard doesn't have a person sitting there buying a little bit of AAPL every time someone invests in VTSAX.

OP is trying to say that even something as simple as VTSAX could have a problem and, I don't know, accidentally sell all its AAPL and so it's proof that even for the current market there are rules that govern.

Except, of course, if VTSAX dumped all their AAPL somehow the trade would be unwound, as trades occasionally are. Selling stock on the market is not nearly as irreversible as it may seem.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#404

Earlier quoted context omitted.

Doing illegal things, mostly. If you are working a w2 job and paying taxes and paying your mortgage / auto loan... crypto doesn't really help you. Blackmail? Awesome. Buying illegal substances? Awesome. Gambling? You got it...

I’m making an assumption here that “crypto” means “crypto coin” and, perhaps further, any form of blockchain based, consensus maintained, public ledger. I don’t understand this “crypto is good for doing crime” narrative. When I’m doing crime, I strongly prefer there to be no record of the transaction. The closer I can get to an assurance there is no permanent record of the transaction, the safer I feel in deviating f…

> I strongly prefer there to be no record of the transaction.

Other than cash, this isn't viable. You'll have to launder your money no matter what, at some point. Crypto just makes transferring trivial, it's less regulated, you can't go to your bank and ask them for help, etc. It's good for criminals for these reasons.

There's radically more infrastructure for this sort of thing in existing systems. Crypto is far less regulated, you can transfer across countries easily, laundering becomes trivial, transfers via hacked accounts, etc.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#405

Earlier quoted context omitted.

I don't know much in the field, but formally verifiable programming methods come to mind. You'll potentially have less of a chance for contracts to be exploited (at least compared to what we have now). That said, you can't protect against infrastructure exploits as easily, mathematically flawless program or not.

Formal methods are about matching the spec. Errors in the spec are still an issue. Moreover, there is very, very little formally verified code in the world, much less than you'd believe. My former professor (RIP) oversaw the formal verification of the F-16 computer software and it still had significant bugs in the end where the specification itself was incomplete or in error. And that was a multi-year, team-scale eff…

A nice practical example from TLS 1.3:

TLS 1.3 has been formally proven (not an implementation, but the standard itself). To the extent the mathematicians correctly explained what the TLS 1.3 RFC says, and correctly told the machine what TLS 1.3 is supposed to do, the machine proof says this protocol does what we intended.

That work assumes a bunch of components are black boxes, they must work. If we ever lose confidence that they work, we've got to throw those out. So for example SHA-256, AES GCM, X25519, the proof doesn't say "We prove these work" it says "Assuming you're right that these do what they're designed to do the rest of your proof holds"

Anyway, one of the assumptions in that proof is a surprise to a human implementing TLS 1.3, it isn't explicitly mentioned in the TLS 1.3 document as written. And so the result is, if you didn't obey that assumption, the proof doesn't hold and sure enough you're vulnerable to an attack.

The assumption is for Pre-shared Keys (e.g. IoT devices A and B don't want to bother with certificates, so they just use pre-agreed random keys) each device pairing has its own PSK.

A person looking at the design figures hey, got two devices Alice and Bob, I can just have a single key K known to both devices, and everything is secure. But that's wrong - and the TLS 1.3 proof doesn't say this will work. Here's what bad guys can do, it's called the Selfie Attack:

Alice sends a message to Bob, maybe "Did you feed the cat?" and it's encrypted with key K. Normally Bob receives the message, maybe answers "Yes I fed the cat" also encrypted with key K and all is well.

But now Mallory is on a network able to intercept and re-route messages. Alice sends to Bob, "Did you feed the cat?" encrypted with key K. Mallory can't read or tamper with this message, it's encrypted with key K and TLS 1.3 works as designed, but Mallory just re-directs the message back to Alice, "Did you feed the cat?". The message is encrypted with key K, Alice assumes Bob sent it, and replies "No, I didn't feed the cat" also encrypted with key K, which Mallory re-directs again back to Alice, who now mistakenly believes that Bob has told her he hasn't fed the cat.

There are obviously a bunch of things you could do to fix this. First of all you could just have more PSKs. If Alice's message to Bob is always encrypted using the Alice->Bob shared key, when Alice actually receives it instead she knows something is wrong immediately. Or you could just prefix each message with To/From information, like an old-fashioned email and that works too so long as you check it.

But the important observation is that this is an assumption in a proof that nobody really surfaced until it was too late. If researchers had told the proof system "No, the PSKs can be the same" the proof fails. Or if they'd carefully explained to the TLS Working Group, "We had to spell out that the PSKs must be different" then today RFC 8446 would likely explain that you need to do that or you've got a security problem. But neither happened and this attack slipped between the cracks.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#406

Earlier quoted context omitted.

What is failure specifically? USDT (despite it's shadiness) trades at 1USDT:1$ on pretty much all exchanges and you can short it if you truly believe it'll flop anytime soon.

The question is are there really $1 USD for every $1USDT? The answer is surely not. You may be able to get your money out today but in the long run there is nearly a 100% chance you lose it all. https://bitfinexed.medium.com/tether-is-setting-a-new-standa...

There isn't 1$ for every 1USDT, they said so themselves. It will eventually fail != "USDT failed a LONG time ago".

If you truly believe what you say, then you should definitely consider shorting it, if you're right you'll make a lot of money.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#407

These incidents really illustrate the main flaw of smart contracts: a single bug in your code can lead to incredible losses. I simply don't think it's possible for human beings to write good enough software for smart contracts.

The problem here is really Ethereum and the language Solidity. Chuck full of gotchas and completely horrible to work with. The mechanics of stable coins is really trivial and thusly should be trivial to implement and validate. Unfortunately it is not, and it is sad that the hype and investment rush inside the broader crypto field does not foster languages and platforms that actually are suitable for the few realworld…

How are they trivial? From my limited knowledge they are basically trying to stabilize a speculative asset using another speculative asset. To me it seems like an essentially impossible task.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#408
post #362

Earlier quoted context omitted.

Odd: HN is made up of the people closest to cutting-edge technology on the planet, and yet sentiment is negative on cryptocurrency. Hmmm...

It's odd indeed. This is a VC-created forum where its users reject entire sectors of new technology. Besides being anti-crypto, there also anti-google, anti-iot, and anti-any website looking fancier than something from 1996. It's a thing to accept and be entertained by I guess. The stunning lack of self awareness over here is legendary though.

On another perspective, maybe HN is anti-scams, pro privacy, pro privacy and pro UX.

No other discussions face such criticism, only crypto. Does everyone believe them with a burning passion? Or are people afraid of losing money?

"It is difficult to get a man to understand something, when his salary depends on his not understanding it."

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#409
post #358
post #340

Earlier quoted context omitted.

I don't know much about this space but a half million dollar marketcap is absolutely tiny and non-news. BTC market cap is what, close to a trillion or something?

The top 10 stablecoins together have a total market cap of around $100 billion. Of that, $62 billion is tether, and the next largest is USDC at $26 billion, then BUSD at $10 billion. It is interesting that these exploits still happen.

Those are based on the trust of the companies behind them though and don’t collapse so suddenly. Also MT.GOX took several days to fully collapse.

Re: SafeDollar ‘stablecoin’ drops to $0 following DeFi exploit on Polygon

#410

These incidents really illustrate the main flaw of smart contracts: a single bug in your code can lead to incredible losses. I simply don't think it's possible for human beings to write good enough software for smart contracts.

The problem here is really Ethereum and the language Solidity. Chuck full of gotchas and completely horrible to work with. The mechanics of stable coins is really trivial and thusly should be trivial to implement and validate. Unfortunately it is not, and it is sad that the hype and investment rush inside the broader crypto field does not foster languages and platforms that actually are suitable for the few realworld…

EOS tried to use on-chain Ricardian Contracts and pair that with upgradeable smart contracts in C++ with DPoS consensus so that intent-of-code could be enforced. That's pretty "real world" but most people feel it's not unstoppable enough.

Ethereum is pretty unstoppable, but unless you use a contract proxy, your contracts are immutable and bugs that can be exploited will be exploited.

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