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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

#431

Post by rawtxapp »

Retric wrote: post #413
rawtxapp wrote: post #261

Earlier quoted context omitted.

How many bugs had a direct financial return in the same way? If you found a bug in maker (or any of the other big contracts) today, you can walk away with billions of dollars worth of coins, that's a huge sum.

Major bugs in smart contracts can cause the system to stop working rather than handing anyone billions. As such people can discover such issues without disclosing them in much the way infrastructure can be vulnerable without people damaging it.

Even being able to grind a smart contract to a halt would be very profitable if you shorted it right beforehand.

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

#432

Post by Hallucinaut »

rawtxapp wrote: post #406
rednerrus wrote: post #388

Earlier quoted context omitted.

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.

The failure spoken of is clearly the breach of the promise (and associated changing of literature) to back each by one USD.

However I'm very interested in the idea of shorting a "stable"coin. Who would possibly enter into this contract for an asset that has an upside of zero and a (potential, long-term, depending on your bearishness) downside of 100%?

In any case, with the strong likelihood Tether themselves are effectively shorting it by selling it unsecured by any real assets it would be a tough market to get in on.

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

#433

Post by jvanderbot »

vel0city wrote: post #361
jvanderbot wrote: post #99

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.

FWIW, traditional banking and credit processes existed over a millennia ago. The Book of Ezekiel which writes a lot about the "sin" of interest was written around 593 BC. Exodus which classically is attributed to Moses was probably actually written down around that time as well also talks about charging interest. Clearly people over 2500 years ago had concepts of loans, interest, and debt. Note: I am not a religious…

Exactly. This system has been polished to some definition of fairness over a long period of time. "millenia".

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

#434

Post by w4llstr33t »

WalterSear wrote: post #378
HugoDaniel wrote: post #147

Earlier quoted context omitted.

Would an "upgradeable" crypto-coin solve that flaw?

Immutability is at the heart of blockchain functionality. Everything involved requires it. So, you'ld have to throw it all out and try to invent something entirely different.

Have you heard of Tezos?

Tezos is often referred to as the first “self-amending” blockchain, which routinely adapts and adopts new features natively and automatically via its unique on-chain governance mechanism. This protocol functionality allows the system to coordinate the selection of new updates though popular voting, integrate the new updates that are selected, and compensate the developers who proposed them. [1]

[1] https://www.gemini.com/cryptopedia/what-is-tezos-xtz-governa...

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

#435

Post by gurchik »

foobiekr wrote: post #337
spicybright wrote: post #308

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…

I'm not familiar with formal verification, so forgive me. Could something like TLA+ be used to inch yourself towards a verifiable spec? Although you are moving the goalpost, the hope is that eventually your spec is so simple that it is "obvious" that it is correct?

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

#436

Post by drdrey »

WalterSear wrote: post #378
HugoDaniel wrote: post #147

Earlier quoted context omitted.

Would an "upgradeable" crypto-coin solve that flaw?

Immutability is at the heart of blockchain functionality. Everything involved requires it. So, you'ld have to throw it all out and try to invent something entirely different.

That’s not true, upgradable contracts using proxies is a common pattern.

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

#437

Post by vel0city »

jvanderbot wrote: post #433
vel0city wrote: post #361

Earlier quoted context omitted.

FWIW, traditional banking and credit processes existed over a millennia ago. The Book of Ezekiel which writes a lot about the "sin" of interest was written around 593 BC. Exodus which classically is attributed to Moses was probably actually written down around that time as well also talks about charging interest. Clearly people over 2500 years ago had concepts of loans, interest, and debt. Note: I am not a religious…

Exactly. This system has been polished to some definition of fairness over a long period of time. "millenia".

Ah oops for some reason in my mind I read that as singular millennium. My bad!

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

#438

Post by graeme »

mshumi wrote: post #320
spiralx wrote: post #286

Earlier quoted context omitted.

Because market cap is nonsense, if I create FooCoin with 1,000,000 tokens and sell one for $250, it has a market cap of $250M despite only ever having $250 in real money involved.

Take this line of reasoning further and you reveal the problem with crypto to crypto taxation.

Why? When you sell you make a profit or loss, same as any other asset.

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

#440

Post by rawtxapp »

Hallucinaut wrote: post #432
rawtxapp wrote: post #406

Earlier quoted context omitted.

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.

The failure spoken of is clearly the breach of the promise (and associated changing of literature) to back each by one USD. However I'm very interested in the idea of shorting a "stable"coin. Who would possibly enter into this contract for an asset that has an upside of zero and a (potential, long-term, depending on your bearishness) downside of 100%? In any case, with the strong likelihood Tether themselves are effe…

Which is why I asked what they meant by failure specifically.

You have to borrow it to short it, so there's a 1-3% APY cost associated with shorting it. You have to calculate the tradeoff of the likelihood of it going to 0 within the next couple of years vs the cost of borrowing USDT to short it.

Say you short 1M$ worth of Tether, it goes belly up within 4 years, it cost you like ~40k$ to short it, but your upside is 1M$. If it never actually fails because the market is irrational or by some miracle Tether was doing the right thing, then your cost depends on when you close your position. It's a relatively cheap way of making lots of money depending on your conviction on Tether's likelihood to fail.

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