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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

#501

Post by TameAntelope »

loeg wrote: post #300
TameAntelope wrote: post #97

Earlier quoted context omitted.

But given the monthly audits conducted, "it's not" is not very likely to happen at all. The auditor would have to be actively lying or misrepresenting for USDC and Gemini both for something like that to happen. Much more likely a smart contract somewhere fails than USDC/Gemini (the only two I know that do full audits to ensure 1:1 dollar backing, ignoring USDT). There just isn't much risk there, hence there not being…

> But given the monthly audits conducted, "it's not" is not very likely to happen at all. The auditor would have to be actively lying or misrepresenting for USDC and Gemini both for something like that to happen. USDC has regular attestations , not audits . It's an important distinction.

Would an audit even make sense here? Based on some Googling, I found this as an explanation for the difference:

> One of the things to keep in mind to differentiate each of these services is that audits are performed to discover data, risks, or compliance issues that may not have been known before the audit took place, and attestation is to evaluate and review how true the data or information is when compared to a stated purpose, internal control or system. [0]

Based on that reading, it sounds like an audit wouldn't make sense here, since we're not trying to discover anything new, just asserting a statement to be true.

    [0] - https://www.ispartnersllc.com/blog/defining-attestation-assurance-auditing/

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

#502

Post by fleddr »

Dylan16807 wrote: post #429
fleddr wrote: post #376

Earlier quoted context omitted.

We're in agreement that lying about backing is wrong in any case, no argument there. I in particular object to the notion that things of value should be 100% backed by actual USD, in bank accounts or cash. That's not how liquidity works, yet a lot of people intuitively believe this to be so.

They said it wasn't hard, not that it was necessary in all circumstances. Banks and gold deposits re-lend money because it makes them money and they can sell the storage service for cheaper. If you want something that won't be loaned back out then you can buy that service pretty easily. And stock prices changing is a very different thing. The actual supply is there, and entire markets caps can and do get sold in thin…

The supply of a stock in itself is meaningless, the only point of a stock is its USD value representation. In the case of a mass sell-off, sure, the same amount of stocks exist, but its monetary value sinks. Hence the market cap goes up in smoke.

This is also why a fraction of a market cap (say a few billion) can dramatically move a stock price of a 1 trillion market cap.

Same for Bitcoin. If its market price crashes, the same amount of Bitcoin exists. Yet this means nothing as only the BTCUSD pair is worth anything.

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

#503

Post by fleddr »

imtringued wrote: post #458
fleddr wrote: post #356

Earlier quoted context omitted.

Your statement "how hard is this" shows your complete incompetence regarding the backing of anything. Nothing of value is backed in our world. If a mere 7% of bank account holders go to the bank to collect their money, the bank collapses. They don't have your money, it's not there. If all owners of gold (gold value papers) today claim their physical gold, it can't be done. There's 400% more value paper compared to th…

>Nothing of value is backed in our world. If a mere 7% of bank account holders go to the bank to collect their money, the bank collapses. They don't have your money, it's not there. Considering negative interest rates in the Eurozone you would be doing the banks a favor. They don't want your deposits.

I know. I recently closed a secondary account there, had to do it in person. Their attitude was "good riddance", they truly do not want my money.

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

#504

Post by elefanten »

cmelbye wrote: post #488
gumby wrote: post #478

Earlier quoted context omitted.

Doesn't a proxy contract defeat the whole purpose of algorithmically enforced contracts?

I don't think it's realistic to think that human judgment can leave the picture after the first deploy. New systems are fragile, requirements change, and mistakes happen. A certain level of trust is required in the founders of a project. And generally, they have long-term incentives that are aligned with your own.

So it implies the crypto maximalist takes on true trustlessness are not proving workable. At least in practice with lots of real users.

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

#505

Post by xur17 »

Aperocky wrote: post #492
xur17 wrote: post #456

Earlier quoted context omitted.

What aspect of stablecoins makes them a bubble?

It only really works on good times (read low interest rates). Good thing that the national debt is also out of control, which kind of restrict Fed's ability to raise interest rates without bankrupting the government.

I'm confused. Why are low interest rates required for stablecoins to work? If anything, for centralized stablecoins, high interest rates would mean more revenue for the corporation holding the assets.

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

#506

Post by NicoJuicy »

jwblackwell wrote: post #457
snewman wrote: post #266

Earlier quoted context omitted.

I'm not sure this follows. It's a fair point that any easy-to-find bugs in large, time-tested contracts will have been found. Any medium- or hard-to-find bugs also will probably have been found. But there might still be a very-hard-to-find bug lurking; and given the value of finding such a bug, people might look hard enough to find it. In other words, the same scale that ensures there is no low-hanging fruit, also pr…

> it's rare for gigantic new flaws to emerge There are countless instances of rouge traders, high level financial crime and corruption. Wirecard is one recent example costing billions. The Libor scandal another that comes to mind.

Who were the victims with wirecard?

They faked the numbers, but they didn't manage people's money.

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

#507

Post by xur17 »

shkkmo wrote: post #475
xur17 wrote: post #456

Earlier quoted context omitted.

What aspect of stablecoins makes them a bubble?

A rapidly rising market cap that depends on the expectation of continued growth of demand. Some stablecoins are more protected than others against drops in demand. However, without a compete backing the the currency a stablecoin, there is a point at which sufficient supply of the stablecoin cannot destroyed and the peg will break as supply outstrips demand. When the bubble pops there will be a lot of broken pegs but…

But that's not how the decentralized ones work. They aren't relying on "a rapidly rising market cap". Most of the stablecoins are backed by volatile assets (ETH, BTC, etc), but have automated systems to liquidate the collateral when price drops occur.

The only real problem would be a very large drop in a very short period of time, and the big stablecoins already have already survived 50% drops in pretty short time spans.

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

#508

Post by rawtxapp »

NicoJuicy wrote: post #506
jwblackwell wrote: post #457

Earlier quoted context omitted.

> it's rare for gigantic new flaws to emerge There are countless instances of rouge traders, high level financial crime and corruption. Wirecard is one recent example costing billions. The Libor scandal another that comes to mind.

Who were the victims with wirecard? They faked the numbers, but they didn't manage people's money.

I can't tell if you're sarcastic or not. In case you're serious, you don't see how a company with a market cap of 28B$ going belly up causes damage to investors, the markets, their partners, clients and employees?

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

#509

Post by thaumasiotes »

tptacek wrote: post #497
thaumasiotes wrote: post #484

Earlier quoted context omitted.

> As the holder of the credit card I can't think of a good reason why I would/should pay the debt off for a purchase I didn't make. This applies to everyone involved, but someone's going to pay for the loss anyway, unless you can recover from the thief. There is no reason for the merchant to pay for the purchase either -- he is even less culpable than you are. But that's what everyone is advocating here.

There obviously is a reason for merchants to eat the losses, or else virtually every merchant in the modern world wouldn't accept credit cards. The reason is that merchants (on the whole) agree with credit card companies that it is better for customers to feel safe and comfortable shopping, and thus increase transaction volume, even if doing so means that merchants will occasionally eat losses from fraud.

You are discussing a different level of "reasons" than frumper is. In your sense, there is a reason for merchants to take the losses, and there is also a reason for customers to take the losses. But in the sense that there is no reason why customers should take these losses:

>>> I did not initiate the sale with the merchant, I did not verify I was the rightful card holder, I did not authorize the funds to be transferred

there is also no reason why merchants should.

The fact that the system currently operates in a certain way is not actually evidence that it cannot operate in a different way.

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

#510

Post by BrissyCoder »

fleddr wrote: post #349
NationalPark wrote: post #311

Earlier quoted context omitted.

I think it's pretty obvious that people here are very literate about the cryptocurrency space and just find it amusing, apparently to the chagrin of true believers.

Quite the opposite. It's valid, healthy and even recommended to have significant skepticism regarding crypto. I think that's fair game, as about 90% (or more) of coins are pump-and-dump schemes. Further, almost everything "Defi" is supremely risky, as they are completely unregulated, not insured, often lack liquidity, and can go down the drain at moment's notice. Fine. However, there's a general anti-crypto stance he…

> Fine. However, there's a general anti-crypto stance here largely based on outdated mainstream narratives that if you truly would be literate about crypto, could only laugh at.

Can you be specific about the narratives you're seeing on here that you are laughing at?

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