Fake Tesla, Apple stocks have started trading on blockchains • Hacker News Board

Re: Fake Tesla, Apple stocks have started trading on blockchains

#181

Post by 3np » Wed, Jul 07, 2021, 4:30 AM UTC

cesarb wrote: post #161

> But to stop mirrored stocks and other synthetic assets from trading, you would have to shut down the underlying open-source software code that makes up the blockchain and is used by a global user base that includes many anonymous players, he added. Don't these synthetic assets need an oracle to inject the price of the real assets into the blockchain? To stop these synthetic assets from working, couldn't they just g…

That is, indeed, the week spot in these constructs.

Commonly, oracles are composed of an aggregate of multiple independent providers. So roughly a majority of them have to collude to manipulate the price and you would have to take multiple oracle providers down to stop the price updates.

Any token derivative that relies on one or a few providers are very risky.

ChainLink (the mainstream choice today) doesn't seem to be officially providing stock prices, but to give you an idea there are currently 16 providers for gold-USD prices: https://data.chain.link/ethereum/mainnet/commodities/xag-usd

Re: Fake Tesla, Apple stocks have started trading on blockchains

#182

Post by MathYouF » Wed, Jul 07, 2021, 4:34 AM UTC

tablespoon wrote: post #52

delusional wrote: post #26

How does this make sense? If they don't hold the underlying security, where does the value come from? This feel like it's another one of those "while money is flowing in it'll work, but if there's a run, it crashes spectacularly". If the liquidity dries up, i end up owning nothing. With a real security at least i end up owning a small part of apple, but here i literally own nothing.

How does this make sense? If they don't hold the underlying security, where does the value come from? Come on, this is cryptocurrency. The whole point is to con people into thinking a fake thing is real because blockchain and cash in; with the off chance that if enough people believe, then their belief will make the fake thing real.

You should read up on the last decade in Venezuela, which used to be the richest country in Latin America, and having wealthy professionals see their savings evaporate due to 1,000,000% inflation because of the actions of a government they democratically elected.

Belief is the only thing holding together a lot of the things that we rely on to keep society functioning the way it does.

I'm guessing (though not assuming) you're posting from one of the most historically stable countries in human history, but that isn't how most people experience planet earth, and it isn't guaranteed that that's the wya you'll always experience it either.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#183

Post by tfehring » Wed, Jul 07, 2021, 4:35 AM UTC

anm89 wrote: post #90

Fake seems like a strange choice of words here. These things arent attempting to deceive anyone into believing they are the real thing. They clearly label themselves as derivatives. We don't call corn futures fake corn, we don't call derivatives of other types fake those things and we shouldn't call these fake stocks. I'm really not defending or not defending whatever these platforms are. I wouldn't be surprised if t…

I don’t disagree, but the technical term is “synthetic” and substituting “fake” for “synthetic” in a headline and first paragraph doesn’t seem like that crazy of an editorial choice.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#184

Post by woah » Wed, Jul 07, 2021, 4:38 AM UTC

cesarb wrote: post #161

> But to stop mirrored stocks and other synthetic assets from trading, you would have to shut down the underlying open-source software code that makes up the blockchain and is used by a global user base that includes many anonymous players, he added. Don't these synthetic assets need an oracle to inject the price of the real assets into the blockchain? To stop these synthetic assets from working, couldn't they just g…

Hard to keep the price of Apple stock a secret

Re: Fake Tesla, Apple stocks have started trading on blockchains

#185

Post by anonymoushn » Wed, Jul 07, 2021, 4:50 AM UTC

smabie wrote: post #152

H8crilA wrote: post #132

Earlier quoted context omitted.

Yeah, I would like to emphasize the fact that they're settled once individual contracts expire, be it cash or delivery. I am yet to find a useful derivative that lacks a settling mechanism. How would you even price such a contract that lacks settling? Like why should it be worth anything at all?

Things like BTC swaps don't really have settlement periods: every so and so numbers of often (often 1 or 8), longs pay shorts using some premium formula is swap > index, and vice verse if swap I suppose you could construe that as some periodic partial settlement mechanism, though.

It is a periodic partial settlement mechanism. Perpetual futures are equivalent to a bag of daily futures that automatically roll over, one of which is always in its expiry period.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#186

Post by Animats » Wed, Jul 07, 2021, 4:50 AM UTC

The basic idea is that bets are collateralized at a level of 150% of the starting price. If you buy a synthetic stock when it's at 100, and it goes above 150, your bet is cashed out at that point.

As usual, the big question is, what's the collateral? In this case it's their very own private stablecoin, Terra, which pays an annual percentage rate of 17%. That, in turn, is being paid by people who are borrowing that stablecoin to do - something.

The stablecoins are in turn collateralized by the LUNA token and something called Special Drawing Rights. There's also something called mAssets involved.

All this works as long as there's no net outflow. Whether it can survive a net outflow is questionable.

So far, three stablecoins have crashed all the way to 0. Supposedly because of "hacks". Whether or not those were inside jobs remains to be seen.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#187

Post by jayd16 » Wed, Jul 07, 2021, 4:52 AM UTC

lilyball wrote: post #165

> Users can trade the tokens anonymously 24 hours a day, seven days a week, from anywhere, unhindered by capital controls, “know your client” rules imposed on broker-dealers, and other frictions of the traditional financial system. I find it really weird how crypto folks keep pretending that financial regulation is an obviously bad thing, as opposed to restrictions put in place in response to real problems

Whats worse is many assume the crypto kabuki dance also absolves them from regulation.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#188

Post by princeb » Wed, Jul 07, 2021, 4:54 AM UTC

H8crilA wrote: post #132

quickthrowman wrote: post #100

Earlier quoted context omitted.

> We don't call corn futures fake corn /ZC is physically settled[0], so that’s not a great example. /ES (S&P 500) or other index futures that are cash-settled is a better analogy. They’re also, yknow, regulated[1]. [0] https://www.cmegroup.com/markets/agriculture/oilseeds/corn.c... [1] https://www.cftc.gov/

Yeah, I would like to emphasize the fact that they're settled once individual contracts expire, be it cash or delivery. I am yet to find a useful derivative that lacks a settling mechanism. How would you even price such a contract that lacks settling? Like why should it be worth anything at all?

skimmed the article - there's apparently a creation/redemption mechanism similar to ETFs.

settlement is always a mystery to me in crypto so i can't weigh in here. how do you guarantee delivery of the physical for units of the crypto that's inked on the blockchain.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#189

Post by jayd16 » Wed, Jul 07, 2021, 5:04 AM UTC

So what generates these "synthetic" stocks?

It doesn't sound like futures or simple bets. From the article, its almost sounds like they're almost selling NFTs of a photograph of a stock created form whole cloth. That can't be right, can it? Surely its backed by something?

Re: Fake Tesla, Apple stocks have started trading on blockchains

#190

Post by gentleman11 » Wed, Jul 07, 2021, 5:05 AM UTC

jayd16 wrote: post #189

So what generates these "synthetic" stocks? It doesn't sound like futures or simple bets. From the article, its almost sounds like they're almost selling NFTs of a photograph of a stock created form whole cloth. That can't be right, can it? Surely its backed by something?

Like the rest of the blockchain?