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

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

#201

Post by runeks » Wed, Jul 07, 2021, 5:30 AM UTC

Animats wrote: post #186

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 st…

This should not be legal. It’s not okay to conjure up some arbitrary scheme, consisting of five different cryptocurrencies, and sell the instrument as though it will always track the price of some stock. It’s not okay to say “well, we thought it would work” when the system crashes. This should be considered as negligence (in properly ensuring that your system will work as advertised before selling to consumers) by the courts.

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

#202

Post by ButtSpark69 » Wed, Jul 07, 2021, 5:31 AM UTC

quickthrowman wrote: post #100

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…

> 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/

But most things of this type specifically arent settled, they're settled in cash and rolled over, again and again and again, forever. Look at the volumes traded for these derivatives, numbers are insanely high. People don't mostly use them to do what they were intended (hedge a poor rain year or similar), but to GAMBLE. The rest is mostly just narrative.

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

#203

Post by mannerheim » Wed, Jul 07, 2021, 5:33 AM UTC

jayd16 wrote: post #192

gentleman11 wrote: post #190

Earlier quoted context omitted.

Like the rest of the blockchain?

So stocks are randomly awarded to miners? Like any stock or each stock is its own chain? The stocks are not backed in any other way?

My understanding is that they're smart contracts that are collateralised by cryptocurrency.

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

#204

Post by ique » Wed, Jul 07, 2021, 5:33 AM UTC

danielmarkbruce wrote: post #169

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

Isn't it also weird that crypto enthusiasts assume that you obviously can't trust a central clearing house (or similar mechanism) when they have been working well for hundreds of years? In numerous cases humans trust institutions for certain things, and those institutions are usually strongly incentivized to act honorably, and do so. And when they don't, the court system works pretty well. At least in the countries w…

Trusting facebook as the central clearing house for all of our personal data doesn’t seem to have worked out very well.

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

#205

Post by alfabetagamma » Wed, Jul 07, 2021, 5:36 AM UTC

All this is, like 95% of all blockchain „innovations“, is to confuse/inspire people long enough to make a fortune from investors/gamblers. Theres just AAA gigs like this and less sophisticated ones. I have yet to be proven wrong.

Even Mark Cuban fell for something similar with great production value.

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

#206

Post by smabie » Wed, Jul 07, 2021, 5:45 AM UTC

mannykannot wrote: post #163

smabie wrote: post #152

Earlier quoted context omitted.

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.

Is it not that settlement nominally occurs when you choose to exit your position? Which raises various questions about whether whatever stack of turtles your swap is built on can provide liquidity when you need it.

The order book provides liquidity. When someone sells a swap, someone else buys it.

Of course, the amount of liquidity and spread available will depend on how popular the coin or specific contract is.

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

#207

Post by marton78 » Wed, Jul 07, 2021, 5:49 AM UTC

woah wrote: post #184

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

That is not the point. By manipulating the Apple stock price the system sees and acts upon you can extract huge amounts of money. The actual price is irrelevant in this case.

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

#208

Post by davidkohcw » Wed, Jul 07, 2021, 5:51 AM UTC

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.

It's a synthetic stock which is overcollateralized by stablecoins. So for example, if $100 dollars worth of the stock is issued, someone else had to lock up $150 dollars worth of USD to issue it. And when the price rises (and hence collateralization ratio drops), the issuer has to constantly top up collateral or run the risk of them being liquidated.

How do they get price to track the real stock? By simple incentives. If the synthetic stock is trading lower than the real price, people have incentive to buy it. If it is trading above, people can easily mint new stock and sell it.

There are lots of benefits to this: 1. It allows people who typically might not have access to the US market to get price exposure to US companies

2. It allows 24/7 trading

3. US stocks are just the start, before more innovative synthetic products can be built on top.

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

#209

Post by gjs278 » Wed, Jul 07, 2021, 5:54 AM UTC

nradov wrote: post #16

arcticbull wrote: post #14

Earlier quoted context omitted.

This isn't about Mark Cuban's losses per se, I also have no issue with him (an accredited investor) getting bilked for some change between the couch cushions - the issue is even if an incredibly sophisticated investor like Mark could fall for such a rug-pull/failure then how can we possibly expect unsophisticated investors not to get bamboozled? Remember, those who wash out of trading end up beneficiaries of the stat…

That is exactly why no one should be trading cryptocurrency. Anyone who does so deserves to lose everything. I don't want the SEC wasting my tax money protecting those idiots.

stay poor

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

#210

Post by ruggeri » Wed, Jul 07, 2021, 5:59 AM UTC

anonymoushn wrote: post #44

ethn wrote: post #21

I think this is illegal. This is effectively a CFD, which are absolutely illegal in the US regulated or not. https://en.m.wikipedia.org/wiki/Contract_for_difference

Does this mean that Archegos and all its counterparties were not permitted to trade CFDs?

I believe Archegos bought total return swaps. Those are different from CFDs, but I'm not sure how different they are. I'm not sure why one would be illegal (like CFDs are) and one would be legal (like total return swaps).