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

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

#261

Post by KirillPanov » Wed, Jul 07, 2021, 8:44 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…

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

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

#262

Post by DennisP » Wed, Jul 07, 2021, 8:49 AM UTC

beefield wrote: post #228

meowkit wrote: post #105

Earlier quoted context omitted.

Either you’re being intentionally obtuse or don’t know what Uniswap is. Decentralized, automatic trading that can route liquidity for direct asset swapping does not exist in traditional finance for retail investors.

I have some professional backround in finance and still have literally no clue what "route liquidity for direct asset swapping" means. Can you ELI5 what uniswap does that current financial system does not? (Orher than "decentralization")

Uniswap is an exchange without an order book. A Uniswap pair has two assets in quantities X and Y, and a constant k such that X*Y=k. If you give some X to the contract, then it will give you back enough Y so that k is still constant. Effectively the ratio between the two assets' quantities is equal to their relative prices.

By giving the contract both X and Y, you're providing liquidity. You get a new token Z, specific to that pair. Every exchange of X for Y (or vice versa) skims off a transaction fee, which is apportioned among holders of Z.

(This actually describes the first version of Uniswap. The new version 3 has more complex math that lets you do fancier stuff, but is the same basic idea.)

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

#263

Post by nly » Wed, Jul 07, 2021, 8:51 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 page[0] about Terra Luna makes for laughable reading.

> Terra combines the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC)

Yeah, the price looks really stable.

https://coinmarketcap.com/currencies/terra-luna/

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

#264

Post by [deleted] » Wed, Jul 07, 2021, 8:54 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?

[deleted]

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

#265

Post by meiraleal » Wed, Jul 07, 2021, 8:57 AM UTC

sjtindell wrote: post #81

tablespoon wrote: post #66

Earlier quoted context omitted.

>> 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. > These are certainly new innovations and features, be they good or bad. That's saying a car with its seat belts removed has an "innovative new feature." The usual word for that situation…

Would you have said the same when we moved from measuring stock prices in increments of dubloons to decimals? Where does all this HN hostility come from, I thought this crypto stuff would mesh so well with the Silicon Valley mindset. Trading should be instant, totally free, in any increment you choose, across borders! That’s the kind of mentality we apply to so much else in tech right? Is this really a bunch of hacke…

It is only natural for the old to become conservative. Blockchain is the SV killer.

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

#266

Post by [deleted] » Wed, Jul 07, 2021, 8:58 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/

[deleted]

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

#267

Post by anm89 » Wed, Jul 07, 2021, 9:02 AM UTC

princeb wrote: post #188

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?

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.

Derivatives settlements with smart contracts is the all time killer app of crypto in my mind because the contract can allocate payouts on its own.

Obviously these can't be physical, they have to be financial, but if you are allocating something financial with value on a liquid market you are just one step away from getting to the physical thing.

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

#268

Post by lottin » Wed, Jul 07, 2021, 9:07 AM UTC

X6S1x6Okd1st wrote: post #85

yawaworht1978 wrote: post #17

Looks like cryptocurrencies are not very innovative. They keep reinstalling all the features that have been there and improved in the regular markets. Tether and stablecoins mimicking the USD, now this stuff mimicking stocks, how are the not getting in trouble with government institutions or Apple? What are the loopholes? No existing laws yet? Or they operate and reside in far away jurisdictions?

The fact that these offerings are non-custodial is innovative, as is the fact that they are always open (albeit if there's high demand the fees may be high enough to be prohibitive) FDIC & regulation kind of makes it so for most people most of the time it doesn't matter that banks are custodial. Offering these services without being custodial is innovative though. EDIT: The other major (IMO) innovative piece is the p…

> FDIC & regulation kind of makes it so for most people most of the time it doesn't matter that banks are custodial.

Non-custodial means the owner is responsible for protecting the asset from theft and operational risks. Nobody wants that, especially not in the case of digital assets, which aren't governed by property rights and instead rely entirely on effective control of the asset to determine who "owns" it.

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

#269

Post by KirillPanov » Wed, Jul 07, 2021, 9:08 AM UTC

lottin wrote: post #251

davidkohcw wrote: post #208

Earlier quoted context omitted.

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. Why? The synthetic stock isn't convertible, so there's no arbitrage opportunity.

You can "burn" the synthetic and claim part of the collateral.

I don't think there is a problem in this particular situation.

The place where there will be a problem is where MakerDAO had problems: when there aren't enough people willing to mint synthetics. The only reason to mint a synthetic is in order to sell it, in order to get a synthetic short position. If not enough people want to do this, but other people want a long position, this will generate excess demand for synthetics and the synthetics will trade consistently above the price of their real-world underlying.

This is precisely what happened to MakerDAO before it turned itself into a "stablecoin index fund". DAI was trading way above $1.00 for several months running. MakerDAO's goal was to provide a trustless stablecoin. If it costs $1.15 to buy one this week and $1.00 next week, it's not very stable. Those 15 cents didn't make DAI expensive -- they made DAI a failure at its goal of producing a stable coin.

Mirror's case is different. They're not trying to create a stablecoin. If the synthetics trade at a premium to the underlying, that difference is effectively a brokerage fee charged in order to open a long position. If the fee charged to open a long position swings around by 15% week-to-week that is certainly unattractive, but it doesn't make Mirror a failure.

This might actually work as expected. The likely failure mode will be annoyingly high fees for long positions, rather than failure to deliver on its promise (as happened with MakerDAO).

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

#270

Post by anm89 » Wed, Jul 07, 2021, 9:11 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/

Are these crypto assets not derivatives? Can you name any other instance where a derivative financial asset is labeled fake ?