Report on Stablecoins [pdf] • Hacker News Board

Re: Report on Stablecoins [pdf]

#101

Post by andred14 » Mon, Nov 01, 2021, 9:03 PM UTC

The government needs to go away they are doing nothing positive for the people.

There are no laws written for cryptocurrencies and it should stay that way. What gives them the right to just make up laws about stuff when they feel like it?

Cryptocurrencies are hurting nobody but government and their "regulations" are definitely hurting people.

Therefore, by common law, the government cannot "regulate" anything that is not doing any harm just because they feel like it.

Government should to go back to fixing roads and infrastructure. That is all we need from them the rest is tyranny.

Re: Report on Stablecoins [pdf]

#102

Post by [deleted] » Mon, Nov 01, 2021, 9:03 PM UTC

svachalek wrote: post #17

frisco wrote: post #6

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. How does this interact with the concept of algorithmic stablecoins? Not every stablecoin is simply backed by deposits.

I think it would make them illegal. As it probably should, I'm not aware of any that are not an elaborate scam.

[deleted]

Re: Report on Stablecoins [pdf]

#103

Post by alex504 » Mon, Nov 01, 2021, 9:03 PM UTC

Would the act of regulating Tether and other stablecoins in and of itself crash the market? If the government shut Tether down, wouldn't that cause the run they are afraid of?

The money is already missing, it is only a question of when the market realizes it.

Re: Report on Stablecoins [pdf]

#104

Post by tick_tock_tick » Mon, Nov 01, 2021, 9:03 PM UTC

agotterer wrote: post #72

Animats wrote: post #47

This is good. The backing of stablecoins is a very real issue. As the Treasury points out, there's a very real possibility of a run. Two stablecoins have crashed so far, SafeDollar SDO, and $TITAN. They went all the way to zero. Can Tether survive a net outflow? Probably not. They don't have the collateral. Dai is really a derivative of Etherium. Dai is backed by Etherium at 150%. So value in Dai is at risk if the pr…

This is why I'm excited about Djed ( https://djed.xyz ). Input Output Global (creator of Cardano) has been researching stable coins and drafted a pretty extensive white paper on their solution ( https://eprint.iacr.org/2021/1069.pdf ). The white paper also include a mentions for how they will prevent bank runs.

> Input Output Global (creator of Cardano)

I worry there target release date of 2042 seems extremely aggressive for them based on past performance and some of there research might not be relevant by the time it comes out.

Re: Report on Stablecoins [pdf]

#105

Post by dragontamer » Mon, Nov 01, 2021, 9:04 PM UTC

hestefisk wrote: post #91

dragontamer wrote: post #76

Earlier quoted context omitted.

I'm describing a CDO scheme. Its important to remember the difference. Ponzi is a very, very different structure. CDOs do well as long as the underlyings don't crash beyond a certain value. The "junior" guys have lots of risk (and they _WANT_ the risk and enjoy it). The "senior guys" think they're safe. Indeed: senior/junior is roughly how we split up fiat dollars: banks do this with our money all the time (under tig…

Very interesting. Can you recommend any good books on this topic to learn more?

For 2008, I think one of the most approachable references is the PBS "Inside the Meltdown": https://www.pbs.org/wgbh/pages/frontline/meltdown/

* https://www.pbs.org/wgbh/frontline/film/meltdown/

The 2012 lookback has a bit more depth, since it had more time to do interviews and stuff: https://www.pbs.org/wgbh/frontline/film/money-power-wall-str...

There's of course, "The Big Short" if you want a stupid 2-hour movie. But that movie glosses over so many details and is straight up hyperbole at many points... so its not "realistic" but maybe a better thing to watch if you really don't want to put in much effort?

-------

I guess my post was based off of the Bloomberg blogpost "Looking for Tether’s Money" by Matt Levine. So read that for my original inspiration, though you may need a Bloomberg subscription to be able to read it.

Re: Report on Stablecoins [pdf]

#106

Post by wpietri » Mon, Nov 01, 2021, 9:05 PM UTC

dragontamer wrote: post #62

dexwiz wrote: post #49

All these coins are proven to be worthless. When speculation is making everyone money, the money isn't worth much. Edit: Love the immediate fear downvote. No one wants to hear their gold is really just shiny dirt.

The downvotes are because "worthless" is hyperbolic and unhelpful. Clearly, the coins have value because someone out there feels like paying money for them. More importantly: we _HAVE_ to understand the market dynamics here. What's going on is very human and very important to realize. Matt Levine from Bloomberg has a very simple explanation: the cryptocoin world has discovered "senior debt vs junior debt", and are us…

> Clearly, the coins have value because someone out there feels like paying money for them.

That's not a great definition of worth. Is the correct value for a Ponzi scheme really determined by the most recent dollar they took in? I'd say not.

Re: Report on Stablecoins [pdf]

#107

Post by dragonwriter » Mon, Nov 01, 2021, 9:05 PM UTC

nostrademons wrote: post #88

nightpool wrote: post #56

Earlier quoted context omitted.

Computers are a tool built to improve the lives of people. It does not make sense to consider them an end in-and-of-themselves.

So is capitalism, and yet capitalism has seemingly taken over human behavior in a way that many people find is not an improvement, and yet are powerless to stop. Complex systems often exhibit complex emergent behavior. Humans are part of that system. Humans are not the only part of that system, and it makes sense that agents interacting at speeds millions of times greater than us might eventually come to dominate the…

> capitalism has seemingly taken over human behavior in a way that many people find is not an improvement, and yet are powerless to stop.

Lots of people banded together to rollback the degree to which capitalism dominanted life in the developed world, and were pretty successful at it over the last century.

Re: Report on Stablecoins [pdf]

#108

Post by inter_netuser » Mon, Nov 01, 2021, 9:06 PM UTC

felixbraun wrote: post #20

Interesting to see Mastercard, Square, Stripe, FIS, Fiserv and Visa all mentioned in "Market Participants". None of those actively today use/settle stablecoins publicly?

all of the above are heavily involved in crypto.

Re: Report on Stablecoins [pdf]

#109

Post by whatshisface » Mon, Nov 01, 2021, 9:09 PM UTC

NikolaNovak wrote: post #87

silentsea90 wrote: post #75

Earlier quoted context omitted.

There's a canonical toxic response to this = HFSP. I don't like that because we're all still learning. I hope you see how the money printer is making scarce assets outside of Govt manipulation more valuable. The Bitcoin rabbit hole goes deep. You're right in that stablecoins might actually be worthless in the long run since they're backed by USD which might be worthless in due course of time. Zoom out of the day to d…

>>There's a canonical toxic response to this = HFSP. I don't feel this was your actual response, but I still need to address it because I don't understand how anybody ever can have that as a remotely legitimate, thought-out response. How can any financial instrument/currency make everybody "rich", in any real terms? If you gave everybody million USD tomorrow, it'd crash so bad that we'd be right back where we came fr…

>How can any financial instrument/currency make everybody "rich", in any real terms?

By organizing economic activity in a more efficient way than our present system of centrally planned debt supplies. That's what currency is "for" - organizing real activities.

Re: Report on Stablecoins [pdf]

#110

Post by JumpCrisscross » Mon, Nov 01, 2021, 9:10 PM UTC

agotterer wrote: post #72

Animats wrote: post #47

This is good. The backing of stablecoins is a very real issue. As the Treasury points out, there's a very real possibility of a run. Two stablecoins have crashed so far, SafeDollar SDO, and $TITAN. They went all the way to zero. Can Tether survive a net outflow? Probably not. They don't have the collateral. Dai is really a derivative of Etherium. Dai is backed by Etherium at 150%. So value in Dai is at risk if the pr…

This is why I'm excited about Djed ( https://djed.xyz ). Input Output Global (creator of Cardano) has been researching stable coins and drafted a pretty extensive white paper on their solution ( https://eprint.iacr.org/2021/1069.pdf ). The white paper also include a mentions for how they will prevent bank runs.

One of the problems this class of mechanisms runs into, in the real world, is that--particularly in times of crisis--liquidity and prices are discontinuous.

Djed doesn't seem to be vulnerable to the former. (Reserve coin holders transparently give up liquidity for their yield. Though, as the paper admits, reserve coin holders are subject to run mechanics.) It would be to the latter.

Still, fascinating stuff.