Report on Stablecoins [pdf] • Hacker News Board

Re: Report on Stablecoins [pdf]

#221

Post by [deleted] » Mon, Nov 01, 2021, 10:34 PM UTC

CryptoPunk wrote: post #211

NationalPark wrote: post #206

Earlier quoted context omitted.

Even the Cato blogger here concedes that wildcat banks failed more often and were probably fraudulent from the beginning some of the time (but you can't prove it!). His argument more or less boils down to regulation being inherently bad, therefore it's worth it to try this all over again with stablecoins, in case it works this time, also sometimes people got back like 95 cents on the dollar so if you don't count thos…

You've totally missed and mischaracterized the point of the article. That wildcat banks failed was never in dispute. They failed, by definition. As the monetary historian notes, wildcat banks were very rare, and the cause of wildcat banking was not, as alleged, lack of centralized regulatory gatekeeping: the failures were generally directly due to regulatory intervention that exacerbated risk, like prohibitions on ba…

[deleted]

Re: Report on Stablecoins [pdf]

#222

Post by swader999 » Mon, Nov 01, 2021, 10:35 PM UTC

Zamicol wrote: post #65

bradly wrote: post #57

Earlier quoted context omitted.

Is Dai similar to Gemini's GUSD stable coin? It too is backed by Etherium. I think Gemini is paying 8 or 9% APR for holding. Where is that money coming from? Are they loaning out for a higher rate than that?

Maker Dai is nothing like GUSD. https://en.wikipedia.org/wiki/Dai_(cryptocurrency) >Dai is a stablecoin cryptocurrency which aims to keep its value as close to one United States dollar (USD) as possible through an automated system of smart contracts on the Ethereum blockchain. [...] Dai is created from an overcollateralized loan[.]

Ampleforth is the most interesting 'stable coin' I've seen.

Re: Report on Stablecoins [pdf]

#223

Post by arcticbull » Mon, Nov 01, 2021, 10:35 PM UTC

swader999 wrote: post #204

BoiledCabbage wrote: post #192

Earlier quoted context omitted.

visa, paypal... all provide value in allowing commercial transitions. Exchange of goods and services, digitally or on credit. The value it is providing is eliminating the inefficiency of barter (which cash also does), and allowing remote digital transactions, again good for societal benefit. There is no societal benefit to buying, holding, selling a crypto currency. The thing that could provide societal value is smar…

There is value in having a monetary system though. And if BTC is a better system and more people find it's utility for barter or wealth preservation better it might appreciate more in relation to something like the USD which has many different characteristics.

It's a strictly worse monetary system by any measure. It's massively more expensive to transact, it's unbelievably inefficient - requiring as much power as Thailand and generating as much e-waste as the Netherlands to scribble 2-3 tx/sec into a ledger. That's 60 days of power for the average US household and 1 iPad of e-waste per transaction. [1] [edit](97% of all mining hardware will be thrown away without ever winning a single block reward).

If adopted as an actual currency it would immediately lead to a deflationary spiral savaging the job market. [2] Even the dictator of El Salvador wasn't nuts enough to adopt it as an actual currency. All pricing continues to be in USD and exchanged for BTC at the point of sale - and the point of a gun. (Keep in mind legal tender laws in ES require everyone to accept your Bitcoin for purchases or you face criminal charges).

To call it wholly unfit for any purpose except exchanging for black tar heroin would be an understatement.

[1] https://digiconomist.net/bitcoin-energy-consumption

[2] https://www.investopedia.com/terms/d/deflationary-spiral.asp

Re: Report on Stablecoins [pdf]

#224

Post by BoiledCabbage » Mon, Nov 01, 2021, 10:36 PM UTC

lamontcg wrote: post #140

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…

Tether can survive a net outflow because Tethers aren't redeemable in that way. If you show up with 1M USDT, they won't give you $1M USD. It'll have to collapse on exchanges with more sellers than buyers, and to determine how that happens you need to actually understand what specific mechanism underlies how the peg is maintained. I suspect Tether is all crypto-backed debt issuance which is denominated in real $USD wh…

Tether will collapse the same way that Squid Game Coin collapsed - extremely quickly.

Assuming a power distribution of coins across accounts, it's likely that 99% of tether accounts don't meet the 100,000 $USDT threshold to cash out. If you have a coin, where 99% of people/accounts aren't allowed to cash out that reeks of scam.

You can come up with tons of smoke to disguise it, and the whole "well you have to sell on another exchange, but prices there will be propped up due to 'arbitrage'" disguises and delays things nicely. But fundamentally it is propped up because people can't get out directly. There is no fair price discovery right now on Tether w.r.t. USD.

Re: Report on Stablecoins [pdf]

#225

Post by mediocregopher » Mon, Nov 01, 2021, 10:36 PM UTC

TomSwirly wrote: post #194

spir wrote: post #182

Earlier quoted context omitted.

Crypto "expert" here. We will have a catastrophic crash, it's normal and natural. But, the tech is here to stay and is 100x better than existing solutions. Crypto is changing the world, one crash at a time :)

> 100x better than existing solutions. And after ten years, there isn't one actual application of cryptocurrencies except for speculation and crime.

I buy legal goods with them. Just because you don't _want_ to use them doesn't mean no one else does.

Re: Report on Stablecoins [pdf]

#226

Post by spir » Mon, Nov 01, 2021, 10:38 PM UTC

lvl100 wrote: post #217

spir wrote: post #202

Earlier quoted context omitted.

I'm with you, where are the actual applications? I'd say this criticism was mostly fair up until about two years ago. Within the last two years, the actual applications have flourished. For example, have a look through this list https://defipulse.com/ If you remain skeptical, that's fair. The good news is, Ethereum is reaching adulthood this year by switching to proof of stake and launching the web of layer-2 network…

This is just pathetic.

There's a large subset of the talented people on HN that were wrong about crypto years ago-- they couldn't see that the casino and the innovation are, unfortunately, inseparable-- and many now cling to their original incorrect points of view, even as crypto is clearly changing the world like the internet did in the 90s and mobile in the 00s.

I have been full-time in crypto for years. I could write you a 10,000-word essay on crypto's promising use cases. But, I believe that you, and many others on HN, don't want to hear it.

That's too bad, because you guys grew up on sci-fi and rigor, and now you're ignoring that crypto is both rigorously successful and cypherpunk sci-fi come to life.

Re: Report on Stablecoins [pdf]

#227

Post by bduerst » Mon, Nov 01, 2021, 10:38 PM UTC

swader999 wrote: post #204

BoiledCabbage wrote: post #192

Earlier quoted context omitted.

visa, paypal... all provide value in allowing commercial transitions. Exchange of goods and services, digitally or on credit. The value it is providing is eliminating the inefficiency of barter (which cash also does), and allowing remote digital transactions, again good for societal benefit. There is no societal benefit to buying, holding, selling a crypto currency. The thing that could provide societal value is smar…

There is value in having a monetary system though. And if BTC is a better system and more people find it's utility for barter or wealth preservation better it might appreciate more in relation to something like the USD which has many different characteristics.

There is value in having a useful monetary system.

That ship sailed (multiple times) during the block size debacle for bitcoin, and there isn't nearly enough adoption with other cryptos to make them a useful payment system (aside from Monero if you're doing illegal activities)

Re: Report on Stablecoins [pdf]

#228

Post by mminer237 » Mon, Nov 01, 2021, 10:39 PM UTC

swader999 wrote: post #191

brightball wrote: post #181

Earlier quoted context omitted.

I always love looking at “market cap” for these things. As if every coin there could actually be sold for the price listed making it worth hypothetical billions. Even a small cash out will cut the value to pieces.

That's the same with many markets though. Market cap is a pretty silly metric to use for almost any market.

For stocks though the market cap is judged against earnings typically. The price can never get too low or the shareholders can just force a dividend to make the money directly from the underlying equity.

Re: Report on Stablecoins [pdf]

#229

Post by Zamicol » Mon, Nov 01, 2021, 10:40 PM UTC

yokem55 wrote: post #77

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…

150% is the minimum amount of collateral. If the USD value of your locked eth falls below that 150% threshold relative to your DAI denominated debt, a liquidator will pay off your debt and take your collateral. So, a conservatively managed Maker CDP's regularly are collateralized to the tune of 300% if not more.

Currently the whole Dai system is 215% collateralized. There's about $8 billion on loan and $17 billion in assets locked in the system.

https://daistats.com/

Re: Report on Stablecoins [pdf]

#230

Post by X6S1x6Okd1st » Mon, Nov 01, 2021, 10:40 PM UTC

okareaman wrote: post #64

Historically, we've had major bubbles and crashes in all kinds of financial markets, from stocks and bonds, to property and dotcom stocks. Is there any reason to believe that cryptocurrency is more stable and we won't have a catastrophic crash?

this is practically what cryptocurrency is known for