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Report on Stablecoins [pdf]

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Re: Report on Stablecoins [pdf]

#521

Post by swader999 »

paulryanrogers wrote: post #276
swader999 wrote: post #213

Earlier quoted context omitted.

Sure and I agree the USD at the moment has an incredible backing. Also it being the reserve currency and base for most other currencies and commodities is no small thing. You could argue that BTC is backed by one of the most powerful networks of computing power on the planet. I don't think that's better than what the USD has, but it isn't 'Nothing'. The fact it can't be debased as easily as fiat currencies is not a t…

It could be debased rapidly through collective regulation and enforcement. While that hasn't happened yet, at least consistently, there's no guarantee it won't happen.

Its value and utility would drop but it won't be debased in a technical sense. For now the kml/amc controls for the on and off ramps are so locked down I think the powers that be are satisfied. The tin hatters say this is just a warm-up to get us primed for a centrally controlled all digital central bank backed system that can be used to better control a populations use of carbon, vaccine uptake and whatever else they want to pull your strings with. I often wonder why they tolerate crypto. I hope this isn't why.

Re: Report on Stablecoins [pdf]

#522

Post by bluecalm »

tremarley wrote: post #348
arcticbull wrote: post #293

Earlier quoted context omitted.

> Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? All of these systems are already software. > If there was no value in it, why did we create all those institutions in the first place? Centralization makes them massively more efficient than crypto. If there was a way to make them more efficient that did not involve throwing risk models out the window or reg…

The only people that have no issues with centralisation are the people who are benefiting from it. World Bank estimates 31 percent of people globally do not have a bank account. Decentralisation helps these people. When you deposit money into a bank account, it is not your money. It is the bank's money. You aren't allowed to use it, or spend it how you like without the permission of your bank. Crypto doesn't have thi…

I personally know people who were running a HFT market making fund when their net worth were below one million. It's true it's not the easiest field to enter but that's the case for many others as well (medicine, law, competitive bike racing etc.).

Re: Report on Stablecoins [pdf]

#523

Post by stickfigure »

arcticbull wrote: post #306
stickfigure wrote: post #291

Earlier quoted context omitted.

Without the aircraft carriers, any mildly malevolent nation could print dollars. Some already try. There's no question that a large military is necessary to preserve USD as a world currency. You can't ignore this cost. Maybe the US would cut military spending, maybe not, but as long as it wants USD to be the coin of the realm, there's no choice in the matter.

This is intuitive but wrong, in three ways. (1) Domestically, the US Army does not enforce law or make sure the dollar is the "coin of the realm." That would violate Posse Comitatus act. US domestic law enforcement enforces laws, domestically - including legal tender laws. I agree you can apportion some of the strength of the US dollar to its legal system, which makes sense, as the currency is an emergent property of…

Counterfeit USD is a small, inexpensive problem because of US military might. The biggest guy in the playground never actually needs to fight.

Imagine for a moment the world suddenly adopted the Nicaraguan Córdoba as the common reserve currency. How long before it gets printed everywhere? Who is going to stop it? And how far do you think Nicaragua's AML/KYC regime would actually reach?

Iceland's currency wouldn't work as a world reserve either, for pretty much the same reasons. You can get away with being small and isolationist if your currency isn't that important.

Make no mistake, "cut off from the entire world financial system" requires the threat of violence. Banks get fined, countries get sanctioned, warrants are issued for people that have never set foot in the US. I don't know exactly how to apportion the cost of that enforcement, but I know you can't ignore it.

Re: Report on Stablecoins [pdf]

#524

Post by swader999 »

stickfigure wrote: post #291
arcticbull wrote: post #270

Earlier quoted context omitted.

> Yes, the USD is backed by the most absurd proof of violence the world has ever seen. No organization of human civilization has ever been able to summon as much death and despair as the United States. That has nothing to do with the currency. I'm not saying its good, or bad, I'm saying you've stapled together two unrelated concepts. The US army is a small fraction of GDP and exists to support the defense of the US a…

Without the aircraft carriers, any mildly malevolent nation could print dollars. Some already try. There's no question that a large military is necessary to preserve USD as a world currency. You can't ignore this cost. Maybe the US would cut military spending, maybe not, but as long as it wants USD to be the coin of the realm, there's no choice in the matter.

The reserve status of the dollar is absolutely dependent on the might of the USA military. Ask Libya what happened when they ventured down the path of trying to not use the petrol dollar to sell their oil.

Re: Report on Stablecoins [pdf]

#525

Post by lowkey »

throaway46546 wrote: post #520
lowkey wrote: post #511

Right now the intellectually curious can earn 19.5% in DeFi on stablecoins using Anchor protocol. No, it isn't FDIC insured, but insurance is available for 2-3% netting 16~17%. Unlike banks anyone anywhere has access to this free and open monetary network and the returns are 1700~2000 basis points higher than any US bank offers. https://www.reddit.com/r/CryptoCurrency/comments/qjhv42/anch... What if this guy is right…

From the thread: >I've been using Anchor + Mirror to get ~40% APY >It's not as degen as the other Defi, but it's very low risk This just screams scam to me.

Look into the Terra stablecoin network and read the whitepaper before dismissing it. The returns are very real. There is a reason that decentralized finance is the fastest growing industry in history. You may want to investigate with an open mind.

Re: Report on Stablecoins [pdf]

#526

Post by stickfigure »

bubbleRefuge wrote: post #352
stickfigure wrote: post #291

Earlier quoted context omitted.

Without the aircraft carriers, any mildly malevolent nation could print dollars. Some already try. There's no question that a large military is necessary to preserve USD as a world currency. You can't ignore this cost. Maybe the US would cut military spending, maybe not, but as long as it wants USD to be the coin of the realm, there's no choice in the matter.

He is right in the figurative sense that the government's power to tax and spend in its own fiat currency is what drives demand for the currency. W. Mosler, one of the founders of MMT, has this allegory: If we are in a room full of people with a single exit and I am blocking the exit with a gun in my hand and tell you you need one my business cards to exit the room, then my business card has value.

Sure, but the issue is not demand but supply. Enforcing the scarcity of USD requires a large military. Enforcing the scarcity of BTC merely requires electricity.

Re: Report on Stablecoins [pdf]

#527

Post by paulgb »

arcticbull wrote: post #518
panarky wrote: post #496

Earlier quoted context omitted.

Somebody holds large chunks of the $70.5 billion in USDT. Presumably, people who hold hundreds of millions of the stuff are well aware of every accusation made against Tether. If they wanted to, they could trade their USDT for actual US fiat on a 1:1 basis if they thought USD was worth more than USDT. The really smart money with large crypto stashes could borrow USDT with crypto as collateral, and trade the USDT for…

There’s nobody to trade $70B USDT with except Tether Inc and they’re not paying out haha. Those folks are trapped.

If you could borrow enough USDT though, you could still break the peg without transacting with Tether directly:

- borrow a ton of USDT

- trade it for USD on exchanges, eating away at organic demand as well as the reserves used to keep the peg

- eventually (presumably) the peg will break and the price will collapse, and you can buy back the USDT for cheap to repay the loan

The trouble is getting that USDT-denominated loan, though.

Re: Report on Stablecoins [pdf]

#528

Post by ryan_lane »

spir wrote: post #343
Igelau wrote: post #331

Earlier quoted context omitted.

Let's have a look at the top five. > a decentralized credit platform > a decentralized exchange liquidity pool > an open source, decentralized, non-custodial liquidity protocol > a smart wallet with an intuitive interface built on top of popular DeFi projects > an algorithmic money market protocol This is a circular argument for the utility of dApps. There's nothing here for someone who isn't already interested in cr…

I think that's fair because right now, most or almost all crypto apps are circular. Yet, I have found it useful to try and separate the fundamental innovations from the current set of assets being manipulated. Here is a partial list of fundamental crypto innovations: - non-custodial wallets in general to protect people from predatory institutions or governments - smart contracts that always do what they say they'll d…

> non-custodial wallets in general to protect people from predatory institutions or governments

You can do that now by hiding money in your mattress. In both cases, it's not on you to protect your money, and a lot of people who are tech savvy have been failing to do so. Regular folks are going to get robbed often.

> smart contracts that always do what they say they'll do

Except when they don't, because they have a bug, and all the money is stolen.

> inherent global jurisdiction of blockchains, ie. borderless

This is only true if you are able to spend the money as cryptocurrency. Once you try converting that into fiat, you start hitting those borders really quickly.

> vastly reduced transaction costs

Except that the transaction costs are higher, on average, and especially so if you consider the fees for converting from fiat, and back to fiat.

> Tesla stock (backed by custodially-held physical shares, not synthetics) has been available on Solana for some time

Sure, but a financial institute is holding those shares. You could cut the middle-man here (the cryptocurrency) and just use the financial institution.

Re: Report on Stablecoins [pdf]

#529

Post by Animats »

wpietri wrote: post #435
irae wrote: post #364

Earlier quoted context omitted.

> If you shut down Bitcoin mining it's immediately worth nothing. Except that it is impossible ever shut down Bitcoin mining at once( ). It might be more similar to gold than what you think. There are too many incentives to keep it up. The holders want value to be kept, the miners have vested interest in the system to continue to work. If you shut down, say, half the miners, this will create opportunity to other mine…

This is like arguing that the Beanie Baby market will never die. It's precisely the belief that the bubble will be eternal that helps inflate the bubble. For those unfamiliar, Beanie Babies were a collectible toy that had a multi-year fad in the 1990s, with 5-dollar toys trading for thousands: https://www.ft.com/content/1563d643-332f-3887-8c6e-caf7435f3... It's true that the Beanie Baby market never totally went away…

The Beanie Baby market on eBay is useful to study because it shows much the same behavior as NFTs. Beanie Babies are non-fungible - each one is different. So there's no "market price", just lots of individual offers. On eBay, you'll see asking prices around $5000. But if you look at completed transaction info, prices are around $50. That's what an illiquid market looks like. NFTs behave the same way - high asking prices, few transactions. Such markets don't crash, they stall.

Re: Report on Stablecoins [pdf]

#530

Post by throaway46546 »

lowkey wrote: post #525
throaway46546 wrote: post #520

Earlier quoted context omitted.

From the thread: >I've been using Anchor + Mirror to get ~40% APY >It's not as degen as the other Defi, but it's very low risk This just screams scam to me.

Look into the Terra stablecoin network and read the whitepaper before dismissing it. The returns are very real. There is a reason that decentralized finance is the fastest growing industry in history. You may want to investigate with an open mind.

I don't see how there can be risk free 40% gains without them being arbitraged away. It is the equivalent of printing money. If the gains are real the only logical conclusion is that the risks are being underestimated.
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