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$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

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Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#281

Post by vkou »

dlubarov wrote: post #182
vkou wrote: post #103

Earlier quoted context omitted.

> funded by some of the initial LUNA tokens. Which were bought by users in a zero sum-game. A ponzi is a zero-sum game where new entrants finance old exits. Just because the funding for the ponzi is done in a different currency doesn't mean it's not one. You can't create a closed system that generates wealth, and when you're growth hacking with your users' money, you are running a fraud.

Anchor protocol always retained the full amount of each UST deposit, plus additional rewards (whose funding was external to Anchor), so clearly Anchor is not a Ponzi, as I thought you were implying originally. Would you assert that any undercollateralized currency is a Ponzi? (Seems like stretching the definition to me.) Or that any system with unsustainable rewards is a Ponzi, even if there was no expectation that t…

You have the look at the system as whole, not just the UST side of it. The system as a whole was not doing anything that generated value, and could only pay yield as long as people were paying money into it.

This was the major innovation of UST. A ponzi that's sufficiently obfuscated that if you look at any part of the system in isolation, it seems fine.

You can have an uncollateralized currency - like baseball cards, but that's not what UST was. It made additional promices (like being a stablecoin, and offering yield).

You maybe even theoretically can create an uncollateralized stablecoin (that remains stable) but you're not going to attract $XY billion into your stablecoin without dangling a carrot to convince the greedy to invest. Investing into a stablecoin is stupid[1], because its price can't go up - so in this case, the carrot was fraudulent yield.

UST only had value because it was backed by Luna, and it only had demand for it because of the promises of yield. Luna was backed by nothing but speculation, driven by demand for UST. Once net money stopped flowing into the Luna ecosystem, the whole thing collapsed.

Any system that only works as long as net value flows into it, but produces no value of its own, but promises yields is a ponzi.

[1] Yes, there are use cases for it that don't involve speculation, but those use cases aren't going to see the market cap explode at the rate Tera/Luna did.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#282

Post by woodruffw »

thebean11 wrote: post #274
woodruffw wrote: post #266

Earlier quoted context omitted.

See the original comment: the point is that there's no actual way to verify the central claim ("$3B in Bitcoin was sold [...]"). We're expected to take everyone's word for it. This is in marked contrast to how two arbitrary users are expected to transact via a blockchain.

How would you verify that something was sold outside of a blockchain? The receiver of the item would need to prove it's in their possession, which is pretty easy on BTC. I guess I'm not sure how you get from that to privacy only being achievable by institutions?

I didn't. That's not a property I want in a financial system; it's one I want in a legal system.

The only points being made are that (1) virtually nobody actually wants their entire life's transactions recorded on an immutable public ledger, and (2) the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#283

Post by vel0city »

sfblah wrote: post #231
jliptzin wrote: post #186

Earlier quoted context omitted.

I never understood the argument why crypto was a good store of value. Sure, it’s an ingenious new transactional system, making global payments mostly frictionless, etc, but that’s true whether the value of 1 Bitcoin is $1 or $50,000. If everyone’s just converting back to fiat anyway, only keeping enough BTC transiently to settle transactions, why hold it long term?

That’s not totally true. The value of a Bitcoin does relate to how much effort miners put in. So, $1 might be low enough to allow some sort of attack on the network.

> The value of a Bitcoin does relate to how much effort miners put in.

It looks like you have the causal relationship there backwards. A bitcoin currently has value, so there's a lot of effort miners put in to get the block rewards + fees. But the amount of effort a miner puts in doesn't make the price go up, the price can move independently to hashrate.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#284

Post by [deleted] »

woodruffw wrote: post #208
thebean11 wrote: post #178

Earlier quoted context omitted.

Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..

> Why can't non-institutional actors achieve the same level of privacy? Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do th…

[deleted]

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#285

Post by namdnay »

dfdaffg423rag wrote: post #135
jpmattia wrote: post #115

Earlier quoted context omitted.

> hold some cash and hold some US treasuries. Pocket the interest. Become rich. Not getting what you're saying here: Only banks should have that privilege?

I'm saying, if you're making a US dollar backed stablecoin, you could do it with minimal risk and still profit handsomely by just holding US treasuries. Instead, we have stablecoins backed by all sorts of things like commercial paper in cryptocurrency exchanges.

Who is going to put their money in a stable coin paying 0.2% interest when the guy next door is offering 20%? Answer:anyone sane, but they wouldn’t be there in the first place

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#286

Post by arcticbull »

actionablefiber wrote: post #268
izzydata wrote: post #210

Earlier quoted context omitted.

Stock prices are back around where they were before the pandemic. It may have already been overvalued at that time, but perhaps it is a level of overvalue that people are comfortable with as we were already there before the system got flooded with money.

> Stock prices are back around where they were before the pandemic. This is not true, at least not for the U.S. stock market. Market indices are still up 20-30% over pre-pandemic levels.

Cool, and that was 2 years ago, during which many index components grew 20-30% year over year. Folks lose perspective on just how good these companies are at growing their revenues.

GOOG for instance, was making a trailing $160B per year going into COVID. Now it's making a trailing $270B per year. [1]

The S&P 500 P/E ratio is down to 20 from 25 on January 1, 2020, so the S&P 500 at least is 17% cheaper now than before COVID. [2]

And looking at mid-cap tech? Shopify is trading at a lower ticker price than at the bottom of the COVID drop on March 19, 2020 - despite having tripled their revenue since then.

A lot of companies are really cheap right now.

[1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve...

[2] https://www.multpl.com/s-p-500-pe-ratio/table/by-year

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#287

Post by solveit »

eric_cc wrote: post #241
sha255 wrote: post #215

Earlier quoted context omitted.

It’s interesting how cryptocurrency advocacy makes otherwise intelligent people discard all principles of engineering with forceful statements like “it’s impossible,” when the only thing realistically standing between someone and as much Bitcoin as they want is SHA-2 compromise. I’m amazed with the money in play that it hasn’t happened yet. It speaks to the strength of the SHA-2 suite (and, complicatedly for me, the…

“It’s impossible” - I agree it’s almost always too strong. However, remember we’re discussing the creation of trillions of bitcoin. Even if it occurred, do you really believe the chain would remain? It would be forked. I just can’t imagine a chain being totally compromised and its users being okay with it - both would need to be true.

A smart attacker wouldn't create trillions of bitcoin, they would create a steady trickle of bitcoin indistinguishable from a medium-sized private mining operation that is too small to be noticed for a good while but large enough to make the attacker very very rich. It won't be noticed for months or even years and you cannot erase years of history. There will be no fix, only damage control.

That said, SHA-2 being broken is not very high up on my list of cryptocurrency failure modes if only because there are much more immediate concerns... and I suspect most other people implicitly feel the same way.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#288

Post by mstipetic »

lumost wrote: post #129
lamontcg wrote: post #108

Earlier quoted context omitted.

> “In a sense, the market is going to take that as kind of bullish.” I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. There's probably going to be a positive bounce just because markets don't move in straight lines. There is always the chance that something else explodes due to stress tomorrow and hits the headlines and crypto and/or stocks start m…

The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?

What else should it be correlated to? It’s not like there’s anything to support it’s underlying value

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#289

Post by aqme28 »

vmception wrote: post #17

I mean that was the expected outcome and now people are like “proof of the expected outcome!?!” Following months of outcry about the unsustainable nature of Terra Luna, Do Kwon through his foundation tried to partially collateralize the stablecoin with bitcoin, with a goal of buying up to $10bn of bitcoin. He got $3-5bn (at the time, price changed a lot), and this prolonged the confidence system for one additional mo…

> People want to see Do Kwon have more reasons to have charges against him, but there’s no need to attribute it to malice, everything can be explained by incompetence already.

Does there need to be malice rather than incompetence, for charges to be filed?

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#290

Post by thebean11 »

woodruffw wrote: post #282
thebean11 wrote: post #274

Earlier quoted context omitted.

How would you verify that something was sold outside of a blockchain? The receiver of the item would need to prove it's in their possession, which is pretty easy on BTC. I guess I'm not sure how you get from that to privacy only being achievable by institutions?

I didn't. That's not a property I want in a financial system; it's one I want in a legal system. The only points being made are that (1) virtually nobody actually wants their entire life's transactions recorded on an immutable public ledger, and (2) the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely.

> the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely

I guess this is where I don't know what you mean, specifically

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