https://i.imgur.com/qz4EeQS.jpg - This is (was?) their ads "15% interest. No surprises."
Not surprisingly 15% of 0 is still 0.
YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
141–150 of 411 posts
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#142Earlier quoted context omitted.
I feel like “safe” needs a giant asterisk applied to it in this sentence. Just because something didn’t explode previously, doesn’t mean it was safe until now.
No, perfectly safe three digit APR yield was the norm for months, and high double digit - for about 1.5 years. Checking the contracts was easy, as usually they were copied from other projects and thus known. Often capital was locked doing nothing at all, sometimes just providing liquidity in a lp pair. Took a while for the absurd risk premium to go down to its real value of ~0, crashing safe yields. Ironically, this…
You're using "safe" in a very odd sense.
If you're driving 200kph and crash, you weren't safe before the crash and unsafe afterwards.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#143They’re just one of several shiny fintech apps/websites running the same scam, a modern two-and-twenty on a ponzi — but with really nice UI. Alice (alice.co / @alice_finance) is another prominent one that may have lost customer funds, which was also using the Anchor protocol. It’s unclear how much they lost, but it’s interesting that Do Kwon’s name is still an actual logo listed on their home page. And Vertex Protoco…
I publicly called out LUNA/UST on Twitter a few times a few months before the collapse [0] [1]. Just stating this so it's clear that I don't have any interest defending them. That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not sa…
> the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff.
This was absolutely a thing; most large Ponzi schemes have feeder funds.
https://www.reuters.com/article/us-pwc-madoff-settlement-idU...
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#144"Stablegains makes earning with DeFi simple and safe for consumers and businesses alike."
There's no such thing as a free lunch, and you cannot earn above inflation returns without taking on risk. Even money market funds, which is what stablecoins are similar to for fiat currencies, are not without risk.
Can you even earn below inflation without risks? Actually you can't even keep your money/wealth without risks...
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#145I always wonder with such things where the line between dishonest advertising and fraud is. To me its fraud, but a lot of people take a different view. E.g. in a lot of countries in Europe, banks were offering loans where the debt was registered in Swiss Francs. They advertised it as really safe, but it wasn't and they knew it. But in some countries the banks got into issues with authorities and in others it was viewed as the risk that the borrower should've known. I'm never really sure where to draw the line.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#146I think what's more interesting than the semantics of ponzis, this is a YC company ?!
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#147Earlier quoted context omitted.
It's a great analogy because: Banning watering gardens is exactly as dumb as banning proof of work. The vast majority of water wastage occurs irrigating farms supporting crops that are unsuitable for that area. A solar panel connected to a coin miner is only doing good in the world. Where is the negative? You sure it's the mining that is the bad thing and not the dirty energy?
The problem is that you need an entire supply chain and manufacturing to provide you with your solar panel and gpu. We are mobilizing all these resources and manufacturing capacity to do what? Run infinite loops on a useless program? Meanwhile at my lab that works on bio simulations they could not find gpus to do their research.
I really don’t understand this line of thinking.
Are gamers just running useless programs too?
We mobilise resources for whatever people want to pay for… “why” they want to spend their money on that has never been an issue.
Is Gucci wasting leather that could otherwise be used to make school shoes? Ban Gucci!
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#148The whole idea was to become a middleman to a ponzi scheme and charge a performance fee. They described what they are doing in their documentation, but the core ethical problem here is that the only users that would use their service are those incapable of understanding how UST/Terra worked, because anyone capable of understanding would just deposit funds directly and get higher APR for the same risk! Extremely preda…
I don't see how stablecoins are fundamentally a ponzi scheme, it's really not hard to imagine a sustainable stablecoin business model - reinvest what people pay into the stablecoin, keep risk low so you don't lose your principal and end up unable to repay debtors, keep enough in reserves that the stablecoin doesn't collapse in a bank run, and cross your fingers. Now, you certainly COULD turn this entire scheme into a…
UST wasn't a stablecoin, it was a ponzi scheme along with Luna. The invention here is obfuscation - move the exponential ponzi growth part into a separate token. In a very straightforward ponzi $2M coming after $1M would allow initial owners to cash out with a 2x gain. Which is too obvious. UST instead would transfer all $2M to Luna sellers (real wealth) while printing just enough UST to provide 20% APR to previous depositors (may have been a bit higher in the past).
What happens when some old depositor wants to cash out? Money comes out of new money that's coming in. As long as there's enough new money it works (the fundamental ponzi property). The system also utilizes some liquidity buffers (liquidity pools with other stablecoins) that can absorb temporary volatility in a redemption demand - which works as long as money flow is positive. When that stops being true, and liquidity buffers run out - both UST and Luna started collapsing, with 100% of inflows redirected to UST sellers.
Viewed as a system - all difference to a traditional, straightforward ponzi disappears. Empirically, this obfuscation is so successful from the marketing perspective algostables with meaningless changes (or even not) will continue to proliferate, although it may take years for any to get as big as UST.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#149Earlier quoted context omitted.
I publicly called out LUNA/UST on Twitter a few times a few months before the collapse [0] [1]. Just stating this so it's clear that I don't have any interest defending them. That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not sa…
> the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. This was absolutely a thing; most large Ponzi schemes have feeder funds. https://www.reuters.com/article/us-pwc-madoff-settlement-idU...
Interesting. I had no idea, but it definitely makes sense. Thanks for sharing.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#150Jesus H. Christ they're called "Stablegains", how could anyone think this is anything besides a crypto bro ponzi scam op?!
They're Stablegains, not Stableprincipal ;)