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TerraUSD crash led to vanished savings, shattered dreams

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Re: TerraUSD crash led to vanished savings, shattered dreams

#111

Post by jmyeet »

gruez wrote: post #95
jmyeet wrote: post #85

Earlier quoted context omitted.

I agree, which is why everyone who lives off an income rather than assets (which is ~99.5% of us) should be a leftist and support labor organization as that is the only thing that'll actually improve their material conditions. And I mean leftist in the actual sense, not a feckless liberal in the US Democratic Party sense who still ultimately exist to defend the capital-owning class. The so-called Great Resignation an…

>I agree, which is why everyone who lives off an income rather than assets (which is ~99.5% of us) I think you're greatly underestimating how many people can "live off [...] assets". This page shows household net worth by percentile[1]. Based off that, you can probably live off investments starting at around the 90th percentile ($61k annual income with 5% withdraw rate), if you live modestly in a low CoL state. Once…

> I think you're greatly underestimating how many people can "live off [...] assets"

1% of households are worth >$11m? Is that really true? I have trouble believing that but it could be true.

Either way, all it does is change it so that 95% of people should be leftists.

Also FWIW living off those assets at the lower percentiles that you mention doesn't factor in inflation, which is currently more than the 5% returns you mentioned. And a real return of 5% is a somewhat more aggressive strategy. It's more likely (and suggested) that at a certain point portfolios should become defensive as a amssive drop is way more impactful than a large positive gain.

It's also worth noting that these net worth figures include your net house value. You're not making a return on that money. In fact it's costing you money. Sure you could not own, get a return on that money instead and rent instead but that opens you up to other risks (eg as we're seeing now with massive rent hikes).

Re: TerraUSD crash led to vanished savings, shattered dreams

#112

Post by dubswithus »

unmole wrote: post #46
sumy23 wrote: post #10

Earlier quoted context omitted.

People are so smug when they say “I told you so.” It really bothers me. On every negative story about crypto, so many people comment “hur dur financial regulation dur”. But that’s so easy to say after the fact. If these people really could foresee these events happening, then they could have made a lot of money by taking short positions. That would be a lot more impressive to me than taking cheap opportunities to fee…

> But that’s so easy to say after the fact. HN was almost always negative about the crypto currency hype. Even when shitcoins were at ATH. So, no. The criticism is not after the fact. > If these people really could foresee these events happening, then they could have made a lot of money by taking short positions. Markets can stay irrational longer than you can stay solvent has been a cliche for almost a century. That…

Y Combinator was an investor in Coinbase and other crypto startups.

Sam Altman personally invested in Worldcoin.

You are posting on a forum of an incubator that supports crypto. The irony.

Re: TerraUSD crash led to vanished savings, shattered dreams

#113

Post by MBCook »

superb-owl wrote: post #66
MBCook wrote: post #55

Ok I’ve never tried to look into TerraUSD or other stablecoins before. So I have $100. I use that to buy $100 worth of Terra because it’s pegged to USD. Then I can.. sell it for $100? What’s the point? If they promise returns where are they supposed to come from? If my coins are pegged to USD how do they appreciate? Or is the idea they just give me more for holding? But if the coins are pegged where do they get the m…

Stablecoins are useful, because they let you set prices on the blockchain that aren't denominated in BTC or ETH or another currency that fluctuates wildly. A good stablecoin is pretty boring in terms of gains/profits, but can generate a modest stream of fees. Terra had a sister coin called Luna which it planned to use to keep Terra stable. Luna had the price dynamics of ETH or BTC, where it's value depended solely on…

How is having a sister coin supposed to stop volatility in the stablecoin?

Re: TerraUSD crash led to vanished savings, shattered dreams

#114

Post by KMag »

dustyharddrive wrote: post #37
ceeplusplus wrote: post #12

Earlier quoted context omitted.

The biggest scam Stablegains pulled was to advertise taking USDC (most trusted stablecoin, backed by real, audited reserves), as to imply they were providing USDC lending yield, when in reality they converted your money to UST funny money.

It’s worth mentioning USDC (Circle) reserves have never been audited, and they don’t even claim to hold dollars anymore ( https://archive.today/2021.07.12-223553/https://www.ft.com/c... ): > Until March 2020, the attestations said USDC was backed by dollars, held in government-backed US depository institutions. After that, they said the reserves were held at institutions and in “approved investments”, but did not giv…

The thing I never understood was why they didn't just invest in treasuries. Yield on the US 10-year is currently north of 3.3%, closer to 2% for a while. That's under inflation, but if you're a small start-up holding 100s of millions or billions of other people's money, that's enough to hit screw-it money in a few years without the constant fear of things going terribly wrong.

Re: TerraUSD crash led to vanished savings, shattered dreams

#115

Post by KMag »

MBCook wrote: post #113
superb-owl wrote: post #66

Earlier quoted context omitted.

Stablecoins are useful, because they let you set prices on the blockchain that aren't denominated in BTC or ETH or another currency that fluctuates wildly. A good stablecoin is pretty boring in terms of gains/profits, but can generate a modest stream of fees. Terra had a sister coin called Luna which it planned to use to keep Terra stable. Luna had the price dynamics of ETH or BTC, where it's value depended solely on…

How is having a sister coin supposed to stop volatility in the stablecoin?

Having not looked into it, and just pulling this out of my rear, presumably the assumption would be that if it has low correlation to other cryptocurrencies, then it improves the stability of the basket of backing cryptocurrencies. Even if the correlation is high, anything less correlated than +- 1.0 helps the diversified basket.

Re: TerraUSD crash led to vanished savings, shattered dreams

#116

Post by MBCook »

wmf wrote: post #69
MBCook wrote: post #55

Ok I’ve never tried to look into TerraUSD or other stablecoins before. So I have $100. I use that to buy $100 worth of Terra because it’s pegged to USD. Then I can.. sell it for $100? What’s the point? If they promise returns where are they supposed to come from? If my coins are pegged to USD how do they appreciate? Or is the idea they just give me more for holding? But if the coins are pegged where do they get the m…

The reporting is skipping some steps. You'd buy UST then deposit it into a "separate" bankish thing called Anchor which would pay you 20% APR. The interest was supposed to come from Anchor loaning out your UST at a higher rate. This would be sustainable in theory, but they were actually paying interest out of their marketing budget to bootstrap the Terra/Luna/Anchor "ecosystem".

So I take my coin, pegged to the dollar, and lend it Anchor for a 20% return.

Anchor lends it out to someone else at >20% APR because that other person is… brain dead? Who would accept that?

But again, where do the new Terra coins come from? If Anchor pays me in more stable coins, they had to buy USD to be allowed to mint them right?

Does that mean I bought Terra with USD to allow Anchor (which is Terra?) to sell my Terra to get USD to lend out at usurious rates to make USD to buy Terra to make up what they sold if mine and pay my returns?

Is that right?

How does anyone take any of this at face value? Why not just take USD to lend USD to get USD to return USD?

I’m ignoring answers like money laundering and avoiding KYC and other financial regs. If we assume everything is truly on the up-and-up how does this ever make any sense?

And again who borrows money, probably denominated in some crypto, at >20%? Isn’t that kind of the crux of the whole system? You’d need those people for this to work?

I understand, though disagree with, many pro-BTC arguments. I even understand the pro-NFT arguments. This… I can’t think of any plausible argument from my current understanding.

Re: TerraUSD crash led to vanished savings, shattered dreams

#117

Post by MBCook »

ano88888 wrote: post #105
MBCook wrote: post #55

Ok I’ve never tried to look into TerraUSD or other stablecoins before. So I have $100. I use that to buy $100 worth of Terra because it’s pegged to USD. Then I can.. sell it for $100? What’s the point? If they promise returns where are they supposed to come from? If my coins are pegged to USD how do they appreciate? Or is the idea they just give me more for holding? But if the coins are pegged where do they get the m…

the biggest utility is moving money across borders. Not sure about TerraUSD but USDT is very valuable in a lot of countries like Dubai and others. It is the heaven for money laundering or avoiding tax and the demand and transaction volume is hugeee. For example, in south east asia , all the casinos, digital frauds, drug sales are using USDT as a way to move money or transact.

I can see how this could easily be used for that. I’m trying to figure out the theoretical legit use for this.

Re: TerraUSD crash led to vanished savings, shattered dreams

#118

Post by MBCook »

dubswithus wrote: post #112
unmole wrote: post #46

Earlier quoted context omitted.

> But that’s so easy to say after the fact. HN was almost always negative about the crypto currency hype. Even when shitcoins were at ATH. So, no. The criticism is not after the fact. > If these people really could foresee these events happening, then they could have made a lot of money by taking short positions. Markets can stay irrational longer than you can stay solvent has been a cliche for almost a century. That…

Y Combinator was an investor in Coinbase and other crypto startups. Sam Altman personally invested in Worldcoin. You are posting on a forum of an incubator that supports crypto. The irony.

If VCs think they can make money in the next pet rock, they’ll try.

It doesn’t make pet rocks an important or useful product. Just something people can make money on.

Re: TerraUSD crash led to vanished savings, shattered dreams

#119

Post by prostoalex »

gruez wrote: post #102
KMag wrote: post #56

Earlier quoted context omitted.

In my experience, it seems that a lot of people have an un-stated gut feeling that "doing something" must out-perform passive dollar cost averaging a broad low-fee index ETF. If we came up with some obfuscated mathematical dance that, if un-obfuscated, were obviously dollar cost averaging in a broad-based low-fee index ETF, I think it would be more popular. Edit: There are also lots of investment strategies where peo…

>Edit: There are also lots of investment strategies where people are short tail-risk and don't realize it or properly account for it. For instance, my dad is a pretty smart guy (practicing medical doctor who never got his undergrad degree because he crushed the MCATs and got into med school after 3 years of undergrad, back in the 1970s when med school was less competitive) but he's convinced that his gut-feeling cove…

Not saying the strategy outperforms, but he should be aware that there are ETFs now covering the covered-call strategy - XYLD, RYLD, QYLD - which automate most of that at reasonable cost.

Re: TerraUSD crash led to vanished savings, shattered dreams

#120

Post by sumy23 »

rurp wrote: post #79
KMag wrote: post #56

Earlier quoted context omitted.

In my experience, it seems that a lot of people have an un-stated gut feeling that "doing something" must out-perform passive dollar cost averaging a broad low-fee index ETF. If we came up with some obfuscated mathematical dance that, if un-obfuscated, were obviously dollar cost averaging in a broad-based low-fee index ETF, I think it would be more popular. Edit: There are also lots of investment strategies where peo…

Heh, I think that idea has a lot of promise. Casinos might offer some guidance here given how good they are at making games with fairly straightforward negative odds seem enticing. We need some sort of responsible investing vehicle that includes gamification, intermittent reinforcement, and a tiny chance for a huge payoff.

> We need some sort of responsible investing vehicle that includes gamification, intermittent reinforcement, and a tiny chance for a huge payoff.

You’re basically describing options.

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