The collapse of the IRON stable coin • Hacker News Board

Re: The collapse of the IRON stable coin

#101

Post by sva_ » Thu, Jun 17, 2021, 4:59 PM UTC

meowface wrote: post #13

Probably a dumb question, but is there any possibility of temporarily getting the price to slightly above 0 in order to let people get their money out? For example, could some group with a lot of money offer to buy/sell a bit until the oracle considers it above 0, in exchange for some sort of compensation from the investors or devs?

Their docs state that there should be a max supply of 1 billion iron titan tokens[0]. But according to coingecko, there are over 27 trillion in circulation[1]. I think that's probably where the trouble started, and at that amount, I doubt they'll be able to get the price up. I may be totally wrong though, I heard about this project for the first time today.

[0] https://docs.iron.finance/iron-finance-on-polygon/titan-dist...

[1] https://www.coingecko.com/en/coins/iron-titanium-token

edit:

On further inspection, it seems like they'd just need to get the price up to the 6th digit[3]. I'm not sure it's feasible though.

[3] https://github.com/IronFinance/iron-polygon-contracts/blob/m...

Re: The collapse of the IRON stable coin

#102

Post by dehrmann » Thu, Jun 17, 2021, 5:02 PM UTC

aodin wrote: post #50

Udik wrote: post #32

Earlier quoted context omitted.

Yep, and btw, how can the price of anything be exactly 0? This doesn't sound right either.

Well, a price can go negative [1], so I wouldn't consider zero to be surprising. [1] https://www.cnbc.com/2020/04/26/why-oil-prices-went-negative...

Oil went negative in the same way the price of my trash is negative: more of it was being produced than people wanted to buy, but the producer had to get rid of it because they couldn't stop production. As another commenter said, you can just walk away from a digital asset, so this isn't a problem. I can't walk away from my trash.

Re: The collapse of the IRON stable coin

#103

Post by raziel2701 » Thu, Jun 17, 2021, 5:03 PM UTC

xqk8 wrote: post #82

boomer_joe wrote: post #23

>Non-collateralized stablecoins read: "ponzi scheme". This is pretty funny.

A Ponzi scheme requires a central actor like Charles Ponzi, you're quoting a description of a "purely algorithmic stablecoin" which implies no central actor to channel new investors' money to old, no central actor to defraud the new investors and by telling them they've gained money when they haven't. I guess they are comparable in the way that they both require a inflow of capital, is that what you're saying? That w…

I think we're splitting hairs with the definition, it's not a ponzi but it acts like a ponzi. It's a weird distinction I suppose, I personally have no qualms calling it a ponzi scheme because new money is needed to pay old money.

Re: The collapse of the IRON stable coin

#104

Post by sva_ » Thu, Jun 17, 2021, 5:03 PM UTC

meowface wrote: post #35

Udik wrote: post #32

Earlier quoted context omitted.

Yep, and btw, how can the price of anything be exactly 0? This doesn't sound right either.

According to the graph in the post ( https://miro.medium.com/max/6088/1*tzpAFvuxVeumWO8ENz_SZg.pn... ), it's somewhere around 0.0961 as of that time, and I suppose the price oracle they're using rounds that down to zero, perhaps? Or maybe the contract is rounding it down? Either way, I agree it's odd that exactly zero would be reported even if it's very close to zero. edit: Nevermind, I misread. It's -0.0961, apparen…

The price is actually something like $0.000000033869.

https://www.coingecko.com/en/coins/iron-titanium-token

Re: The collapse of the IRON stable coin

#105

Post by 52-6F-62 » Thu, Jun 17, 2021, 5:05 PM UTC

tluyben2 wrote: post #97

Semaphor wrote: post #84

Earlier quoted context omitted.

I can recommend checking out Reddit’s /r/cryptocurrency and branching out to smaller altcoint subreddits. Read the comments. There are thousands of people just looking for that one weird trick to get rich. As a sidenote, I almost always got out just before a crash by when I was playing with altcoins by waiting for people to get over the top enthusiastic in their subreddit and then selling everything. Might as well ha…

I was not even talking crypto but 'normal' CEOs. I mean a famous one was the guy (do not think he was the CEO but close to him?) from Groupon: he was a known scammer and yet, he gets bingo every time. And many many more. Edit: whoops I never knew what became of Groupon but I see it was a massive scam altogether. Seems the investors could have known that from the first time they met the founders by just typing some na…

Reminds me of Kevin O'Leary. Buddy toppled a software industry at the height of the first internet boom. That's either a special kind of incompetence or something worse.

They almost always seem to get bingo; the companies and the people that rely on them take the hit.

https://www.nationalobserver.com/2016/02/18/news/did-kevin-o...

Re: The collapse of the IRON stable coin

#106

Post by marton78 » Thu, Jun 17, 2021, 5:06 PM UTC

neither_color wrote: post #24

gruez wrote: post #9

This is good for USDC right? Because it's $262 million that they don't have to pay back? >EDIT: I’ve since learned that the developer(s?) behind this are already the laughing stock of the DeFi community, having wrecked each of their 3 previous projects (now 4) — though this might be their biggest hit yet And people poured $262 million into this?

Wait so USDC is linked to existing USD in a bank somewhere, so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones? Sorry if it's a dumb question Im not sure how stablecoins work.

Why should they? Suddenly they're over-collateralized by 262 millions, they might just as well spend that money.

Re: The collapse of the IRON stable coin

#107

Post by exporectomy » Thu, Jun 17, 2021, 5:06 PM UTC

meowface wrote: post #35

Udik wrote: post #32

Earlier quoted context omitted.

Yep, and btw, how can the price of anything be exactly 0? This doesn't sound right either.

According to the graph in the post ( https://miro.medium.com/max/6088/1*tzpAFvuxVeumWO8ENz_SZg.pn... ), it's somewhere around 0.0961 as of that time, and I suppose the price oracle they're using rounds that down to zero, perhaps? Or maybe the contract is rounding it down? Either way, I agree it's odd that exactly zero would be reported even if it's very close to zero. edit: Nevermind, I misread. It's -0.0961, apparen…

Negative 0.0961

Re: The collapse of the IRON stable coin

#108

Post by AlexandrB » Thu, Jun 17, 2021, 5:08 PM UTC

jefftk wrote: post #76

ww520 wrote: post #21

Here’s an arbitrage opportunity. Since the price of TITAN is 0, it only takes a small amount of $ to buy a vast amount of TITAN coins. Buy the locked out IRONs at a discount. Keep buying TITAN at $0 until it moves beyond $0 to satisfy the greater than 0 constraint on IRON. Cash out the IRONs.

I think that's why IRON is trading only slightly below the value of the locked collateral, instead of going down to zero.

I think it's foolish to assume that the price for any particular cryptocurrency is arrived at rationally.

Re: The collapse of the IRON stable coin

#109

Post by thebean11 » Thu, Jun 17, 2021, 5:10 PM UTC

RandomLensman wrote: post #78

thebean11 wrote: post #67

Earlier quoted context omitted.

Yeah I agree with that. Once the contract has executed, enforcement actions can certainly happen in meatspace. But do you not see the difference between: 1. A normal contract (legal or illegal) that requires outside enforcement in the first place to force parties to comply. 2. A smart contract (legal or illegal) that executes itself without outside enforcement and can be overturned later (not literally overturned, bu…

The vast majority of contracts in (1) does not need enforcing, because it is in both parties interest (at least long-term) to perform. Yes, there is implicit enforcement to some extent, but then "non-society" which don't even have that are not pretty places to be. On (2), sure we can find ways to have the execution fail. In fact, anything where there is not fully escrowed payment/collateral/etc. can fail to execute p…

> The vast majority of contracts in (1) does not need enforcing

Of course, people are very careful prior to entering those contracts, because they know how big of a headache it will be if enforcement is needed!

> In fact, anything where there is not fully escrowed payment/collateral/etc. can fail to execute properly if the other side does have not what it needs to deliver/or does not make it available on chain.

Well, sure, if you write a contract that makes it possible for one side not to pay up, then that might happen. Having software run escrow is basically the whole point..

Re: The collapse of the IRON stable coin

#110

Post by skybrian » Thu, Jun 17, 2021, 5:12 PM UTC

georgyo wrote: post #5

This has always been the problem with smart contracts. They are infact dumb contacts. To program one you need to think about all the edge cases. The programmers here likely did want >0 here. The possibility that the thing feeding price data return zero incorrectly was higher than the price legitimately being zero in their minds. There is no court or lawyer who can interpret the spirit of the contract.

This is less about actually going to court and more about counterparties being able to give each other a bit of slack based on customs in the profession and what was “really” meant because they may need to work with each other again someday. The courts are for when negotiations fail.