Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The collapse of the IRON stable coin

irony-97882.medium.com

Post reply on HN
Print view View original

121–130 of 502 posts

Re: The collapse of the IRON stable coin

#121

Post by xqk8 »

raziel2701 wrote: post #103
xqk8 wrote: post #82

Earlier quoted context omitted.

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.

A Ponzi scheme without anyone running it isn't a Ponzi scheme.

> new money is needed to pay old money

WOW that's a broad definition. Turns out my 401k is a Ponzi!

Do you know the difference between, say, a pyramid scheme and a Ponzi scheme? Or is "new money is needed to pay old money" the most nuanced understanding you have?

Re: The collapse of the IRON stable coin

#122

Post by easrng »

runbathtime wrote: post #74
ganzuul wrote: post #70

Earlier quoted context omitted.

> but why would Circle want to help out this contract and lose 262 million? Probably a rhetorical question, but they might decide that it's a price they can pay for trust in their system. Not sure if I understood where the real value currently is though.

USDC's system didn't fail. The money transmitter (smart contract- IRON/TRON) failed, if the USDC is indeed 'locked' or not able to be transmitted. USDC can't be compelled by anyone to 'fix' this. If USDC can revoke any p2p transaction of USDC, that means that they can revoke the transmission of movement of dollars/reserves that USDC token represents. Implicit in that, means they have ultimate control or authority of…

I don't remember if there's a way to lock a specific token but I've read the contract and 1. It's behind an UpgradabilityProxy so it can be changed and 2. It includes functions to blacklist addresses and even temporarily pause all transactions.

Re: The collapse of the IRON stable coin

#123

Post by sva_ »

tanzann wrote: post #115
Dotnaught wrote: post #61

The line of source code cited in the post isn't immediately evident in the Iron Contracts repo: require(_share_price > 0, “Invalid share price”); https://github.com/IronFinance/iron-contracts Is it in a different repo? Does it exist?

Seems this line is in Polygon contract: https://github.com/IronFinance/iron-polygon-contracts/blob/m...

I think it ultimately boils down to

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

> uint256 private constant PRICE_PRECISION = 1e6;

yikes :D

Re: The collapse of the IRON stable coin

#124

Post by shkkmo »

kevincox wrote: post #79
ceejayoz wrote: post #36

Earlier quoted context omitted.

I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.

Sure, but if you both sign a legal contract to obey the outcome of the smart contract then no one owes anything, because the smart contract says that the $200M is gone. Obviously this doesn't allow you get around laws such as warranties but I don't see why it can't be used if everyone agrees to it.

> Sure, but if you both sign a legal contract to obey the outcome of the smart contract then no one owes anything,

You are begging the question by presupposing that for every smart contract there could be a possible legal contract that can bind the people who sign it to the results of the smart contract.

If a smart contract is illegal, then any written contract that binds people to the results of that contract would be similarly illegal.

Re: The collapse of the IRON stable coin

#125

Post by xqk8 »

jonfw wrote: post #98
xqk8 wrote: post #82

Earlier quoted context omitted.

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…

A ponzi scheme largely refers to a scheme where you invest capital to get access to the future inflow of capital, where that future inflow of capital comes from other investors who are hoping to access future inflows of capital, etc. The difference between this and a startup is obvious- a startup intends to become financially independent at some point

It certainly doesn't largely refer to that. It requires a central actor to defraud new investors, promise investors returns that haven't actually been realized, channel their money to pay off the old ones. If you read up on why it's named a Ponzi scheme you can understand how they work.

Re: The collapse of the IRON stable coin

#126

Post by dkokelley »

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?

I'm wondering the same. I don't know how the mechanics of blockchain oracles work, but it seems feasible that the oracle operators could report a price high enough for the contract to believe it's `> 0`.

Reasons why this might NOT work:

1. The oracle "broadcasts" the price to the network, which other services may rely on. Broadcasting a false price could hurt those services, and the oracle would lose credibility.

2. The oracle's price is somehow tied into other blockchain mechanics (i.e. it can only report a price that the network consensus agrees is true)

I'm not sure how #2 could be true, since the purpose of an oracle is to provide information that the blockchain can't determine on its own.

EDIT: More info on the price oracle in use here: https://docs.iron.finance/mechanism/pricing-oracle

Still not sure the exact mechanism, but #1 seems to be the concern. Chainlink can't readily tamper with the price feed that may be in use by others.

Re: The collapse of the IRON stable coin

#128

Post by sashimi-houdini »

hungryforcodes wrote: post #59
sashimi-houdini wrote: post #39

Earlier quoted context omitted.

But cryptocurrency's answer is usually not "how can we do better" but "how can we repeat the same mistakes in a shorter time span?"

Cryptocurrency is incrediably diverse at this point, so you would have to be more specific.

Is TFA specific enough for you? It appears to be about the inevitable outcome of imitating banks in an unregulated context. A top level comment here is about the outcry for regulation that this then produces.

Re: The collapse of the IRON stable coin

#129

Post by dragonwriter »

exdsq wrote: post #81
JohnWhigham wrote: post #54

Earlier quoted context omitted.

Seriously. I posit that many of the programmers in the field have no financial background whatsoever, on top of whatever shaky software background they may also have (especially if they went to a bootcamp). Just hilarious to watch.

I've worked in the space for a few years and can say it's been the opposite experience for me. Had the chance of working on a Haskell project with the original creators of Haskell, being taught QuickCheck by the creator of QuickCheck, testing economic ideas created by professors of Economics at top universities, and sponsored entire compilers and languages to help ensure the software was as solid as possible. One of…

The existence of some “absolutely insane” highly-skilled, well-trained, well-funded teams in the field doesn’t mean that there aren’t also lots of poorly-qualified teams without the up-front funding for development trying to cash in on all the money sloshing around the field.

Re: The collapse of the IRON stable coin

#130

Post by RandomLensman »

thebean11 wrote: post #109
RandomLensman wrote: post #78

Earlier quoted context omitted.

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,…

Most contracts are so basic as to be invisible, so no, people are not very careful when they buy a chocolate bar, for example

If you want smart contracts to be only applicable to very narrow sets of problems so be it, but otherwise you need to be able to allow, for example, unsecured lending and highly uncertain payoffs at T0 (staying in the finance domain)

Post reply on HN