The collapse of the IRON stable coin • Hacker News Board

Re: The collapse of the IRON stable coin

#161

Post by opsecweather » Thu, Jun 17, 2021, 6:08 PM UTC

tluyben2 wrote: post #73

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?

As I get older, I do not understand how known scammers, especially the ones that raise millions over and over, get support time and time again. If not in jail, why do they still get jobs. I know some who just told me in my face that they were scammers of millions (or simply were happy screwing people even with viable ways out) and they raise money again, screw people again etc. People do use Google right? Due diligen…

Our IronBank (lending), IronSwap (pegged assets-focused swap) have been developed already and will be live for testing soon. Iron stablecoin v2 will come later.

https://ironfinance.medium.com/iron-finance-post-mortem-17-j...

Re: The collapse of the IRON stable coin

#162

Post by thebean11 » Thu, Jun 17, 2021, 6:09 PM UTC

RandomLensman wrote: post #130

thebean11 wrote: post #109

Earlier quoted context omitted.

> 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)

> people are not very careful when they buy a chocolate bar

Ok..sure, but I think it's sort of pedantic to bring up a class of contract that, obviously, nobody in this thread is talking about. It's a bad example anyway; even if you are being pretty careful it's simply not a risky transaction and therefor out of scope for complicated enforcement mechanisms like smart contracts.

I don't think smart contracts are very well suited to unsecured lending, at least not with available software. There would be no incentive to pay it back without some mechanism to force collections. Collateralized loans, however, is a great use case that exists already.

This is early stage tech, the scope is pretty small. I don't think anybody is arguing the contrary.

Re: The collapse of the IRON stable coin

#163

Post by dlubarov » Thu, Jun 17, 2021, 6:12 PM UTC

bruce343434 wrote: post #139

meowface wrote: post #18

Earlier quoted context omitted.

I can't imagine it'd be possible. There're a whole lot of Andy Kaufman-esque / kayfabe / "the most entertaining outcome is the most likely" things going on. Literally no conceivable parody could work as an actual parody, I think. There are coins people are getting rich off of with names and logos like "Pregnant Butt", "CumRocket", racial slurs, etc. There's absolutely no doubt in my mind that if it hasn't already hap…

> Doesn't matter if you do or don't publish the verified source code; if you do, no one will look at it, and if you don't, no one will notice/care that you didn't before investing their life savings in it. As someone who doesn't know much at all about crypto, it seems insane that apparently coins can be closed source? But how? How does the chain know what code to execute?

Ethereum apps are typically written in Solidity before being compiled to EVM bytecode. The EVM bytecode must be public, but one could keep the (more readable) Solidity code private, like distributing an executable without the source. I think it would be unusual though.

Re: The collapse of the IRON stable coin

#164

Post by tigger0jk » Thu, Jun 17, 2021, 6:14 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.

Also, if the price of TITAN is 0, then you really can't pay out 25 cents worth of it... It does seem correct that the contract should handle such a case differently than just trying to pay you out UNDEFINED DIVIDE BY ZERO ERROR count of TITAN

Re: The collapse of the IRON stable coin

#165

Post by AlexCoventry » Thu, Jun 17, 2021, 6:15 PM UTC

bruce343434 wrote: post #139

meowface wrote: post #18

Earlier quoted context omitted.

I can't imagine it'd be possible. There're a whole lot of Andy Kaufman-esque / kayfabe / "the most entertaining outcome is the most likely" things going on. Literally no conceivable parody could work as an actual parody, I think. There are coins people are getting rich off of with names and logos like "Pregnant Butt", "CumRocket", racial slurs, etc. There's absolutely no doubt in my mind that if it hasn't already hap…

> Doesn't matter if you do or don't publish the verified source code; if you do, no one will look at it, and if you don't, no one will notice/care that you didn't before investing their life savings in it. As someone who doesn't know much at all about crypto, it seems insane that apparently coins can be closed source? But how? How does the chain know what code to execute?

Most chains have a low-level representation which higher-level smart contrast source code is compiled to. E.g.,have a look at the "contract creator creator code" section on this contract:

https://etherscan.io/address/0x1a2a1c938ce3ec39b6d47113c7955...

Re: The collapse of the IRON stable coin

#166

Post by random023987 » Thu, Jun 17, 2021, 6:16 PM UTC

RaketenStadt wrote: post #155

EDEdDNEdDYFaN wrote: post #150

Earlier quoted context omitted.

"They are comparable in that both keep working as long as no one tries to cash out, and money keeps coming in." So...a Ponzi scheme?

No, much different, in a Ponzi scheme you're fraudulently claiming that the high returns you're delivering your old investors are real, and result from your investing acumen, when in fact they aren't real, they're just money from new investors that was never invested in the first place. They are comparable in one way however.

So it's an honest Ponzi scheme?

Re: The collapse of the IRON stable coin

#167

Post by missblit » Thu, Jun 17, 2021, 6:16 PM UTC

shkkmo wrote: post #138

exporectomy wrote: post #92

Earlier quoted context omitted.

How is that thing you've been saying relevant here or how does it lead to your 2nd paragraph? Smart contracts meet all your requirements for a contract just as PDF contracts do.

I believe the point the poster was making is that "smart contract" is a misnomer and contracts comprised of code should be more realistically called "dumb contracts" since they lack the intelligence to understand and compensate for context and intent.

They really shouldn't be called contracts at all, since intent ("meeting of the minds") is a fundamental part of contract law.

Imagine for example if a mortgage contract contained some bizarre inscrutable loophole that as-written would give the first 3rd party to notice it total control over over the house.

This would of course be laughed out of court because that part of the contract wouldn't be enforcable under contract law.

"Code is law" is more accurately written as "code is not law at all".

Re: The collapse of the IRON stable coin

#168

Post by only_as_i_fall » Thu, Jun 17, 2021, 6:17 PM UTC

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.

A valid contract requires a meeting of minds such that inserting something designed to trick the other party inside a contract is pretty much always invalid.

If you sign a contract to abide by a smart contract that was designed in bad faith or misrepresented I fail to see how that's any different.

Even valid contracts are bound by the law. E.G. you can't sell yourself into slavery. Similarly, a smart contract can be a tool to execute the terms of a legal contract, but if it behaves in a way that would be illegal under a traditional contract I doubt any court in the US or Europe is going to recognize that as legal.

I admit enforcement is another issue entirely though.

Re: The collapse of the IRON stable coin

#169

Post by RaketenStadt » Thu, Jun 17, 2021, 6:23 PM UTC

random023987 wrote: post #166

RaketenStadt wrote: post #155

Earlier quoted context omitted.

No, much different, in a Ponzi scheme you're fraudulently claiming that the high returns you're delivering your old investors are real, and result from your investing acumen, when in fact they aren't real, they're just money from new investors that was never invested in the first place. They are comparable in one way however.

So it's an honest Ponzi scheme?

Bernie Madoff went to prison for fraud, what would "an honest Ponzi scheme" even mean?

I think a lot of people saw The Wizard of Lies and "Ponzi scheme" is the only financial scheme they're familiar with, so it gets thrown around a LOT.

Re: The collapse of the IRON stable coin

#170

Post by juliansimioni » Thu, Jun 17, 2021, 6:24 PM UTC

bombcar wrote: post #55

> Non-collateralized stablecoins require continual growth to be successful. In the event of a price crash, there is no collateral to liquidate the coin back into, and the holder’s money would be lost, as seen with many past projects trying to utilize such design [sic]. Isn’t that just a Ponzi scheme?

No, much different:

In a ponzi scheme, the perpetrators will not willingly directly reveal that it's a ponzi scheme.

In cryptocurrency, the perpetrators are honest and transparent about it being a ponzi scheme, but surround it in so much techno-babble that they make it sound like a ponzi schme is what you WANT.