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

171–180 of 502 posts

Re: The collapse of the IRON stable coin

#171

Post by ArkanExplorer »

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?

Its like the Uber of Ponzi Schemes.

The main innovation is that there's no one to sue. The founders can just print themselves a bunch of coins and remain basically anonymous.

They also bypass regulation, because its on the web?

Regulators are asleep at the wheel. This entire category of 'technology' should have been snuffed out years ago for the good of us all. Now, look around us as GPUs and other chips are out of stock, cities face blackouts due to coin mining, and the major use of these coins is to fuel ransomware attacks that take down critical infrastructure.

All entirely pointless - or even outright negative - activity.

Re: The collapse of the IRON stable coin

#172

Post by crooked-v »

shkkmo wrote: post #124
kevincox wrote: post #79

Earlier quoted context omitted.

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…

A very obvious example: in most jurisdictions, a contract signed by a minor can be rendered null and void by that minor (or their legal guardian) at any time.

Re: The collapse of the IRON stable coin

#173

Post by ska »

gknoy wrote: post #93
RandomLensman wrote: post #64

Earlier quoted context omitted.

Courts remain the legal authority, you cannot trade on for other unless provided by law (as in statute), and then it is back again to the courts to interpret. What did both parties really agree to? IANAL, but intentions and assumptions of the parties can matter - for example, quite a few things you cannot waive in some places, irrespective of what you agree or not.

I don't know. I'm not a lawyer, but I recall that when it comes to contracts, they often allow you to waive protections that the law would normally give you (e.g., specifying that conflict is resolved with arbitration) if both parties agree to it. In the case of smart contracts, where both parties (if I understand it right?) agree that the code defines the contract itself, it seems like saying "... but I made a mista…

> hey often allow you to waive protections ... if both parties agree to it.

This is not really generalizable. Arbitration clauses for example waive one method of recourse in favor of another method of recourse, both already accepted by the courts. I expect you couldn't replace that with trial by combat and expect it to hold in court, but you might be able to argue that a different resolution process with historical precedent would hold - at least you could test it in court.

Re: The collapse of the IRON stable coin

#174

Post by RaketenStadt »

shkkmo wrote: post #157
xqk8 wrote: post #125

Earlier quoted context omitted.

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.

> It requires a central actor I see exactly zero existing definitions of ”ponzi scheme” that mentions any "central actor" so you seem to be creating an entirely new definition purely to avoid the "ponzi scheme" label.

Then you didn't look at wikipedia which mentions "the con artist" and "the operator of the scheme" several times.

If you're having to google the definition of the term maybe there's still a little more you need to learn about it.

Re: The collapse of the IRON stable coin

#175

Post by ezoe »

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?

It sounds exactly the case to me.

Re: The collapse of the IRON stable coin

#176

Post by bena »

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?

Here's a better question: Why?

This is exactly what crypto-enthusiasts claim is going to happen to the US Dollar and I've never heard mention of crypto taking pity on fiat by offering to give them crypto when the bottom finally falls out of fiat.

So why should anyone else be responsible for people who took a calculated risk that blew up in their face?

Yes, this sucks for them. But this shit happens. Don't throw good money after bad.

Re: The collapse of the IRON stable coin

#177

Post by meowface »

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?

The Ethereum interpreter bytecode is stored on the blockchain, but the source code isn't. (It'd be inefficient both for storage and CPU cycle reasons.) Basically like storing a Python .pyc or Java .class file.

There's pretty much a rule of thumb that tokens should always be open source, in part because it's much easier to hide a backdoor if you don't publish the source, and also because cryptocurrency communities generally share the open source, high-transparency ethos. The #1 Ethereum blockchain explorer site has a system that lets you submit source code for a contract, and they verify that the source code compiles to the exact same bytecode.

You can very safely assume that if there's no source, it's malware. For every single instance I've seen where a project doesn't publish the verified source code, it's always been because the code is backdoored.

You can decompile bytecode, but scam projects will often add a ton of obfuscation or even specific things to confuse the decompiler and make it fail to decompile certain parts. Better decompilers will keep getting written, so you theoretically won't ever be able to truly hide what your code is doing even if you don't publish source, but it's sort of moot because verified source code is bare minimum "table stakes" for anyone (competent) to interact with your project.

The caveat being that most investors are non-technical and don't have a clue what any of what I just wrote means and will just invest in whatever if it has a name and a logo. But in that case, they'll invest in a scam project whether or not they publish the source code. And for the percentage who do at least know that no source = scam, they'll still invest in every scam that does have source code, which is most of the scams.

Re: The collapse of the IRON stable coin

#179

Post by [deleted] »

raziel2701 wrote: post #95
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?

It sure sounds like it, new money needed to pay the old money.

[deleted]

Re: The collapse of the IRON stable coin

#180

Post by wombatpm »

xqk8 wrote: post #121
raziel2701 wrote: post #103

Earlier quoted context omitted.

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?

Your pension, if you have one is a ponzi. Your 401k is your money subject to special tax rules.
Post reply on HN