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The collapse of the IRON stable coin

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Re: The collapse of the IRON stable coin

#211

Post by lottin »

meowface wrote: post #185
bena wrote: post #176

Earlier quoted context omitted.

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…

>Here's a better question: Why? A calculated risk is that you put money into something which may end up losing all of its value; not that your collateral becomes locked in a safe with an accidentally lost key. They had a reasonable expectation that even if the value was totally lost, they wouldn't have their collateral locked forever. Their investment, yes, but not their collateral. Sure, one always has to account fo…

> They had a reasonable expectation that even if the value was totally lost, they wouldn't have their collateral locked forever. Their investment, yes, but not their collateral.

They literally handed their money to a computer program that works outside of human control and cannot be interfered with... which means if something goes wrong no one can intervene and sort it out. This is a risk they took willingly. It's not the first time a computer program malfunctions, and won't be the last.

Re: The collapse of the IRON stable coin

#212

Post by jessriedel »

jcrawfordor wrote: post #143
jessriedel wrote: post #116

Earlier quoted context omitted.

It's common for people to take mechanical/technological steps to make sure agreements will be respected when they know that if they just wrote a contract they could not rely on the legal system to enforce it in a reliable or economical manner. This is not necessarily bad. When I get my car fixed at the mechanic, I am paying for the service but at no time do I transfer ownership to him. One procure we could follow is…

Most places recognize something called a "mechanics lien" that means the police won't get your car back either. Workmen usually have a legal claim to property that they worked on and have not been paid for. Sometimes it requires specific paperwork (more often with real property, e.g. a contractor can place a lien on your house but usually needs you to agree to it before they start work) but often it's implicit. I gue…

Yes, of course the reality and usefulness of this particular mechanism has now been legally acknowledged and incorporated into the law in some (but not all) places. But mechanisms like this arise organically and are put to use long before they are officially recognized. I expect similar things to happen with smart contracts.

In other words: things you might call "evading the law" in fact can be useful and then shape the law. If we were to adopt a principle like "anything that looks like it's trying to evade the law must be dismantled", we'd be worse off.

Re: The collapse of the IRON stable coin

#214

Post by xur17 »

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.

That's both a downside and an upside though - they do exactly what they say they will do. The issues occur when people don't realize exactly that they say they will do. To me it's just a different set of trade offs.

Also, it's worth noting that this contract wasn't audited, a baseline practice in the industry. Most larger contracts go through multiple waves of audits, while this was apparently released with exactly 0 (so hard for me to be shocked when there are issues).

> A code audit likely would have caught this (this type of bug is so common in software development, I’ve probably made it hundreds of times myself), but of course this smart contract was not audited. Only its sister-contract on the Binance Smart Chain, written in a different language, was.

Re: The collapse of the IRON stable coin

#215

Post by oneshoe »

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 precisely why Cardano is using Haskell for their language.

Re: The collapse of the IRON stable coin

#216

Post by shkkmo »

RaketenStadt wrote: post #204
shkkmo wrote: post #186

Earlier quoted context omitted.

I don't see either of those as at all synonymous with "central actor". I would consider all the founders and early investors who knowingly promote the ponzi scheme as con artists. I google the definition to charitably give your argument the benefit of the doubt. I don't see how you think phrases like the following make for effective communication or a strong argument: > If you're having to google the definition of th…

Why isn't "the operator of the scheme" synonymous with "the central actor?" Either: 1. I'm trying to dodge the label "Ponzi scheme" for a reason you haven't provided (maybe you think I have millions invested in this shitcoin?) 2. This isn't a Ponzi scheme, and you don't know what a Ponzi scheme is Which explanation is simpler?

> Why isn't "the operator of the scheme" synonymous with "the central actor?"

There can be multiple operators.

I see zero good reasons why decentralized schemes can't be ponzi schemes.

Your argument is akin to claiming that a three legged dog is not a dog because dogs have four legs.

I wouldn't be so uncharitable as to presume to know why you have chosen to make this argument.

I think your argument would be clearer if you took a step back and explained why you think that "central actor" is such a critical part of the meaning of "ponzi scheme" rather than a incidental feature common to ponzi schemes.

Re: The collapse of the IRON stable coin

#217

Post by rank0 »

crooked-v wrote: post #195
rank0 wrote: post #152

Earlier quoted context omitted.

> 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]. How on earth does something like this happen?

Well, we can already see they screwed up a basic piece of code in the IRON smart contract, so is that really so surprising?

I suppose yes and no.

Screwing up the maximum supply seems like an enormous blunder while I kinda understand the assumption that “price > 0” if they’re supposed to be backed by 75% usdc.

Re: The collapse of the IRON stable coin

#218

Post by oneshoe »

ikeboy wrote: post #213

Fwiw the bug was fixed by submitting a transaction to change the oracle to a new contract that just had a fixed nonzero price for titan. Everyone was able to redeem at roughly 74.6 cents.

Quite honestly, that's quite scary. The ability to just change an oracle sounds like a backdoor (and not De-centralized). I'm not exactly familiar with Poly - but, I thought that was the sell of Link, was the idea that you are dealing with Oracle pools rather than a specific, single, Oracle?

Re: The collapse of the IRON stable coin

#219

Post by ikeboy »

oneshoe wrote: post #218
ikeboy wrote: post #213

Fwiw the bug was fixed by submitting a transaction to change the oracle to a new contract that just had a fixed nonzero price for titan. Everyone was able to redeem at roughly 74.6 cents.

Quite honestly, that's quite scary. The ability to just change an oracle sounds like a backdoor (and not De-centralized). I'm not exactly familiar with Poly - but, I thought that was the sell of Link, was the idea that you are dealing with Oracle pools rather than a specific, single, Oracle?

There's a timelock where any such changes are delayed by 12 hours. So if they were to submit a transaction that people didn't like, they could exit - this significantly reduces the expected value of trying to steal funds since most of it will vanish. But it's useful to be able to tweak some parameters in case of bugs such as this.

Re: The collapse of the IRON stable coin

#220

Post by raziel2701 »

RaketenStadt wrote: post #169
random023987 wrote: post #166

Earlier quoted context omitted.

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.

So what you're describing is that this is a next-generation Ponzi scheme where nobody goes to jail but a bunch of people still lose money.

But yeah let's keep arguing over semantic definitions.

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