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The collapse of the IRON stable coin

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Re: The collapse of the IRON stable coin

#231

Post by ikeboy »

pavel_lishin wrote: post #227
ikeboy wrote: post #219

Earlier quoted context omitted.

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.

12 hours is not a lot of time. And what does it mean that they could exit, when the contract itself was completely broken in the meanwhile?

It's enough time for most people to exit during normal circumstances. Sometimes longer periods are used. Definitely better than nothing.

In this case people wouldn't have been able to exit due to the bug, correct.

Re: The collapse of the IRON stable coin

#232

Post by RaketenStadt »

raziel2701 wrote: post #220
RaketenStadt wrote: post #169

Earlier quoted context omitted.

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.

No, this isn't a Ponzi scheme. That's the only thing I've said. I think you believe "Ponzi scheme" and "scheme" are interchangeable.

Usually the go-to lazy catchphrase is "we're just arguing semantics!" but "semantic definitions" is new.

Re: The collapse of the IRON stable coin

#233

Post by tornato7 »

xur17 wrote: post #214
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…

Any experienced crypto investor knows that putting money into an unaudited contract that's less than a few months old is basically throwing that money away. There is another side to this, though, which is that protocols than have been around for a year or more without problems are quite trustworthy and become important building blocks for DeFi.

Re: The collapse of the IRON stable coin

#234

Post by runbathtime »

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 is what courts are for- to interpret the spirit of a contract. There is a point where hiding deliberate pump and dumps/ fraud/ ponzi schemes through complicated tokenomics or incompetence (we couldn't predict all the edge cases) no longer is an excuse. At this point, there is really no difference between the approach to launching these half baked algo/backed stablecoins and deliberate fraud. It could be easy for a court to make the decision that the contract was designed to be complicated on purpose to hide deliberate fraud, or at least could determine the devs were recklessly incompetent and still responsible.

Re: The collapse of the IRON stable coin

#235

Post by tornato7 »

rchaud wrote: post #188
juliansimioni wrote: post #170

Earlier quoted context omitted.

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.

This is happening right now with the hilariously titled "SafeMoon" cryptocurrency. You can find posts on the subreddit openly asking people to buy a few million for $25 and 'gift' it to their friends and family.

The hot new Ponzi scheme is EMAX, which even has celebrity endorsement! What could possibly go wrong. If you want to see an endless number of other Ponzi coins, check out /r/cryptomoonshots

Re: The collapse of the IRON stable coin

#236

Post by unyttigfjelltol »

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.

... and a small band of programmers quietly sneak out of the room ...

If your mechanic installs the tires in the passenger cabin, no one cares about the mechanics' lien. Depending on the judge they might not even care about the fine print on the back of the invoice, because installing tires in the passenger compartment is that dumb.

Re: The collapse of the IRON stable coin

#237

Post by tornato7 »

hi5eyes wrote: post #19
sashimi-houdini wrote: post #8

I wrote Skepticoin as a serious parody of Bitcoin. Articles like these about the "state of the art" of cryptocurrency make me wonder: would a parody of a more "modern" cryptocurrency even be recognizable as such?

bitcoin is a parody of itself completely unusable as a currency, even maximalists cant seriously tell people to use it as such. "cryptocurrency" at this point means less useful than any currency in any mmo

I'm quite skeptical of Bitcoin in general but I can't deny that Lightning Network has really started to take off as a means of payment, it's even a common sight in El Salvador to see Bitcoin accepted through LN, where transaction costs are in the fraction of a cent.

Re: The collapse of the IRON stable coin

#238

Post by redisman »

juliansimioni wrote: post #170
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.

These are not Ponzi schemes. In a ponzi you have a mechanism to distribute money to early adopters in the tree. These are just pump and dumps but you create and pre-mine the asset before pumping it.

There were ponzis some years back like OneCoin and BitConnect.

Re: The collapse of the IRON stable coin

#239

Post by imtringued »

sashimi-houdini wrote: post #39
hungryforcodes wrote: post #26

Earlier quoted context omitted.

Why bother -- it's so broken. We can just again, it makes way more sense.

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?"

We basically have low inflation and a savings craze as a driver of a housing bubble in 2008 as people were looking for perfect, risk free bonds (no such thing can exist outside government bonds and even those are just best effort).

The people behind Bitcoin were basically thinking: Ok, our banking system failed because of low inflation and a savings craze. Let's make both of those worse so that it will never become possible to run an economy on top of Bitcoin.

Fiat banking failed because an aging population has a strong saving preference to the point that it chokes out businesses. The idea behind saving is that you release production capacity in the economy so it can be used on something else. The population isn't going to stop aging. The problem is going to get worse over time. There won't be a something else unless the government artificially uses the savings on that something else.

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