Algorithmic stablecoins are provably impossible without continuous funding • Hacker News Board

Re: Algorithmic stablecoins are provably impossible without continuous funding

#241

Post by spiralx » Tue, May 31, 2022, 7:12 PM UTC

sifar wrote: post #132

imtringued wrote: post #47

Earlier quoted context omitted.

The economy is not like an ecosystem since there is no reciprocation. Money flows in one direction only, toward the top. I find it particularly frustrating that people don't see the economic distortion caused by monopolies in the private economy, they think it must be the government's doing when it tries to undo some of the harm caused by them.

I find it useful thinking in ecosystem terms as a model. And ultimately, the economy is situated in a real ecosystem and not an abstract manifestation. >> The economy is not like an ecosystem since there is no reciprocation If mutual beneficial trade is not reciprocation, then I don't know what is. Reciprocity is more a societal thing than an economic one. I would say historically there have always been reciprocal so…

> Monopolies, by and large are formed (and broken) by government aid/intervention.

So natural monopolies and economies of scale are caused by governments?

Re: Algorithmic stablecoins are provably impossible without continuous funding

#242

Post by spiralx » Tue, May 31, 2022, 7:34 PM UTC

notahacker wrote: post #221

nostrademons wrote: post #212

Earlier quoted context omitted.

But that's not true: every individual household and business is trying to maximize their profits (or at least, those that aren't are replaced by those that are), reducing their expenditures and increasing their revenues. In the presence of a stable money supply and stable prices, the only way to do this is through innovation and better efficiency: you reduce the value of your inputs, or you increase the value of the…

> In the presence of a stable money supply and stable prices, the only way to do this is through innovation and better efficiency: you reduce the value of your inputs, or you increase the value of the outputs Or you decide the winning move is not to play, because borrowing is expensive, the purchasing power of your Benjamins won't diminish if you bury them in the ground, and investing money on capital goods in the ho…

The graph showing a supposed sharp fall in US productivity isn't without its own serious criticism as well:

https://economicsfromthetopdown.com/2020/01/17/debunking-the...

Their argument is what the graph is actually showing is related to the fact that labour's share of US income peaked around 1970 and then began to drop, not some tautologically-defined concept of "production".

Re: Algorithmic stablecoins are provably impossible without continuous funding

#243

Post by spiralx » Tue, May 31, 2022, 7:42 PM UTC

imtringued wrote: post #54

samsquire wrote: post #19

Let me share my theory that the economy is impossible or paradoxical and that the American dream is impossible and that everything is built on by faith. To buy a loaf of bread, the price needs to pay for the wheat, ovens, energy and the employee costs. This relationship is recursion. The staff of the bread company need to afford bread of their own and shelter and energy and transportation. Everyone is thereby support…

I am having trouble understanding your comment. Farmers and bakers easily produce more food than they need to stay alive themselves. When people start a business they must borrow money and usually pay interest. That interest forces you to be profitable, you can't just run your company at 0% profit as that would only pay for your salary and the salary of your employees and the materials and machines you bought. It is…

Bank loans create new money by increasing bank deposits, which is then destroyed when the principal is repaid, leaving behind the interest on the loan. So it is theoretically possible for every company to borrow money at once.

Re: Algorithmic stablecoins are provably impossible without continuous funding

#244

Post by spiralx » Tue, May 31, 2022, 7:47 PM UTC

trhr wrote: post #66

samsquire wrote: post #19

Let me share my theory that the economy is impossible or paradoxical and that the American dream is impossible and that everything is built on by faith. To buy a loaf of bread, the price needs to pay for the wheat, ovens, energy and the employee costs. This relationship is recursion. The staff of the bread company need to afford bread of their own and shelter and energy and transportation. Everyone is thereby support…

The price of bread has a net addition into the system in the form of sunlight. Seeds essentially germinate into wheat for "free." In fact, you could make the argument that all of human endeavor is simply withdrawing from the bank of 4.x billion years of sunlight.

Or as Henry George put forward over a century ago, we should tax only the unimproved value of land, as everything else is the product of humanity, while land is finite and required for everything else.

https://astralcodexten.substack.com/p/your-book-review-progr...

Re: Algorithmic stablecoins are provably impossible without continuous funding

#245

Post by zikzikzik » Tue, May 31, 2022, 10:16 PM UTC

galaxyLogic wrote: post #231

DoughnutHole wrote: post #174

Earlier quoted context omitted.

That is entirely still a societal norm and a statement of personal belief about specific rights. You might believe those rights to be inalienable and that your property is necessarily yours, but that doesn't actually translate to to a guarantee of maintaining that possession in the absence of the institutions that currently protect that ownership. Anyone who's lived through a massive societal upheaval, collectivisati…

All true but still I think there is a clear difference. Assets can and are traded in exchanges. Their value goes up and down based on what is the "shared belief" of their expected value. Laws are not traded. They can change but do so many orders of magnitudes less frequently than the value of assets on the market. Laws are not beliefs they are societal contracts.

> Laws are not beliefs they are societal contracts.

Societal contracts are just collective beliefs. When the number of people upholding a particular societal contract goes to zero it ceases to exist. Just as any other belief, it requires believers to exist. Unlike, for example, the space rock that some group of sentient organisms decided to call Mars.

Re: Algorithmic stablecoins are provably impossible without continuous funding

#246

Post by rglullis » Tue, May 31, 2022, 10:46 PM UTC

Kinrany wrote: post #226

rglullis wrote: post #136

Earlier quoted context omitted.

https://trustlines.network

Huh! The marketing materials look like exactly the same thing so far. > However, since Trustlines is designed to be implemented on a public blockchain, making transactions requires the use of a native cryptocurrency to pay transaction fees. But this one part seems wrong. With such a design there should be no need for global consensus. :(

You still need to avoid double-spending issues.

Re: Algorithmic stablecoins are provably impossible without continuous funding

#247

Post by bufferoverflow » Wed, Jun 01, 2022, 7:20 AM UTC

jmyeet wrote: post #37

This doesn't go far enough. The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset. Crypto in any form doesn't solve the trust problem other than a very narrow slice because as soon as you interact with anything outside of the blockchain, you're adding trust. Even on the blockchai…

> Even backing a currency with gold (or any other asset) doesn't solve this problem

It actually does. If the backing is real, the user knows he will always be able to exchange his coin for $1. If the price on an exchange goes under $1, the issuer of the coin can buy it back, making a profit. If the price goes above $1, the issuer can sell. It's a trivial algorithm. Of course, it only works if the backing is real.

Unfortunately having billions in cash is a huge temptation to invest them and make even more profit. That's what Tether did. And now, if their commercial paper is under water, they are insolvent.

Re: Algorithmic stablecoins are provably impossible without continuous funding

#248

Post by pyrryh » Wed, Jun 01, 2022, 3:02 PM UTC

Kinrany wrote: post #238

pyrryh wrote: post #236

Earlier quoted context omitted.

This is the case where the worse UX is just a better security in disguise (note: "better", not "perfect"; see multiple US reports on trying to investigate the terrorist funding through hawala). No electronic transactions cuts a lot of SIGINT (though not all, people carry their phones with them, call each other, satellites make images, etc.) and sometimes HUMINT is more difficult in countries like Afghanistan or Pakis…

Security can be improved later, the same way Monero came out after Bitcoin. Having the option to transact without intermediaries and locally is enough of an improvement, the same way Bitcoin is Pareto-optimal when compared to SWIFT.

Hawala has kinda been out there for a long time, and I'm not sure that there is a space for incremental improvement since, as I already mentioned, its main security properties lie in hawala being out of modern fully electronic systems. This is the case when we are talking about the general mechanism, of course; a group of 2, 5, 10, N people | N < some abstract big number where we can't tailor solutions easily and need to scale, there some customization may surely be devised as an improvement.

Re: Algorithmic stablecoins are provably impossible without continuous funding

#249

Post by galaxyLogic » Wed, Jun 01, 2022, 3:12 PM UTC

zikzikzik wrote: post #245

galaxyLogic wrote: post #231

Earlier quoted context omitted.

All true but still I think there is a clear difference. Assets can and are traded in exchanges. Their value goes up and down based on what is the "shared belief" of their expected value. Laws are not traded. They can change but do so many orders of magnitudes less frequently than the value of assets on the market. Laws are not beliefs they are societal contracts.

> Laws are not beliefs they are societal contracts. Societal contracts are just collective beliefs. When the number of people upholding a particular societal contract goes to zero it ceases to exist. Just as any other belief, it requires believers to exist. Unlike, for example, the space rock that some group of sentient organisms decided to call Mars.

it is not about "believing a societal contract". It is about believing that other people follow it or not. Contract is not a belief.

Re: Algorithmic stablecoins are provably impossible without continuous funding

#250

Post by Kinrany » Thu, Jun 02, 2022, 10:34 AM UTC

rglullis wrote: post #246

Kinrany wrote: post #226

Earlier quoted context omitted.

Huh! The marketing materials look like exactly the same thing so far. > However, since Trustlines is designed to be implemented on a public blockchain, making transactions requires the use of a native cryptocurrency to pay transaction fees. But this one part seems wrong. With such a design there should be no need for global consensus. :(

You still need to avoid double-spending issues.

Why? Everyone is only ever dealing with people they trust. And every single agent is in charge of confirming or rejecting every operation they agree to.