The collapse of the IRON stable coin • Hacker News Board

Re: The collapse of the IRON stable coin

#261

Post by zionic » Thu, Jun 17, 2021, 9:28 PM UTC

sanderjd wrote: post #241

So, Dai is a stablecoin that by my understanding is collateralized similarly to this one, except that it requires ether (and I believe USDC is also an option). However, its peg held up very well during the recent precipitous drop in the price of ether. I'm curious if anyone here knows whether that was an algorithmic success in comparison to this, or perhaps just an artifact of people having more confidence in ether.

DAI kept its peg while ETH went all the way up to 1440 and back down to $70. It’s also kept it up from $70 to $4400 and back to $2300, so we’re well within norms.

Re: The collapse of the IRON stable coin

#262

Post by dheera » Thu, Jun 17, 2021, 9:31 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.

Not only that, but all the hashes will probably be broken at some point in the future. We thought MD5 was the be-all end-all of hashes back then, but here we are at SHA-512 thinking it's our masterpiece. Two decades from now it will probably be obsolete.

Re: The collapse of the IRON stable coin

#263

Post by ac29 » Thu, Jun 17, 2021, 9:31 PM UTC

tornato7 wrote: post #226

I think Circle is the real winner here. If there are 200 million USDC locked up permanently in some contract, then Circle can safely spend $200m of it's collateral knowing it will never be withdrawn. Or, if they were generous, they could return it to the community that invested in IRON (seems unlikely)

Given that Circle is based in the US and subject to US court rulings, more likely they would need to freeze and hold those assets pending any potential lawsuits to recover funds.

Re: The collapse of the IRON stable coin

#264

Post by meowface » Thu, Jun 17, 2021, 9:34 PM UTC

disruptalot wrote: post #248

Retric wrote: post #230

Earlier quoted context omitted.

Smart contracts don’t protect you from being sued. So, now you need both lawyers and programmers while still risking losing everything.

Not exactly. There are plenty of anonymous projects, developers and users.

Plus, even if they lose their anonymity, many are in places like Eastern Europe where suing them won't be so easy.

Re: The collapse of the IRON stable coin

#265

Post by lmilcin » Thu, Jun 17, 2021, 9:35 PM UTC

thebean11 wrote: post #7

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.

> There is no court or lawyer who can interpret the spirit of the contract. That's obviously the point, though. You are trading one set of risks for a completely different set of risks that might suit your use case much better; your counterparty being able to contest a contract in court could very well be a "bad" thing for you.

> That's obviously the point, though. You are trading one set of risks for a completely different set of risks.

But that's exactly the point.

People are not able to interpret "smart" contracts. For normal contracts most people can understand the contract and if there is a dispute you have laws and courts who can interpret in every case.

In case of "smart" contracts even the contract developers more often than not seem to not be able to understand all consequences.

So if we are trading one set of risks for another it kinda seems to me to be a a really shitty tradeoff.

Re: The collapse of the IRON stable coin

#266

Post by freewilly1040 » Thu, Jun 17, 2021, 9:37 PM UTC

> 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

What's the best DeFi project? One where the value proposition is actually clear, there are actually people using it and it's actually at parity or better than a traditional financial system offering?

Re: The collapse of the IRON stable coin

#267

Post by meowface » Thu, Jun 17, 2021, 9:37 PM UTC

motioncuty wrote: post #114

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.

Do you see no value in throwing these "dumb contracts" out there and seeing what happens? An expensive experiment for the speculators, but we got to the moon on a roman candle iterated a billion times, so I'm personally just curious about these programmable organizations of digitalized willpower.

I agree. It's software. Lots of software sucks and is buggy and vulnerable. Sometimes mission-critical software sucks and is buggy and vulnerable and causes catastrophes when it fails. A lot of it's malware. A lot of it's inefficient and/or useless.

But a lot of it's good, and more good things will come out over time. It's currently the equivalent of like 1998 in the smart contract space right now.

Re: The collapse of the IRON stable coin

#268

Post by femto113 » Thu, Jun 17, 2021, 9:39 PM UTC

msgilligan wrote: post #259

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.

Smart contracts is a horrible name. The better analogy (which has been around for years) is that they are the digital equivalent of (snack and beverage) vending machines. As with vending machines, they have their use cases, but they aren't lawyer "smart" and they certainly aren't legal contracts. I'm not sure how much trouble a better name would have saved everyone, but it might have done a better job of setting expe…

So is this event the digital equivalent of the bag of chips getting stuck on the row below it or the frustrated customer shaking the machine until it falls over and squashes them?

Re: The collapse of the IRON stable coin

#269

Post by kemonocode » Thu, Jun 17, 2021, 9:39 PM UTC

I knew crypto detractors were going to have a field day with this one. ;)

With DeFi, you're simply exchanging one type of risk for another. Without due diligence you're pissing your money away- as it is to be expected. And as it was brought up before, this was an unaudited contract that had been running for what, weeks? Months?

Personally, I cannot say I understand DeFi deeply enough to get into the intricacies of "yield farming" and such, so I just avoid it altogether. Only have a relatively small amount of USDC and DAI accruing interest on Compound, which has at the very least been audited [0] a few times before, but even if it were to go tits up tomorrow for whatever reason, at least I understood there was that risk.

[0] https://compound.finance/docs/security

Re: The collapse of the IRON stable coin

#270

Post by timdaub » Thu, Jun 17, 2021, 9:40 PM UTC

tornato7 wrote: post #226

I think Circle is the real winner here. If there are 200 million USDC locked up permanently in some contract, then Circle can safely spend $200m of it's collateral knowing it will never be withdrawn. Or, if they were generous, they could return it to the community that invested in IRON (seems unlikely)

brilliant comment :D