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The collapse of the IRON stable coin

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Re: The collapse of the IRON stable coin

#311

Post by aazaa »

> _share_price here refers to the price of TITAN, as provided by an oracle, which is correctly reporting it as… 0 (somewhere in the distance, you can hear a room full software engineers burst into laughter ).

Aside from the amusing programming error, the main problem with much of the "smart contract" activity today is that doing anything remotely interesting requires an oracle. An oracle is basically a server that reports the outcome of an event. And servers can be attacked in ways that systems like Ethereum can't.

So a lot of the hype around Ethereum and its "smart contracts" is really people just misunderstanding the security model. The weakest link is a server in a dorm room or data center reporting a number.

Here the oracle is doing the right thing. But it could easily go the other way.

Re: The collapse of the IRON stable coin

#312

Post by dragontamer »

gruez wrote: post #43
neither_color wrote: post #24

Earlier quoted context omitted.

Wait so USDC is linked to existing USD in a bank somewhere, so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones? Sorry if it's a dumb question Im not sure how stablecoins work.

>Wait so USDC is linked to existing USD in a bank somewhere Yep, short of the fed issuing USD tokens directly that's always going to be how USD stablecoins work. >so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones Nothing, other than that they have zero incentive to do it. I doubt whatever goodwill they get will come close to the $262 million that they don't have to pay back.

> Yep, short of the fed issuing USD tokens directly that's always going to be how USD stablecoins work.

Or... you could just lie about the USD and issue a stablecoin anyway.

Re: The collapse of the IRON stable coin

#313

Post by hippich »

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

Just an anecodote:

I recently needed to buy something from a merchant, who was not able to acquire a traditional credit card merchant account, or a business checking account. I had three options to pay to that merchant: cash in the envelope, money order, bitcoin (merchant also run a promotion for bitcoin method of payment, discounting the total of the order by 20% when paid by bitcoin).

Bitcoin turned out the best option out of these three.

Re: The collapse of the IRON stable coin

#314

Post by DennisP »

aazaa wrote: post #311

> _share_price here refers to the price of TITAN, as provided by an oracle, which is correctly reporting it as… 0 (somewhere in the distance, you can hear a room full software engineers burst into laughter ). Aside from the amusing programming error, the main problem with much of the "smart contract" activity today is that doing anything remotely interesting requires an oracle. An oracle is basically a server that re…

I'd say Uniswap is interesting. That doesn't use an oracle.

Re: The collapse of the IRON stable coin

#315

Post by sanderjd »

RaketenStadt wrote: post #258
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.

According to paragraph 3 of TFA it's not collateralized similarly > Other on-chain stablecoins like DAI are over-collateralised. For every $1 of DAI, there’s ~$1.75 worth of crypto assets in the DAI system.

Thank you! That's the critical fact that I missed!

Re: The collapse of the IRON stable coin

#316

Post by DennisP »

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 contract" has always been a bit of a misnomer. If they'd just called them "scripts" then people wouldn't complain about the lack of lawyers.

Re: The collapse of the IRON stable coin

#317

Post by phire »

georgyo wrote: post #192
tigger0jk wrote: post #164

Earlier quoted context omitted.

Also, if the price of TITAN is 0, then you really can't pay out 25 cents worth of it... It does seem correct that the contract should handle such a case differently than just trying to pay you out UNDEFINED DIVIDE BY ZERO ERROR count of TITAN

You just hit the nail on the head. I did not think about that. This is the true reason they needed to special case <=0.

If you think about it, the special case should give holders the option to withdraw the 74c of USDC without any TITAN.

Clearly the programmers didn't fully think though what would would happen if TITAN reached and got stuck at zero value.

Re: The collapse of the IRON stable coin

#318

Post by blake1 »

ikeboy wrote: post #249
PragmaticPulp wrote: post #245

Earlier quoted context omitted.

> It's enough time for most people to exit during normal circumstances. Most people don't monitor the finer details of their investments 24/7. 12 hours is better than nothing, but it's unrealistic to expect everyone to stay tapped into news feeds about their crypto at minimum twice a day.

The main benefit is reducing the incentive for the developers to steal. If you know 90%+ of the funds will disappear before you can do anything then it's much less attractive (where the alternative is making money by fees over time if the protocol is successful). The risk needs to be balanced with the risk of funds lost because of a smart contract bug that can't be fixed. Different projects make different choices her…

I think an unscrupulous developer would find 10% of $275mn to be a pretty big incentive. Sure it’s relatively less, but still a very large number.

Re: The collapse of the IRON stable coin

#319

Post by _9omd »

meowface wrote: post #294
wallacoloo wrote: post #286

Earlier quoted context omitted.

Uniswap, the decentralized exchange. Is it decentralized finance ?… up for debate (but at the very least, it’s a critical component of the DeFi ecosystem). But I can plop $x of Ethereum and $y of tokenized BTC onto it, providing a valuable service to anyone who wants to exchange the two for any reason (e.g. tuning their price exposure to those assets), forget about it for a couple months, and come back to see that it…

I think a better question might be: what are some valuable "non-ouroboros" projects? Most of the stuff people use essentially seems to be one form or another of shuffling the unit(s) of account around, like the ones you listed. You have a cryptocurrency. What are the uses for the cryptocurrency? Well, you can swap the cryptocurrency for another cryptocurrency or let someone else borrow the cryptocurrency in exchange…

Sure, but shuffling units around is the starting point of a new financial system. I like to say that DeFi is speed running the creation of a financial system from scratch. Storing value, trading currencies, borrowing/lending, derivatives, insurance, etc. are some of the building blocks of a financial system and all are currently live in the Ethereum ecosystem.

I think some people got sold on this false premise that cryptocurrency would reinvent the entire world, build a new decentralized internet, etc. etc. And then they miss what's actually happening, because it's just "boring finance stuff". This is actually really important stuff that's being built.

Re: The collapse of the IRON stable coin

#320

Post by DennisP »

meowface wrote: post #294
wallacoloo wrote: post #286

Earlier quoted context omitted.

Uniswap, the decentralized exchange. Is it decentralized finance ?… up for debate (but at the very least, it’s a critical component of the DeFi ecosystem). But I can plop $x of Ethereum and $y of tokenized BTC onto it, providing a valuable service to anyone who wants to exchange the two for any reason (e.g. tuning their price exposure to those assets), forget about it for a couple months, and come back to see that it…

I think a better question might be: what are some valuable "non-ouroboros" projects? Most of the stuff people use essentially seems to be one form or another of shuffling the unit(s) of account around, like the ones you listed. You have a cryptocurrency. What are the uses for the cryptocurrency? Well, you can swap the cryptocurrency for another cryptocurrency or let someone else borrow the cryptocurrency in exchange…

I think limited scaling so far is one reason for that. With limited transaction space, only the high-value transactions are worth paying the gas fees, and mostly that's people trading stuff around looking for profit.

I'm hoping that when rollups and sharding get tx/sec into five figures, there will be more room for other sorts of applications.

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