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The collapse of the IRON stable coin

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Re: The collapse of the IRON stable coin

#341

Post by tialaramex »

dragontamer wrote: post #144
ppeetteerr wrote: post #127

I have never read so much about nothing as I have when reading about some new coin. It's worse than a pyramid scheme. At least there, you end up with a decade-worth of skin cream.

You're talking about multi-level marketing. Which isn't quite a pyramid scheme (even though it is pyramid-ish). Pyramid Schemes have the originators (the "top" of the pyramid) win lots of money, while the base (the "bottom" of the pyramid, where most people are) losers. And the top barely did any work to get there: they just took the money from people below them.

MLM is about concealing your status as a pyramid scheme from investigators, in the hope that either their resources are too limited to chase you or that by the time they do you've cashed out anyway.

On a forum I used many years ago a regular was forever pushing an MLM and I investigated how it worked, just to try to understand how screwed he was rather than out of any misunderstanding that MLMs are a good idea.

It was one of those health juice MLMs, and what I realised was very clever was that the business structure was set up so as to on the one hand make it less obviously an MLM, and then on the other hand ensure the scammers were insulated from the scam.

There's a pretty ordinary over-complicated compensation package, with tiers of distributors getting a percentage from those beneath them in a structure that sure looks like a pyramid - and imaginary "consumers" who buy at the supposed retail prices at the bottom of the pyramid. But the juice itself is bought exclusively from a separate company at an inflated price.

If the government shuts down the MLM company, few there were getting rich, it's just a handful of people out of an office somewhere. The big money flows into the juice manufacturer selling this awful tasting muck - and they can claim they know nothing about any pyramid scheme. Selling cheap juice for lots of money isn't a crime it's just capitalism.

Re: The collapse of the IRON stable coin

#342

Post by ska »

perl4ever wrote: post #331
ska wrote: post #173

Earlier quoted context omitted.

> hey often allow you to waive protections ... if both parties agree to it. This is not really generalizable. Arbitration clauses for example waive one method of recourse in favor of another method of recourse, both already accepted by the courts. I expect you couldn't replace that with trial by combat and expect it to hold in court, but you might be able to argue that a different resolution process with historical p…

I'm not particularly knowledgeable on the topic, but there are all sorts of religious courts (at least in the US). Generally they coexist with the secular legal system. https://www.pewforum.org/2013/04/08/applying-gods-law-religi...

Yes that's true, but again it's a case where (a) both parties agreed to (b) a recognized form of resolution, in this case mediation - you can do this with a secular mediator also. In general they don't "coexist" so much as they are subsumed within, as allowable forms of resolution, within prescribed bounds.

Important to note that the courts already recognize and/or have precedence for this, and also there are limits to what you can shift here. Finally if the resolution process is not acceptable to one party there are ways to bump it back to the courts.

None of this applies to "smart contracts", which aren't contracts in the legals sense anyway. There is no (yet?) agreement by the courts that this is a valid resolution method, and any issues of contractual law brought before a civil court will be resolved by legal principles, not source code. I suspect that the best you could hope for in the current setting is that the source code + associated communications speaks to intent.

There's no reason to believe that it is impossible that US courts and/or legislation would at some point give some legal status to a smart contract beyond above, but that's not the case today as far I know.

Re: The collapse of the IRON stable coin

#343

Post by perl4ever »

xqk8 wrote: post #121
raziel2701 wrote: post #103

Earlier quoted context omitted.

I think we're splitting hairs with the definition, it's not a ponzi but it acts like a ponzi. It's a weird distinction I suppose, I personally have no qualms calling it a ponzi scheme because new money is needed to pay old money.

A Ponzi scheme without anyone running it isn't a Ponzi scheme. > new money is needed to pay old money WOW that's a broad definition. Turns out my 401k is a Ponzi! Do you know the difference between, say, a pyramid scheme and a Ponzi scheme? Or is "new money is needed to pay old money" the most nuanced understanding you have?

It's pretty common, in the US context, to call Social Security a "Ponzi scheme".

The label is also controversial, but it should be an undisputed fact that people call it that, and it's obviously not particularly similar to Madoff's scheme.

Similarly, it's not hard to find people calling (particularly public) pension funds Ponzi schemes.

Re: The collapse of the IRON stable coin

#344

Post by Synaesthesia »

chriswarbo wrote: post #60
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?

PonziCoin comes to mind https://ponzicoin.co Here's a snapshot before it shut down: https://web.archive.org/web/20140312233243/http://ponzicoin....

>parody

Searching for Diamond Coin Token or DIAH token got me results for DiarrhoeaCoin!

Re: The collapse of the IRON stable coin

#345

Post by perl4ever »

bena wrote: post #183
raziel2701 wrote: post #103

Earlier quoted context omitted.

I think we're splitting hairs with the definition, it's not a ponzi but it acts like a ponzi. It's a weird distinction I suppose, I personally have no qualms calling it a ponzi scheme because new money is needed to pay old money.

Forget "central actors" or whatever. A ponzi scheme is a description of a certain type of fraud. We can reduce it to it being the fraud of claiming new capital as investor dividends. It's a little more complex, but at its heart, that's what you got to do. If there is no lie about the source of the money, it's not technically not a ponzi scheme.

If that's your definition, fine, but lots of people use it in a looser sense and have forever.

Nobody wins in an argument over which definition of a word or phrase is correct.

Whatever happened to the debates over whether something was ironic?

Re: The collapse of the IRON stable coin

#346

Post by freshhawk »

tfang17 wrote: post #228
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 the whole point. Code is law. The alternative is our current, arcane legal system - only interpretable by lawyers who charge $600/hr.

"Code is law"

except for the DAO fork of course, when commit rights were law.

Re: The collapse of the IRON stable coin

#347

Post by chrisco255 »

el_dev_hell wrote: post #324
bikamonki wrote: post #321

Earlier quoted context omitted.

Oracle is a fancy name for an API, right?

I've been wondering the same for a few weeks but can't be bothered checking. My uneducated inference is that an oracle is a data source and you can hook into it from the smart contract. The oracle seems to live off-chain and live on a traditional server/DB. Please correct me if the above is way off!

An oracle is a source of truth for information about the outside world to a smart contract. The smart contract doesn't actually call the oracle. This is because smart contracts don't self-execute and can't make external http calls. So a smart contract pauses, and waits for an oracle to trigger an update function. Because oracles have a lot of power over a smart contract (not all smart contracts need them, by the way), they have to be done in a secure way. The market leader in decentralized oracles is Chainlink. They power hundreds of DeFi applications.

Re: The collapse of the IRON stable coin

#348

Post by shadowgovt »

kingaillas wrote: post #328
shadowgovt wrote: post #17

Earlier quoted context omitted.

Hypothetically, what he's suggesting may not even need to be government-backed. An independent auditor, with reputation on the line, could, for a fee, offer independent coin analysis and risk assessment. Perhaps something similar to the Underwriters Laboratories model... knowing a coin was "Coincheck-certified" or something could give similar confidence to knowing the UL sticker on a lamp means it's a bit less likely…

>An independent auditor, with reputation on the line, I don't think this will matter. Moody's and S&P are two rating agencies that both failed to give useful info before the 2008 financial crisis. Their reputations weren't affected much as far as I can tell.

That's because most of the financial world stumbled.

The rating institutions won't take a big hit for blowing a call that 90% of the industry also blew.

Re: The collapse of the IRON stable coin

#349

Post by perl4ever »

gruez wrote: post #9

This is good for USDC right? Because it's $262 million that they don't have to pay back? >EDIT: 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 And people poured $262 million into this?

I can't say I would've done my research and learned things like this, if I had heard of them before the blow-up.

But now that I've looked at their website, I think I can say that the writing just has a low budget BS-y tone to it.

I'm not claiming to have an infallible BS detector. But this thing in particular gives me an overwhelming sense of they're trying to sound intelligent to people like me who don't understand a word.

They sound very like the writers of spammy financial news that clogs Google search results for public companies these days. The ones that aren't actually bots, I mean.

"Market shocks provide the best stress tests for stablecoin pegs, and IRON’s strong peg retention should go a long way to grow trust in our community. IRON has shown itself to be a shock-proof stablecoin, and the stabilizing protocol is now battle-hardened."

Re: The collapse of the IRON stable coin

#350

Post by anyfoo »

tornato7 wrote: post #233
xur17 wrote: post #214

Earlier quoted context omitted.

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.

> have been around for a year or more without problems

> quite trustworthy

As someone being used to write fixes to code that is 20 or even 30 years old, I had to chuckle.

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