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The collapse of the IRON stable coin

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Re: The collapse of the IRON stable coin

#391

Post by lifeformed »

nieve wrote: post #364
chrisco255 wrote: post #347

Earlier quoted context omitted.

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)…

At that point can they really be considered purely code contracts anymore? If their execution requires a trusted third party some of the rhetoric goes out the window.

I think they're just other smart contacts that use many data sources. Like if you wanted an oracle that returned the result of a baseball game, you'd have it check various newspaper websites and have it make sure the results were all the same. To attack it, you'd have to attack all the newspaper sources. It's still a weak point, but not quite a single point of failure.

Re: The collapse of the IRON stable coin

#392

Post by ineedasername »

jMyles wrote: post #46
toomuchtodo wrote: post #31

Earlier quoted context omitted.

I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. https://digitalchamber.org/wp-content/uploads/2018/02/Smart-... > Is A Smart Contract Always A Legal Contract? > No. Because a smart contract is computer code, a smart contract may represent all, part, or none of a valid legal contract under U.S. law. Smart contracts function – in whole or in part – to give effect…

> I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. On a blockchain, this is absolutely false. The nodes interpret smart contracts. The "legal system" needs to be applied by some kind of oracle or by force to a node operator. Smart contracts are authoritative in their native environment.

Parties to a contract exist in jurisdictions that do not see things this way, and even block chains are rooted in some form on physical media in legal jurisdictions.

In the case if IRON, the 0.75 in actual money exists somewhere, a bank presumably. Wherever that is, the jurisdiction might be friendly for IRON, or not, but there is in a very real sense no pure native environment for smart contracts. At a minimum, the parties involved will always exist in a physical legal sovereign jurisdiction that regards it's own authority as higher than the smart contract and has some ability-- perhaps limited, perhaps extensive-- to enforce that authority.

Re: The collapse of the IRON stable coin

#393

Post by ineedasername »

wins32767 wrote: post #378
jMyles wrote: post #358

Earlier quoted context omitted.

This is a strange statement. It's like saying that a forloop isn't authoritative because it hasn't been approved by a court. "Legal authority" isn't a well-defined object in the evaluation of smart contracts. It is certainly not an authority in the sense that the EVM (or, for other blockchains, corresponding VM) code is. Is this really a surprise? Nodes don't evaluate common law, they evaluate smart contracts. That's…

>Not everyone believes in the legitimacy of the state, let alone that the legal system is somehow the proper authority for evaluation of disambigous source code. This is something that I haven't been able to figure out about blockchain enthusiasts. Assuming the blockchain is wildly successful, it poses an inherent threat to the ability of the modern state to collect taxes. Why do blockchain enthusiasts, who already d…

Or to paraphrase a US president (Andrew Jackson) when he didn't like a Supreme Court ruling, "make me. Oh right, you don't have an army. I do."

Re: The collapse of the IRON stable coin

#394

Post by 3np »

ikeboy wrote: post #383
3np wrote: post #379

Earlier quoted context omitted.

The general consensus is that it's a terrible idea to rely on Uniswap (or any other dex) as a price oracle for valuation/pricing for other on-chain defi applications/dexes. With enough capital (which can be acquired through flash loans) you can absolutely perform economic attacks though atomic transaction chains involving moving the dex price. Uniswap, Kyber, and others will tell you the same thing. This makes me thi…

Flash loans are not relevant to the uniswap TWAP oracle, which ignore any transactions in the current block. That oracle was written specifically to be resistant to manipulation and I don't think there's any consensus not to use it.

It's definitely an improvement. Still, I would advise against it in general, especially for arbitrary pairs. This category of attacks can be difficult to foresee and even arise after deployment due to new incentives outside of the system.

While Chainlink has its own host of issues and risks, there are still valid reasons why companies are paying them and their node operators good money to feed price contracts for ERC-20 token pairs.

Re: The collapse of the IRON stable coin

#395

Post by ineedasername »

thebean11 wrote: post #40
criddell wrote: post #34

Earlier quoted context omitted.

They said "typically", so they aren't saying it's true in all cases, but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society.

They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. > but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society Reminds me of the "nothing to hide" argument, that only someone tr…

Agreeing the code is the legal authority means implicitly believing the code is perfect: no bugs, no unanticipated edge cases. Which is just not realistic. So when they arise, who decides what happens?

Re: The collapse of the IRON stable coin

#396

Post by rebolek »

jMyles wrote: post #358
toomuchtodo wrote: post #52

Earlier quoted context omitted.

> The "legal system" needs to be applied by some kind of oracle or by force to a node operator. Yes, this is usually how it's done. Business logic is not a legal authority.

This is a strange statement. It's like saying that a forloop isn't authoritative because it hasn't been approved by a court. "Legal authority" isn't a well-defined object in the evaluation of smart contracts. It is certainly not an authority in the sense that the EVM (or, for other blockchains, corresponding VM) code is. Is this really a surprise? Nodes don't evaluate common law, they evaluate smart contracts. That's…

Not believing in the legitimacy of the state is like not believing in the gravity.

Re: The collapse of the IRON stable coin

#397

Post by aidenn0 »

perl4ever wrote: post #340
aidenn0 wrote: post #246

Earlier quoted context omitted.

Many MLM companies fit the legal definition of a Pyramid scheme (and have faced consequences from the FTC in some cases). The general rule is that if the majority of money does not come from selling to retail customers (either directly or downstream), but rather from recruiting new members, then it's a pyramid scheme.

There really is no "general rule" as evidenced by the fact that companies accused of being MLMs have gone on as publicly traded companies for ages, while even billionaires and hedge fund managers have feuded about whether it is a scam. See: Herbalife and Ackman vs. Icahn. Or AFLAC. (I'm not saying they are an MLM, but I've been personally approached for a "job" that seemed to be sales with no qualifications needed an…

My general rule is paraphrased from the FTC website[1]

There's more detailed information on a different page[2] including the following quote which I think supports the general rule I listed in my original comment:

> ...[Amway's] sales plan was not an illegal pyramid scheme. Amway differed in several ways from pyramid schemes that the Commission had challenged. It did not charge an up-front "head hunting" or large investment fee from new recruits, nor did it promote "inventory loading" by requiring distributors to buy large volumes of nonreturnable inventory. Instead, Amway only required distributors to buy a relatively inexpensive sales kit. Moreover, Amway had three different policies to encourage distributors to actually sell the company's soaps, cleaners, and household products to real end users. First, Amway required distributors to buy back any unused and marketable products from their recruits upon request. Second, Amway required each distributor to sell at wholesale or retail at least 70 percent of its purchased inventory each month -- a policy known as the 70% rule. Finally, Amway required each sponsoring distributor to make at least one retail sale to each of 10 different customers each month, known as the 10 customer rule.

Lastly, just because people disagree about the nuances of the rule, does not mean the rule doesn't exist. I feel very comfortable with my original statement, and those in favor of e.g. Herbalife would vigorously argue that meet my definition of MLM, while those who think its a scam would argue that they don't meet it.

1: https://www.consumer.ftc.gov/articles/multi-level-marketing-...

2: https://www.ftc.gov/public-statements/1998/05/pyramid-scheme...

Re: The collapse of the IRON stable coin

#398

Post by redisman »

hluska wrote: post #282
redisman wrote: post #238

Earlier quoted context omitted.

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.

So basically a Ponzi scheme where only the earliest adopters get paid and everyone is remarkably open about that?? :)

Almost every scam gives money to the early adopters. It would only be a ponzi if they claimed that there was some kind of a business/mechanism that’s generating the revenue when it’s actually coming from the fools downstream from you. Usually it’s something like a guaranteed double digit interest on your money. You put the money in and receive the reward (from other people’s money) and that’s a strong psychological trigger to put more money in. You just saw it work and you have the check from the ponzi to prove it!

If you just have a large amount of a worthless asset and you convince other people to buy it on the market to pump the price up (mainly via social media and “influencers” these days) and then you dump it at the top then you have a…

Re: The collapse of the IRON stable coin

#399

Post by perl4ever »

aidenn0 wrote: post #397
perl4ever wrote: post #340

Earlier quoted context omitted.

There really is no "general rule" as evidenced by the fact that companies accused of being MLMs have gone on as publicly traded companies for ages, while even billionaires and hedge fund managers have feuded about whether it is a scam. See: Herbalife and Ackman vs. Icahn. Or AFLAC. (I'm not saying they are an MLM, but I've been personally approached for a "job" that seemed to be sales with no qualifications needed an…

My general rule is paraphrased from the FTC website[1] There's more detailed information on a different page[2] including the following quote which I think supports the general rule I listed in my original comment: > ...[Amway's] sales plan was not an illegal pyramid scheme. Amway differed in several ways from pyramid schemes that the Commission had challenged. It did not charge an up-front "head hunting" or large in…

Herbalife was fined $200 million by the FTC a few years ago.

Bill Ackman declared: 'Herbalife has actually been shut down by the FTC, they just haven't realized it yet'

But Herbalife management, and Carl Icahn, said that the FTC had determined it was not a pyramid scheme despite the $200M fine.

The chair of the FTC denied that they determined it was not a pyramid scheme - but at the same time, they carefully didn't say it was.

I'm just saying you can't really treat the FTC as the ultimate authority, because even they don't know.

Re: The collapse of the IRON stable coin

#400

Post by ineedasername »

gknoy wrote: post #93
RandomLensman wrote: post #64

Earlier quoted context omitted.

Courts remain the legal authority, you cannot trade on for other unless provided by law (as in statute), and then it is back again to the courts to interpret. What did both parties really agree to? IANAL, but intentions and assumptions of the parties can matter - for example, quite a few things you cannot waive in some places, irrespective of what you agree or not.

I don't know. I'm not a lawyer, but I recall that when it comes to contracts, they often allow you to waive protections that the law would normally give you (e.g., specifying that conflict is resolved with arbitration) if both parties agree to it. In the case of smart contracts, where both parties (if I understand it right?) agree that the code defines the contract itself, it seems like saying "... but I made a mista…

There are certain rights you can't waive. But that aside, the issue at hand is what happens when there is a mistake in the smart contract, unintended by either party? Who decides what happens? In this case IRON could even hypothetically claim (true or not) "nope, not a bug, the contract will stay in it's null indeterminate state, and in the meantime we'll be using that USDC as collateral for 30-year US treasury bonds. 2% isn't much, but it sure does add up nicely on $250+ million."

Or something like that. I doubt that's how it will go down here, but it will take a human judgement call or agreement-- not a coded contract-- to resolve this.

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