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The collapse of the IRON stable coin

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Re: The collapse of the IRON stable coin

#41

Post by rawtxapp »

neither_color wrote: post #24
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?

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.

Because those tokens are fungible, they can "blacklist" certain addresses and refuse deposits from them coming to their exchange, but they can't "null" some random addresses holdings.

Re: The collapse of the IRON stable coin

#42

Post by [deleted] »

toomuchtodo wrote: post #12
thebean11 wrote: post #7

Earlier quoted context omitted.

> 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.

> your counterparty being able to contest a contract in court could very well be a "bad" thing for you. Evading the law (whether the court or a regulatory body such as the SEC [civil] or DOJ [criminal]) is typically a "bad thing" for the person or people intending to or successfully doing so. https://www.sec.gov/spotlight/cybersecurity-enforcement-acti... (SEC Cyber Enforcement Actions, control-f "blockchain" | "cryp…

[deleted]

Re: The collapse of the IRON stable coin

#43

Post by gruez »

neither_color wrote: post #24
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?

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.

Re: The collapse of the IRON stable coin

#44

Post by thebean11 »

ceejayoz wrote: post #36
thebean11 wrote: post #33

Earlier quoted context omitted.

Not quite sure what you're saying, that you expect the DOJ to somehow overturn the judgements of smart contracts, with possibly anonymous participants or participants outside of the DOJ's jurisdiction?

I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.

Sure, I don't disagree with that. For example, defrauding someone with a smart contract obviously doesn't offer the scammer legal protections.

Re: The collapse of the IRON stable coin

#45

Post by toomuchtodo »

thebean11 wrote: post #44
ceejayoz wrote: post #36

Earlier quoted context omitted.

I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.

Sure, I don't disagree with that. For example, defrauding someone with a smart contract obviously doesn't offer the scammer legal protections.

Who defines fraud if the contract is contested?

Re: The collapse of the IRON stable coin

#46

Post by jMyles »

toomuchtodo wrote: post #31
thebean11 wrote: post #28

Earlier quoted context omitted.

Are you saying the only time a contract is disputed is when the other party is evading the law? Nobody abuses the legal system to screw over people without enough resources to fight in court?

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.

Re: The collapse of the IRON stable coin

#47

Post by gruez »

rawtxapp wrote: post #41
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.

Because those tokens are fungible, they can "blacklist" certain addresses and refuse deposits from them coming to their exchange, but they can't "null" some random addresses holdings.

The smart contract itself has a "blacklist" function[1], which presumably can be used to prevent those tokens from being moved.

[1] https://etherscan.io/token/0xa0b86991c6218b36c1d19d4a2e9eb0c...

Re: The collapse of the IRON stable coin

#48

Post by runbathtime »

neither_color wrote: post #24
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?

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.

USDC represents a claim on USD, but why would Circle want to help out this contract and lose 262 million?

If a stablecoin issuer like USDC can make arbitrary decisions to null any USDC token and they use that power, that is a good argument for the point that they are not following aml/kyc on every hop or transaction of USDC, even though they are allowing the transfer of dollars behind it. USDC can be charged with violating money transmission / bsa / aml/ kyc requirements.

Re: The collapse of the IRON stable coin

#49

Post by [deleted] »

meowface wrote: post #30
hi5eyes wrote: post #19

Earlier quoted context omitted.

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

Bitcoin totally failed as a currency, but it's still something. I'm not necessarily arguing Bitcoin is useful or valuable period, but the issue you refer to is more with the "cryptocurrency" name and public conception that that's what all this technology is. The core idea is reliable, secure decentralization and the things it can enable. Coins that support smart contracts show that "cryptocurrency" isn't a great term…

[deleted]

Re: The collapse of the IRON stable coin

#50

Post by aodin »

Udik wrote: post #32
meowface wrote: post #13

Probably a dumb question, but is there any possibility of temporarily getting the price to slightly above 0 in order to let people get their money out? For example, could some group with a lot of money offer to buy/sell a bit until the oracle considers it above 0, in exchange for some sort of compensation from the investors or devs?

Yep, and btw, how can the price of anything be exactly 0? This doesn't sound right either.

Well, a price can go negative [1], so I wouldn't consider zero to be surprising.

[1] https://www.cnbc.com/2020/04/26/why-oil-prices-went-negative...

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