Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Basecoin, aka the Basis Protocol

prestonbyrne.com

Post reply on HN
Print view View original

91–100 of 104 posts

Re: Basecoin, aka the Basis Protocol

#91

Post by monochromatic »

mattbeckman wrote: post #66
monochromatic wrote: post #33

Earlier quoted context omitted.

Damning with faint praise.

Not really. He basically says the Bitshares approach is unsound because it requires market forces to be > 0. I agree that you can't have a stable pegged asset when nobody wants to participate in that market. However, if nobody wants to participate, then why do we care about stable pegged assets in the first place.

Oh I just meant that when you said "it's always been a better alternative than, say, the magically backed world of Tether," it was pretty faint praise.

Re: Basecoin, aka the Basis Protocol

#92

Post by hcmag »

hcmag wrote: post #43

I've worked with these founders over at Google. They were normal, middle-of-the-road SWEs working on some (fairly boring) DoubleClick teams, one of which eventually shut down. In a matter of a year, with no revenue, code, product, or customers, I can't believe they've raised over $100m. Are investors just betting on pedigree at this point? In which case, is a Princeton undergrad degree really worth that much? Moreove…

Sorry, I didnt mean to disparage the founders, although I see how I came off that way. The founders played the game well, and best of luck to them.

My comment was aimed at the investors who, with little compelling info, bandwagoned into pouring in millions. That, to me, is discouraging.

Re: Basecoin, aka the Basis Protocol

#93

Post by hashsalt »

chrisco255 wrote: post #72
hashsalt wrote: post #53

Earlier quoted context omitted.

Thats precisely his point. Contagion causes the break. Analogous to a bank run or the ruinous fall of the Thai baht in 97/98. Nobody has any real info on whether the bank has enough reserves, nor do they care. They just dont want to hold the asset.

In this case, they do. DAI's system is run entirely on the blockchain. It's auditable and decentralized. The biggest risk to DAI is if the value of the collateral crashed below the amount of DAI in circulation. The system has incentives in place to prevent this from happening. I'm not saying it's bullet proof, but I think it's a highly resilient system. I think adding multiple types of collateral should protect again…

Bank eg was an analogy. The issue is contagion, which can be external in source.

Re: Basecoin, aka the Basis Protocol

#94

Post by [deleted] »

thisisit wrote: post #44

Something is unstable because market wants it to be unstable. There are no mathematically underpinnings which can stop them from a long time. This is a fallacy which cryptocurrency groups need to wake up from. Sure it looks like math can solve this problem and many have over the years relied on solid math only to fail. See: https://en.wikipedia.org/wiki/Long-Term_Capital_Management But, what about controlling supply…

[deleted]

Re: Basecoin, aka the Basis Protocol

#95

Post by zodiac »

hashsalt wrote: post #53
zodiac wrote: post #28

Earlier quoted context omitted.

He has a weird definition of "break". At no point did the value of collateralized ether backing each DAI go below $1 or even anywhere close to that. There are valid arguments to be made against a DAI-like system like capital inefficiency, the appropriateness of the bounded volatility assumptions, and maybe sell spirals, but Preston Byrne's articles include a lot of invalid arguments.

Thats precisely his point. Contagion causes the break. Analogous to a bank run or the ruinous fall of the Thai baht in 97/98. Nobody has any real info on whether the bank has enough reserves, nor do they care. They just dont want to hold the asset.

What do you mean "contagion"?

Re: Basecoin, aka the Basis Protocol

#96

Post by rajacombinator »

hcmag wrote: post #43

I've worked with these founders over at Google. They were normal, middle-of-the-road SWEs working on some (fairly boring) DoubleClick teams, one of which eventually shut down. In a matter of a year, with no revenue, code, product, or customers, I can't believe they've raised over $100m. Are investors just betting on pedigree at this point? In which case, is a Princeton undergrad degree really worth that much? Moreove…

Without commenting on the validity of their business or the amount of money allocated, your premise is badly flawed. There’s no reason to think one’s SWE ranking at Google would correlate with success as an entrepreneur. (There’s fairly obvious arguments one could make for why they might be inversely correlated.) Furthermore a median engineer at Google is presumably at least a top decile engineer worldwide. Ultimately, life isn’t a report card, there’s lots of different paths to success.

Re: Basecoin, aka the Basis Protocol

#97

Post by drcode »

chrisco255 wrote: post #90
drcode wrote: post #19

Earlier quoted context omitted.

There's not really much reading on this- You simply can't take 10 assets that are worth less than $1 individually (because of guarantor risk) and mix them together to create an asset that's pegged at exactly $1- This is not a problem that can be solved by "diversification". For other history on synthetic assets, read Preston's posts and also Vitalik's posts such as https://blog.ethereum.org/2014/03/28/schellingcoin-a…

MakerDAO's system over-collateralizes on DAI. Currently, it takes at least $1.50 of ETH to create $1 of DAI. This is based on the volatility and risk profile of ETH. These parameters are adjustable by MakerDAO token holders. Suppose they added gold to the asset basket where 50% of DAI was backed by gold and 50% was backed by ETH. They could require 125% position on gold and 150% position on ETH. In this case, 50% of…

The inherent problem is that even if you are heavily diversified, in order to back by 50% gold you'd need to have 50% gold PLUS 50% MULTIPLIED BY THE PROBABILITY THE GUARANTOR FAILS.

For ether, such overcollateralization isn't a problem, because you can package it as an ether derivative and have no counterparty risk... But for a gold collateral you would have a risk that cannot be mitigated in this way and the risk will need to increase the slippage of the asset.

Re: Basecoin, aka the Basis Protocol

#98

Post by thisisit »

chrisco255 wrote: post #77
thisisit wrote: post #42

Earlier quoted context omitted.

> MakerDAO's DAI coin (currently collateralized by ETH) has already proven quite stable in the face of several black swan events and the price of Ethereum crashing nearly 70% over the past couple of months. That is an interesting claim. What were these black swan events which DAI passed with flying colors?

I would argue the value of ETH (the asset that backs DAI) crashing from nearly $1400 a couple months ago to a low of almost $350 a few weeks ago is pretty strong. What other asset has these sort of swings in such a low amount of time? The fact that the collateral backing DAI has dipped and yet DAI has remained stable is a testament to the systems underlying it. What could kill DAI would be ETH crashing to near zero r…

You could argue that. And that is a good point. But it is simply price swings or volatility. The job of the stable coin is to be stable during periods of volatility, even high one as that.

A black swan event is the one you pointed out about ETH crashing to zero. And there were none yet.

Re: Basecoin, aka the Basis Protocol

#99

Post by chrisco255 »

drcode wrote: post #97
chrisco255 wrote: post #90

Earlier quoted context omitted.

MakerDAO's system over-collateralizes on DAI. Currently, it takes at least $1.50 of ETH to create $1 of DAI. This is based on the volatility and risk profile of ETH. These parameters are adjustable by MakerDAO token holders. Suppose they added gold to the asset basket where 50% of DAI was backed by gold and 50% was backed by ETH. They could require 125% position on gold and 150% position on ETH. In this case, 50% of…

The inherent problem is that even if you are heavily diversified, in order to back by 50% gold you'd need to have 50% gold PLUS 50% MULTIPLIED BY THE PROBABILITY THE GUARANTOR FAILS. For ether, such overcollateralization isn't a problem, because you can package it as an ether derivative and have no counterparty risk... But for a gold collateral you would have a risk that cannot be mitigated in this way and the risk w…

As time progresses, other guarantors will place their assets on the blockchain similarly to Digix. And when other guarantors come online, Maker will be free to add those to the pool. As it stands, Digix provides Assay certificates and undergoes third party auditing. MakerDAO is off to a great start. They're doing all the right things to build a sustainable stable coin.

Re: Basecoin, aka the Basis Protocol

#100

Post by gitgud »

samfisher83 wrote: post #52
hcmag wrote: post #43

I've worked with these founders over at Google. They were normal, middle-of-the-road SWEs working on some (fairly boring) DoubleClick teams, one of which eventually shut down. In a matter of a year, with no revenue, code, product, or customers, I can't believe they've raised over $100m. Are investors just betting on pedigree at this point? In which case, is a Princeton undergrad degree really worth that much? Moreove…

They must be good at selling if they can convince people to get 100+ million with no "revenue, code, product, or customers." You can't hate on someone for making it.

In other words, "you gotta respect the hustle"
Post reply on HN