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Report on Stablecoins [pdf]

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Re: Report on Stablecoins [pdf]

#91

Post by hestefisk »

dragontamer wrote: post #76
null_object wrote: post #73

Earlier quoted context omitted.

> When BTC goes up to $20,000, the junior guy spent $0 and made $10,000. Senior guy still has $10,000. When BTC goes up to $50,000, junior guy now has $40,000 and senior guy has $10,000. You used a lot of words to describe a Ponzi scheme.

I'm describing a CDO scheme. Its important to remember the difference. Ponzi is a very, very different structure. CDOs do well as long as the underlyings don't crash beyond a certain value. The "junior" guys have lots of risk (and they _WANT_ the risk and enjoy it). The "senior guys" think they're safe. Indeed: senior/junior is roughly how we split up fiat dollars: banks do this with our money all the time (under tig…

Very interesting. Can you recommend any good books on this topic to learn more?

Re: Report on Stablecoins [pdf]

#92

Post by playpause »

seph-reed wrote: post #63
dexwiz wrote: post #49

All these coins are proven to be worthless. When speculation is making everyone money, the money isn't worth much. Edit: Love the immediate fear downvote. No one wants to hear their gold is really just shiny dirt.

Even less than people want to hear that gold is just shiny dirt, people don't want to hear that almost all perceptions of value are inherently subjective and meaningless. That social credit, and money, and everything we hold dear and true is just narrative we've crafted around ourselves to cope with the uncaring void that is the cosmos. So -- my guess -- people are probably going to keep thinking that things are valu…

Where do you get that people “don’t want to hear” this? I find it’s a tedious revelation that people seem to love having. Yes, things are only valuable if people believe they’re valuable. Deep. So what though?

Re: Report on Stablecoins [pdf]

#93

Post by JumpCrisscross »

dragontamer wrote: post #76
null_object wrote: post #73

Earlier quoted context omitted.

> When BTC goes up to $20,000, the junior guy spent $0 and made $10,000. Senior guy still has $10,000. When BTC goes up to $50,000, junior guy now has $40,000 and senior guy has $10,000. You used a lot of words to describe a Ponzi scheme.

I'm describing a CDO scheme. Its important to remember the difference. Ponzi is a very, very different structure. CDOs do well as long as the underlyings don't crash beyond a certain value. The "junior" guys have lots of risk (and they _WANT_ the risk and enjoy it). The "senior guys" think they're safe. Indeed: senior/junior is roughly how we split up fiat dollars: banks do this with our money all the time (under tig…

> CDOs do well as long as the underlyings don't crash beyond a certain value

Which, to be clear, didn't happen in 2008. People assumed that super safe meant super liquid. The AAA tranches of every CDO I've looked at performed as promised, in terms of not losing money. Even when the underlying securities performed abysmally. They just didn't trade in a crisis like the Treasuries their buyers were using them to replace.

(Side note: a lot of algorithmic stablecoins similarly assume perfect liquidity and continuous pricing.)

Re: Report on Stablecoins [pdf]

#94

Post by mgamache »

fancyfredbot wrote: post #66

"If well-designed and appropriately regulated, stablecoins could support faster, more efficient, and more inclusive payments options." Anyone else find it bizarre that the solution to slow payments might turn out to be distributed ledgers based on proof of work? It feels like the last thing you'd expect - especially since we're starting from a position of managing money through trusted centralised authorities. It's a…

All traditional methods use gatekeepers that control the flow of money. If you can't do what you want with your money is it really yours? The Trustless nature of BTC involves a seeming waste of energy, but you get a lot in return (like ownership of your money).

Re: Report on Stablecoins [pdf]

#95

Post by lavezzi »

Aaronstotle wrote: post #43
robmerki wrote: post #12

Tether and other pose a critical systemic risk to all cryptocurrency. Anything to increase trust/transparency with stablecoins is a big with for crypto.

Tether absolutely poses a large risk to crypto. If companies do issue stablecoins, they should have links to third-party attestations that verify proof of reserves like Circle (USDC) does. Tether could end all of their "FUD" if they ever published such a report. Circle's reporting: https://www.circle.com/en/usdc#transparency (edited to change audits --> attestations)

Circle are not audited, Grant Thornton provide an attestation. There's a big difference.

Re: Report on Stablecoins [pdf]

#96

Post by andred14 »

kim0 wrote: post #30

For a stable coin to actually work, it needs to be private and algorithmic. The only such crypto I know of, is Haven protocol. This is based on a fork of Monero the largest fungible crypto network, with a system of private synthetic assets on top. Things like synthetic USD, CHF, GBP, also gold and silver...etc. If you find this interesting, read more at https://havenprotocol.org/knowledge/

Haven is cool but the Secret Network (SCRT) is better Imo :)

I don't like how the wallet for Haven is web based ie. if the website goes down then we lose access to our funds?

In December the Shade protocol and associated stable coin comes out for Secret it's going be awesome.

https://shadeprotocol.io/ https://scrt.network

Re: Report on Stablecoins [pdf]

#97

Post by lottin »

Aaronstotle wrote: post #43
robmerki wrote: post #12

Tether and other pose a critical systemic risk to all cryptocurrency. Anything to increase trust/transparency with stablecoins is a big with for crypto.

Tether absolutely poses a large risk to crypto. If companies do issue stablecoins, they should have links to third-party attestations that verify proof of reserves like Circle (USDC) does. Tether could end all of their "FUD" if they ever published such a report. Circle's reporting: https://www.circle.com/en/usdc#transparency (edited to change audits --> attestations)

The problem is an independent audit would also uncover Tether's likely involvement in various illegal schemes to pump up the prices of cryptocurrencies. It's not only that they don't want to be audited but that they just can't.

Re: Report on Stablecoins [pdf]

#98

Post by [deleted] »

__MatrixMan__ wrote: post #59
svachalek wrote: post #17

Earlier quoted context omitted.

I think it would make them illegal. As it probably should, I'm not aware of any that are not an elaborate scam.

I read your comment and then started reading about at MakerDAO's governance model. It doesn't jump out as a scam to me, just a clever bit of game theory. What am I missing?

[deleted]

Re: Report on Stablecoins [pdf]

#99

Post by xvector »

wegwerfbenutzer wrote: post #38
nostrademons wrote: post #14

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

DAI is not considered an algorithmic stablecoin, but an asset backed stablecoin. Algorithmic stablecoins like FEI do not seem to work as well as asset backed stablecoins.

Wait, why is DAI not algorithmic?

Re: Report on Stablecoins [pdf]

#100

Post by dragontamer »

mrandish wrote: post #86
dragontamer wrote: post #62

Earlier quoted context omitted.

The downvotes are because "worthless" is hyperbolic and unhelpful. Clearly, the coins have value because someone out there feels like paying money for them. More importantly: we _HAVE_ to understand the market dynamics here. What's going on is very human and very important to realize. Matt Levine from Bloomberg has a very simple explanation: the cryptocoin world has discovered "senior debt vs junior debt", and are us…

Your post makes a lot of sense to me from a fundamental econ perspective, however, I know I don't know enough about the topic of crypto-currencies in general to trust my opinion much. I'd love to see the strongest possible counter-argument to yours to help me understand why so many people seem to disagree.

All crytocoins have their own programming and therefore their own general behaviors that fail to generalize.

My post was largely based on the TITANIUM / IRON saga of the cryptocoin world, just a few months ago ("Titan" for short). I'd suggest you read up on the mechanics of how / why that crashed.

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