Now if dai, usdc or usdt had failed, that would be a big deal.
The fact that some people think a $250,000 heist followed by the collapse of a half a million dollar stablecoin is "not news" underscores how ridiculous the cryptocurrency space is right now.
It is interesting that these exploits still happen.
Title of leaderboard, REKT.
Although, junior devs certainly can get that much at top tier companies in SF, but you have to be really good to get them.
The “Dai” peg did break — both in early 2020 [1], and a few days after launching. DAI’s now 60% backed by Tether like instruments. It’s basically a strictly worse version of Facebook’s Libra, assuming Libra weren’t crippled by state regulators (Libra is now Diem).
Every major algorithmic stablecoin has imploded at least once in times of market volatility. Preston Byrne has written a wonderful article explaining why the concept is clearly unsound and theoretically flawed [2]:
When you make a “coin” which is in form and substance a repackaged
exposure to another underlying cryptocurrency, as Dai is simply
repackaged Ether, and Basecoin is simply an abstraction of demand
for “Base bonds,” and peg that exposure to some meatspace asset
like an ounce of gold or a U.S. dollar, a sudden move against the
underlying collateral – in this case, 12% – can trigger a sell-off
that breaks that peg, and breaks it hard.
Unfortunately, when stablecoins break, they get propped up by biased investors in closely linked pseudo equities who limp the imploded stablecoin along by injecting more capital and then powering on the hype machine.
[1]: https://blog.makerdao.com/the-market-collapse-of-march-12-20...
It's valid, healthy and even recommended to have significant skepticism regarding crypto. I think that's fair game, as about 90% (or more) of coins are pump-and-dump schemes. Further, almost everything "Defi" is supremely risky, as they are completely unregulated, not insured, often lack liquidity, and can go down the drain at moment's notice.
Fine. However, there's a general anti-crypto stance here largely based on outdated mainstream narratives that if you truly would be literate about crypto, could only laugh at.
So this community is not "very literate", it doesn't even past the basic smell test.
Can you be specific about the narratives you're seeing on here that you are laughing at?
"Crypto is only used by criminals". Complete non-sense, cash is used far more often for illicit activities. In fact, blockchain forensics is developing so fast that crypto increasingly is very unattractive. Not only may they find you, your coins may become "tainted", and rejected by exchanges.
"Crypto is a scam". Inaccurate. Out of the 10,000 or so coins, most are scams. Yet there's at least two dozen or so serious long term projects, and these matter, as judged by their market cap.
"It's a pyramid scheme or ponzi fraud". No, in particular for the serious projects (Bitcoin, Ether), it does not meet this comparison at all. There is no single beneficiary doing a rug pull.
"Crypto boils the oceans". It doesn't. If you see it as an industry, it's greener than most other industries. And particular as we speak, almost all dirty mining (coal-based) is rapidly moving to renewables as miners are leaving China. And not just that, there's a mining council stimulating in particular stranded energy.
"It's worth zero". Well, I can't predict market prices, but the point here is that people have no idea about Bitcoin adaption. It grows by millions of users per week, faster than the rise of the internet and Facebook. Also, institutional investors are in, there's ETFs, the first nation accepting it as legal tender, the list goes on. It will face many more obstacles but the point is that this is no longer some weird internet cult, it's mainstream.
"Political rejection" Here I'm hinting at mostly liberals rejecting crypto based on political motives. Yet they quite literally fail to see the other side of the coin. Where Bitcoin besides being speculative, also has tremendous humanitarian value. It can help the poor unbanked to store/grow value. It can help people in inflationary regimes protect their property. It allows immigrants to cross borders without seizure. It allows immigrant arrivals to send back money to their homeland, without the middle man taking 35%. And perhaps closer to our first world, crypto may be the young's generation only chance to grow some wealth, as they are locked out of everything else.
I know, the above list make me sound like a proponent. I'm not, I'm confused, puzzled. And I embrace that. Because this entire thing is just too complex to slap a single label on.
https://bitfinexed.medium.com/tether-is-setting-a-new-standa...
If you truly believe what you say, then you should definitely consider shorting it, if you're right you'll make a lot of money.
However I'm very interested in the idea of shorting a "stable"coin. Who would possibly enter into this contract for an asset that has an upside of zero and a (potential, long-term, depending on your bearishness) downside of 100%?
In any case, with the strong likelihood Tether themselves are effectively shorting it by selling it unsecured by any real assets it would be a tough market to get in on.
You have to borrow it to short it, so there's a 1-3% APY cost associated with shorting it. You have to calculate the tradeoff of the likelihood of it going to 0 within the next couple of years vs the cost of borrowing USDT to short it.
Say you short 1M$ worth of Tether, it goes belly up within 4 years, it cost you like ~40k$ to short it, but your upside is 1M$. If it never actually fails because the market is irrational or by some miracle Tether was doing the right thing, then your cost depends on when you close your position. It's a relatively cheap way of making lots of money depending on your conviction on Tether's likelihood to fail.
And if you believe USDT has been 1:1 backed by us dollars for its full history - dream on. If you believed they would actually get audited when they said they would - hahah.
Nothing of value is backed in our world. If a mere 7% of bank account holders go to the bank to collect their money, the bank collapses. They don't have your money, it's not there.
If all owners of gold (gold value papers) today claim their physical gold, it can't be done. There's 400% more value paper compared to the total supply above ground.
If all owners of Apple stock today decide to sell their stock all at the exact same moment, they won't get out the full market cap. Because the entire thing crashed before that. But that won't happen, because the exchange will simply stop the trade.
Which is the same thing crypto exchanges do when things get too heated.
I in particular object to the notion that things of value should be 100% backed by actual USD, in bank accounts or cash. That's not how liquidity works, yet a lot of people intuitively believe this to be so.
Banks and gold deposits re-lend money because it makes them money and they can sell the storage service for cheaper. If you want something that won't be loaned back out then you can buy that service pretty easily.
And stock prices changing is a very different thing. The actual supply is there, and entire markets caps can and do get sold in things like mergers.
This is also why a fraction of a market cap (say a few billion) can dramatically move a stock price of a 1 trillion market cap.
Same for Bitcoin. If its market price crashes, the same amount of Bitcoin exists. Yet this means nothing as only the BTCUSD pair is worth anything.
Considering negative interest rates in the Eurozone you would be doing the banks a favor. They don't want your deposits.
The buyer of all apple stock gets a claim to all apples future profits (and control of the corp). This happens regularly - all sellers selling when businesses are taken private. In general, this results in a premium to present value, not a discount. And even if the price went to zero, I still end up with this profit generating asset.
What crypto people don't understand is that the constant LYING (!) undermines their arguments.
We understand how banks work. FDIC insured to 250K, you can do an ICS or other accounts to spread your cash to get FDIC coverage for about $100M of your balance. For most folks that is plenty of cash insurance for funds if they need it. If not, buy 13 week t-bills.
What you totally fail to understand, is when someone says something is backed 1:1 by a related asset, then when someone buys item A, the issuer needs to be 1 unit of the related asset. This is not complicated math. This actually happens all the time in the real world. Even the title to my vehicle even is backed 1:1 by my vehicle.
Even your "successful" 1:1 backed crypto is likely anything but that, and yes - when the run starts, we will find out how bad it is.
Meanwhile on boomer news
> A single web server caught fire somewhere in Bolivia, is social media over? (+20000 points)
(Though I think it's obvious that USDT is a scam.)
If there are any appropriate places on the internet for news about a new collapsed piece of DeFi tech, HN is unquestionably on that list.