Iron Finance’s DeFi bank run – and how Mark Cuban got ‘rekted’
forkast.news
forkast.news
The iron finance devs have a history of failed projects (at least 4) and tbh the space between a rugpull, incompetence and a genuine mistake is a gray area.
https://www.rekt.news/ lists a lot of these cases and the cynic in me believes many such cases are inside jobs.
If you can get a token for one dollar, no buyer should be willing to pay more than that, if you can sell a token for one dollar, no seller should be willing to sell for less than that. Sure, there will be some imperfections, there will be transaction fees, people might want to buy or sell some tokens faster than wiring money around, but can this really push the price significantly up or down? If, how? Some chain of arbitrage opportunities? Would the price at least stabilize or is there a runaway tendency without active management?
The other problem is related: you can’t make nearly as much money off your scheme.
Fractional reserve is about how they have to have a small fraction of liquid stuff to deal with withdrawals.
The usual idea of fractional reserve banking people have on the internet is a myth, it would be an insolvent bank, I believe.
And banks don't have to have just $1 in assets for every $1 deposited, but they have to have a little more in case some of their loans go bad.
People were attracted to this because it promised returns for using their stablecoin (IRON) if you put it into liquidity pools that allowed others get IRON.
Attestations exist. They are not the same as an audit, and do not show quite what you seem to think they show.
https://www.centre.io/hubfs/pdfs/attestation/Grant-Thorton_c...
Attestations are not audits.
If this understanding is correct, then the attestations may just say that the company behind USDC prepared and signed those statements about their balances, but may say nothing about the correctness of those statements as they did not audit the company and therefore did not obtained independent evidence for the correctness of them.
I read one of the attestation and would read it as saying something stronger and closer to an audit but I am not an legal expert and find the language used quite hard to parse. Maybe someone more qualified can expand on this.
"US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."
Note the "and in approved investments". Not cash.
This is what it says, for March 2021:
"US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."
But point taken about the attestation -vs- audit. I'd have to read a bit more about the practical differences.
"US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."
So the money is not in actual dollars. It is in entirely unspecified "approved investments".
is kind of ironic given this:
> One place that these organizations are VERY DIFFERENT is that they are not based in the USA and they are not corporations. They are foundations. They are Decentralized in their governance. NO ONE owns majority control (although the founders certainly have significant influence). This is not only because of the ethos of Decentralized Autonomous Organizations (DAOS), but also because of the ABSOLUTE STUPIDITY of our regulators forcing some of the most impactful and innovative entrepreneurs of this generation to foreign countries to run their businesses.
From the original blog post at https://blogmaverick.com/2021/06/13/the-brilliance-of-yield-...
In fairness, I'll grant him that it's possible that regulating stable coins in that way is not the same kind of regulations that drive entrepreneurs to foreign countries.
we can all jump through an increasing number of hoops and use off shore unregulated financial products who have simply learned not to bother with US citizens, but most of us stick with the ones with fiduciary duties
As per HN rules I request an example of positive, non-shitcoin-speculation impact that cryptocurrencies have had in the last twelve years.
With MG and WU, they are deeply embedded in the countries they operate in; they develop relationships with the banks so customers can get their money without hassle, even if they don't have accounts there. If you send money in Country A, it's available in Country B within 10 minutes, which is approx. the amount of time it would take a human to look up that transaction and verify the customer's ID. Your recipient walks out with cash.
Meanwhile, transferring crypto peer-to-peer isn't even free, and transactions are nowhere near instantaneous. And even if your recipient understands crypto, they still have an extra step of converting these bytes into actual legal tender.
To do remittances, you have to have money flowing in both directions, or you will run out of local currency. Cryptocurrencies do not have that. There are not an equal number of people in foreign countries that want to buy cryptocurrencies as there are that want to send money and convert it to local currencies.
The solution for this is, ultimately, arbitrage using the traditional financial channels. And at that point, you are paying the costs for those channels, plus the costs of the extra middlemen you have added on top of them.
Perhaps they are only surrounded by Yes Men who don’t attempt to educate them or advise when they are wrong/under-informed.
Do you mean something other than “my guess is” here?
There are other better cryptocurrencies for facilitating transactions, in terms of speed, fees, energy cost, etc. He should have known some of this before publicly jumping on the Bitcoin wagon.
Then when he did clue in a bit, he made the move to Doge and chirped about how it required less energy than Bitcoin. But it is still much higher consumption and much slower transaction speed compared to something like Stellar.
All this leads me to believe that nobody was educating him, and he wasn’t speeding enough time to come up to speed.
I don’t expect him to be an expert in everything, but he could have at least consulted with some experts.
Musk, separately from Tesla plays with Doge. As far as I know Tesla hasn't accepted or invested in Doge.
But that’s SO much worse! He’s coaxing his followers to dash out in front of a steamroller to help him — a billionaire — pick up pennies. He’s “just playing around” with peoples’ life savings.
It would be far less reprehensible if Musk held sincere but misguided beliefs in Doge but “just meme-ing” is unconscionable. Especially for someone with his exorbitant wealth to do so at the expense of those with far fewer resources.
>Cuban and Musk are not savvy (crypto) investors. Just because they are rich and successful in one domain does not make them experts in others. Perhaps they are only surrounded by Yes Men who don’t attempt to educate them or advise when they are wrong/under-informed.
It's unreasonable to expect someone who's been shit posting on twitter for years to stop because people are for some reason taking him more seriously after Tesla 10x'd. He's always been a shit poster.
That's what he got in trouble for a few years back, when he "decided" to meme himself a securities fraud violation.
Not sure how much sympathy people putting their life savings into DogeCoin deserve, on the grand total diligence of a tweet no less.
But looking past that, who to you has the greater responsibility in this moment? The gambler who can't stop until he/she loses everything? Or the knowledgeable CEO that runs 2 companies, and yet can't stop himself from messing with people that don't know any better?
I don’t think Musk’s brand suffers because of what he’s doing in DogeCoin. Crypto and the broader economy continue to have limited connection. Nobody reasonable will turn down Cuban’s business or term sheet because someone else lost money on TITAN. The networks are mutually exclusive.
That itself may be a reference to Mark Cuban appearing in an episode of Entourage as himself, promoting an investment in a tequila brand.
Oddly, the article doesn't mention the LINK Oracle they used rounded the price to a number of decimals and since TITAN went too low the price returned was $0 and thus the IRON contract itself would fail since it had an assert price > 0!
So what is the difference between these three chart patterns then? [0] [1] [2]
[0] https://coinmarketcap.com/currencies/iron-titanium-token/
Cuban also doesn't see it like that and wants the whole thing regulated.
I am pointing out an insignificant detail, but it does remind that the journalist usually has no first hand experience, and they're just re-telling heard stories.
Is this supposed to be some sort of dig at anyone writing or commenting specifically about crypto-currencies needing to have "first hand experience" or do you think any journalist has to have directly experienced themselves whatever they're writing about.
In my view, "re-telling heard stories" is a good definition of journalism, in itself. But I suspect in this case it's meant to de-legitimize the contents of any crypto-skeptical article?
edit: after the downvotes I thought I'd check the journalist's history - I thought there might be some justification for the skepticism of the post I quoted. But she has a pretty solid background writing about crypto-currency economics. So the minor linguistic mistake is obviously just a simple way to discredit the opinions she's expressing as a whole.
Sadly, this goes for the whole capitalism itself...