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Comment by debacle | Hacker News Reader

For everyone who is a big fan of crypto, what is the next "big step" after PoS.

I am more than happy to use a cryptocurrency where I can take 1 USD and receive a coin that is worth ~1 USD, without needing the promise that it will be a moonshot "investment," merely a vehicle for value.

When is that coin coming our way?

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Really? Stable-coins as a concept have existed for years, and in practice have blown up in trading volume and circulation the past 2 years.

USDC stable-coin [0]($34 Billion in circulation) is arguably the most trustworthy in terms of having a 1 to 1 exchangeable backing through a regulated centralized custodian (Circle/Coinbase primarily but also BlockFi and other entities that hold USD reserves for exchange).

Many of these entities (as well as "DeFi" decentralized finance platforms that use Ethereum or similar smart contracts to decentralize the process) allow for various forms of deposit and lending accounts that provide a whole range of yields way way above traditional banking deposits. On top of this, some of these custodians add an additional layer of payment ability to these deposit accounts. Crypto.com[1] for example has a Visa debit card that ties into your USDC/stable coin deposits that you can transact from, in theory avoiding needing to use fiat at all. As well as "CD-like" 3-month lockups where you can get 8-12% yield.

There are also many decentralized stable coins that have various forms of over-collateralized crypto-asset reserves backing the coin and algorithms to stabilize the value by buying or selling from these reserves, trading off possible volatility and uncertainty around peg to avoid centralization and KYC and other regulations of 1:1 backed coins.[2]

[0] https://www.circle.com/en/usdc

[1] https://crypto.com/us/earn

[2] $MIM dollar stable-coin: https://cointelegraph.com/news/magic-internet-money-races-pa...

Other than proof of stake I've heard of two validation systems:

1. Proof of space and/or time: https://en.wikipedia.org/wiki/Proof_of_space#:~:text=A%20pro....

2. Proof of authority: https://en.wikipedia.org/wiki/Proof_of_authority

Not sure either makes a huge difference

Helium network's proof of coverage is also interesting.

Proof of Authority is extraordinarily useful but it's not inherently complex by any means (really it's just the old school consensus problems).

I'd argue though that Proof of Authority definitely is the most useful outside of Proof of Stake and the slowly maturing Proof of Useful Work consensus systems. It's simplistic but it perfectly covers the needs of a lot of government systems.

Before these and even before PoS there was FBA consensus which is the true successor of PoW designed by ex-BTC devs who saw the problems with PoW and actually came up with something better rather than just replacing the worst part of PoW with something else.

MIM - Magic Internet Money, a stablecoin that just leans into the meme because the space is big enough to just ignore crypto/blockchain skeptics (and maxis) as you dont need buyin from them anymore to attract billions of dollars for validation. It competes with DAI, same system just natively crosschain (via AnySwap bridging function added to the erc20 class) and potentially maintains better collateral choices. Right now they use yield bearing collateral like liquidity pool shares which earn enough to reduce loan to value ratios and even pay interest on their own. In comparison, DAI was released in a world without onchain distributed asset backed securities and its users eventually picked completely centralized assets like USDC for collateral. This limits that communities’ risk tolerance for raising debt limits.

That part of your question about stablecoins doesn’t have much to do with a Proof of Stake though-a consensus model.

DAI is still an extremely important in decentralized finance. It is simply easier to scale a centralized stable coin than a collateralized one as the collateralized one is less capital efficient. The centralized coin has different risk parameters though, such as a bank run scenario or the fact that USDC funds can be frozen at will by Circle.

I didn't write that anything was wrong with any of the three assets mentioned

I wrote how they compete on collateral choices which lets people predict their growth/issuance trajectory. MIM grows faster than DAI for a variety of reasons that DAI didn’t have when it launched, which is not likely that DAI can replicate now or at least not quickly.

On Ethereum the three most popular ones are DAI, USDC, and USDT. All are pegged to $1. There are also more niche stablecoinds, such as RAI.

https://ethereum.org/en/stablecoins

Worth to keep in mind is that USDT is involved in a lot of shady stuff (and run by Bitfinex), USDC is run by a centralized organization (and Coinbase is involved in that too) while DAI is based on algorithmic stability/stableness. Which one is the best choice for the normal user is left as an exercise to the reader.

https://coinmarketcap.com/currencies/multi-collateral-dai/

> When is that coin coming our way?

Today. It is called USDC; but on the Stellar Blockchain. [0]

You will always know that 1 USDC will always be worth 1 USD and you won't have to deal with ridiculously slow transactions or incredibly high gas fees for every operation and it is not using PoW. [0]

[0] https://stellar.org/usdc

What you're looking for exists today and is called a stable-coin (for example, USDC).

There is already nearly $100B worth of stable coins available on the Ethereum blockchain (and other EVM chains such as Polygon): https://defipulse.com/usd.

From an consensus perspective PPoS (Pure Proof of Stake) and PoH (Proof of History) are next steps. If you want to send around USD you can use UST for example, an algorithmic stablecoin.

DAI has remained stable, even when ETH crashed 90%, Maker worked perfectly and DAI remained $1 USD.

This is an honest question, and I'm not trying to pour cold water on DAI. What would happen if DAI had a single centralised source of truth which could be mirrored as needed if people lost faith in the central entity? This is a bit like what Wikipedia has, which is a fully open database that can be mirrored ad infinitum -- but still remains the central source of truth as long as people respect the organisation that runs it. More broadly, does DAI really need to be on a blockchain*? Are there efficient non-blockchain ways to make verifiable stablecoins?

I ask this question because a lot of things that are run on blockchains seem like they're losing more than they're gaining. It makes me suspicious of even DAI.

When I say "fully open database", you might object that this compromises a person's privacy in order to make the database mirror-able. But then again, all blockchains are fully open and public, so there's nothing more to be lost there.

* - By which I mean the Ethereum blockchain, which is inefficient like all blockchains currently are.

Ethereum is going to stop being so inefficient in about six months. The proof-of-stake migration will reduce its energy usage by about 99.95%. So that will make it an efficient way to make verifiable stablecoins.

https://blog.ethereum.org/2021/05/18/country-power-no-more/

The US government could make a centralized digital currency without a blockchain. That makes way more sense to me than dealing with all the overhead associated with a trustless decentralized ledger.

They are working on it. they call it a "digital dollar".

I suspect if such a service was not hosted on a blockchain, it would be quickly shut down by regulators

Does mirroring deal with this? Somebody downloads the database and hosts it somewhere else, a bit like TPB or Sci-hub. I suggested this in my original post. Which host gets "elevated" to be the official source of truth is decided by community concensus.

Then you run into the problem of deciding who is running the authoritative mirror when the existing one goes down. If there's no single authoritative mirror then you could potentially double-spend your money by spending it in different places on different mirrors.

Mirroring doesn't deal with this because there's always a single target, elimination of which disrupts the whole system, since some time will pass until yet another person puts a target on his back, and there is the problem of finding out which one is legitimate in case if there are few successors.

funny how everyone refers to coins which are pegged to a massively inflationary fiat currency as "stable"...

The "stable" refers to the absence of massive short-term volatility. The purpose of stablecoins is "banking the unbanked" - in other words, allowing people to spend money who don't have bank accounts. At least I think that's what they're for. It allows people to use USD in the wild, wild west.

>The "stable" refers to the absence of massive short-term volatility.

Nope, See my reply, stable refers to pegged to something and thus stable in value to that something.

The absence of massive short-term volatility is not a property of stablecoins its a property of pegging to something without massive short-term volatility.

Stablecoins exist in the Fiat world too. For example the Bahamian dollar is pegged to the US dollar on a one-to-one basis. So its a Fiat USD stablecoin. It doesn't have a long term stable value (buying power) just like the USD does not.

Stablecoins is a synonym for pegged-coin it is stable to the value of something else not stable in buying power. You could have a gold stablecoin it would have the vale of defined mount of gold and would therefore move in value just like gold.

the moonshot premise is the growth hack - a reason for people to want the coin. anything stable is unlikely to find widespread adoption, unless it’s introduced by central banks, in which case it’s called Central Bank Digital Currency (CBDC)

Proof of work is the only system where you can look at the blockchain data and figure out the consensus. All other systems depends on people agreeing on what is the truth. PoW is not just superior, it's essential for true decentralized crypto.

Delegated Proof of Stake is pretty cool, particularly as its applied in Nano (instant and feeless transactions), if someone manages to combine that with the transaction privacy of Monero that would be awesome in my view.

There is nothing cool about dPoS. Compared to PoS, it's an objectively worse system in terms of decentralization.

PoD = Proof of Dollar. ;-)

That’s what Tether is… ostensibly

"When is that coin coming our way?"

My guess is around the time central banks start issuing it.

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