Comment by ogogmad | Hacker News Reader

Comment by ogogmad | Hacker News Reader

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> simply put: mitigating price volatility of the base token

Then cash it out and put it in your bank. OMG.

> this might be useful for tax purposes,

How??

> payments

You can't pay for groceries.

> & donations,

Your donee won't be able to get groceries.

> or just to balance your portfolio.

But it pays no dividends, so it's not really part of any portfolio, and it's a poor man's cash.

> unlike fiat this has all the features of ERC20

And what are those? And can those be achieved in other ways?

> and self-custody.

What the hell does this mean?

> DAI, USDC and RAI are all fairly interesting

Oh, indeed!

> and make different choices and trade-offs to stabilize their price.

But I still don't know why you need this!!!

> all stablecoins do carry risk though; if you want a risk-free coin then just convert to fiat.

Oh, absolutely.

[addition]

I'm coming more from the BTC direction, where smart contracts are very limited. Then I really don't know what stablecoins are for. From an ETH direction, stablecoins might make sense as a way for smart contracts to operate on USD, assuming smart contracts are actually useful for something that can't be done better in other ways.

You're coming from a BTC direction but you don't know what self custody means?

Anyways, an example of what I would use stablecoins for: I expect the price of $TOKEN to go down so I swap it for USDC. While I'm waiting for $TOKEN price to go down I lend my USDC on Aave for ~3% APY (and yes, there is smart contract risk here but I chose Aave in my example for that reason). When $TOKEN price drops enough I swap the USDC back for $TOKEN.

Another situation: I want to send my family member money to help with down payment on a house. I don't want to sell $TOKEN because I think the price will go up, so instead I lend $TOKEN on Aave and borrow stablecoins. I send stablecoins to family member (worth noting this would be difficult to do in FIAT due to the amount) and when he pays me back I can then withdraw my $TOKEN.

One more: I just sold a jpeg and want to make sure I have enough cash to pay taxes next year. Instead of hoping my $TOKEN price will stay same or go up I sell some for USDC to cover taxes

> (worth noting this would be difficult to do in FIAT due to the amount)

Difficult how? Wire transfers are a thing. Or are you just hoping that doing this with a token lets you dodge taxes somehow?

Jesus, is the comment about dodging taxes necessary? For the record I paid a fuckton of taxes for my crypto transactions, it would be idiotic not to. Do you know why?

I'm not sure if my wire transfer experience is uniquely bad, but I had to do a wire transfer when I made a down payment on my house last year. To do this I had to drive to a physical bank location, sign some papers, and then they told me it will probably arrive within a couple hours.

Google says the bank I use is 6th largest in the US so maybe bigger banks are better but I'm guessing my experience is not an outlier.

edit: oh also forgot to mention wire transfer limits. I don't know the exact limit is for my bank but I'm guessing it's under the amount I transferred. I'm guessing this would mean multiple trips to a physical bank branch in the year 2022

> I send stablecoins to family member (worth noting this would be difficult to do in FIAT due to the amount) and when he pays me back I can then withdraw my $TOKEN.

While you're on your high horse about the taxes comment, you should know that in the US what you're describing here is illegal. You can't give someone an interest-free loan and have neither party pay taxes on it. Your options are roughly either to classify it as a gift or structure it like an actual loan, with a minimum acceptable rate published by the IRS each month. https://www.lindsayandbrownell.com/beware-of-the-interest-fr...

Sorry, taxes comment was out of place. Just frustrated.

The loans aren't interest free, they have a variable rate determined by supply and demand. For USDC its been pretty steady around 3%. There was a day or two last year where it spiked to 40% when Justin Sun removed billions of his capital.

In response to wire transfer, I was more complaining about having to be at a physical bank branch to do it. Not sure if that is unusual either.

edit: Just remembered that normally I wouldn't have to physically go to the bank. I had to do so to make sure it arrived in time for the signing. I think they told me it would take a day or two if I did it online/over phone? But being there in person they said it would "probably" arrive in a couple hours

I was referring to your loan to your family member, not the interest-bearing crypto loan.

Schwab lets me wire up to 100K a day using an online form, sounds like you need a better bank. I thought the whole point of wire transfers was to move around large sums of money, so it surprised me that you thought it's supposed to be difficult.

Perhaps one example is Endaoment[1], which automatically converts ETH payments to USDC to mitigate market volatility and ensure beneficiaries receive donations in dollar amounts. This is also good from a tax perspective, as businesses report income based on the USD price of an asset at the time it is received, not based on the price of that asset later when it may be disposed.

Also see Stripe USDC payouts[2]. Some users may prefer this to receiving payments in a PayPal account.

[1] https://app.endaoment.org/

[2] https://stripe.com/newsroom/news/crypto-payouts

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