MakerDAO may execute ‘emergency shutdown’ if sanctions hit DAI
thedefiant.io
thedefiant.io
This may not be the fiat-breaking revolutionary digital currency we're looking for.
Nearly every citizen that's not running an extensive mining operation is going to be required to go through a centralized exchange at some point or another.
There is no way to avoid this issue of trust with crypto, unless crypto itself becomes the de-facto currency of choice (hint: it won't).
There is simply no meaningful way to avoid "trust", despite the snake oil that crypto folks like to coat everything in.
I would agree - bitcoin will likely continue even if sanctioned by the US, but I'd not be willing to bet all that much on it.
If there is no on-ramp for new US dollars... I don't see it faring well. The market will likely collapse back to the only genuine use case: dark market exchanges.
At least the threshold is shifting. This was once said about DeFi.
Bitcoin is nukable. Banning would go far on its own. Yes, some people would still use it. But if a computer search or errand text resulted in criminal charges, the network effect would reverse. Total annihilation would involve committing to mounting attacks on the chain, buying up or even building massive mining rigs to sow chaos on the chain.
If a computer search or errand text resulted in criminal charges,
then there would be an opposing counterforce to that.
But it turns out that bad actors also know how to use the Internet to accelerate their bad communications. Surprise, surprise!
Asset-backed stablecoins, being ostensibly on-chain references to real-world value, cannot fork and retain their value across both forks. They provide the overwhelming majority of the actual economic utility of a given chain which means that a fork of any major chain that hosts them is basically impossible. A contentious network decision is at basically the sole discretion of Jeremy Allaire and lord help us Paolo Ardoino.
So not just the government.
Their primary issue was being early and there weren't really collateral choices.
There was no trustless bridge for Bitcoin when they needed it. So they wound up using BitGo's WBTC. People got afraid of the volatility of the assets so started approving stablecoins as collateral, and Tether wasn't an option, other stables didn't exist, so they went with USDC.
For more modern iteration of this concept with different collateral choices and community ethos, look at Magic Internet Money $MIM (yes, naming is intentional re-appropriation). So far all the collateral are yield generating assets, they generate yield from liquidity pools and volume. The automated liquidation functions the same and its worked. It has ancillary issues from its founder's reputation on other projects, so there is still room for yet another stablecoin that inspires more confidence without really needing the baggage of a leader.
The reputational contagion is what I’m referring to
An autonomous stablecoin shouldn’t really need confidence based on tangentially related persons or an erratic and scattered founder
I recognize the market need for a different stablecoin that takes the learnings from MIM and I’m excited that a more resilient one will come about
Again taking a look at Magic Internet Money, one part of the structure is that their SPELL token (the equivalent of the MAKER token) was launched more organically and at least has been able to keep an ethos within the owners. Nothing here prevents more consolidated ownership, or any novelties in governance (and I argue that governance can be vassstly improved, there are no bylaws or even continuity between governance anywhere). Only a case study into the contrast between MakerDAO and the answer to your rhetorical comment.
withdraw your sanctioned Tornado Cash notes to a virgin address, don't worry about cashing them out at an exchange, just deposit them as collateral in MakerDao to create DAI
deposit those funds into lending protocols until you have a LTV ratio of 80% or higher
Sell all the borrowed funds and walk away from the collateral and that address
protip: Uniswap V2 swap/exchange code has a recipient feature that isn't present on the GUI. When you trade assets, you can designate yet another address as the beneficiary. Exchanges don't read custom smart contract inputs to flag source of funds to prevent you from cashing out, for now.
This will probably happen eventually but I imagine it would be pretty easy to circumvent. There are lots of convoluted ways of transferring ETH that I'm not sure Chainlysis would pick up on. Stuff like:
1. Withdraw from Tornado to address A
2. From address A, call a contract that flashloans the amount you just withdrew minus the fee from dydx to a new address B
3. Repay flashloan with funds from address A, but address B keeps the ETH that was "from" dydx.
or
1. Withdraw from Tornado to address A
2. From address A, convert ETH to WETH
3. From address A, transfer WETH to Uniswap v2 DAI/WETH pool
4. From a new address B, call skim() on the Uniswap contract and get all the WETH you just transferred to it, but now it looks like it was from Uniswap.
Both of these rely on the fact that they probably aren't going to flag all the funds in a defi protocol just because one of its users used Tornado Cash.
> 4. From a new address B, call skim() on the Uniswap contract and get all the WETH you just transferred to it, but now it looks like it was from Uniswap.
the second one is dangerous! are you suggesting to just transfer WETH to the pool address without using the pool's swap function? that means anyone can see the imbalance and skim before you do! and if you did a composable or flash loan style transaction to do it all in a single transaction, that just makes it more obvious (eventually) that the same party was involved
and even that could be frontrun! which is actually kind of funny because maybe you could frontrun yourself for plausible deniability, and put MEV protection around that transaction!
Yeah. I meant to add that it should be done atomically in one transaction but come to think of it just using flashbots and having it as 2 transactions would make it look more legitimate.
The way you suggested by pumping a token is also pretty good but depending on how many initial holders there are you may lose some money in the process. I watched the Tornado Cash 100 ETH address for a while and I think I saw a guy doing something like this.
Don't have initial holders. Create the liquidity pool yourself (in any of your identities) and have that be the only place to get the tokens. In the Uniswap V2 style of liquidity pool, the token can't go below the initial price (or ratio) you set. Anybody that buys in, even bots, will just push the price up, anybody that sells can only push it back down to the initial ratio.
Part 1:
Ident A - any money: Create token, create liquidity pool
Ident B - clean money: Buy as much token as you want
Ident C, D, E ... n - tornado cash withdrawals: Buy all the token, depositing Ether into the liquidity pool, removing token from liquidity pool.
Part 2:
Ident B - clean money: sells the tokens back into the liquidity pool, receives more ether.
I could see how you could lose money if too many bots and onlookers bought in before one of your idents deployed the tornado Ether, the tornado cash withdrawals need to already be finished then and waiting to buy. Any address that misses a pump due to bots can just be sidelined until creating the next token to pump.
but that token was pumped by all your tornado cash withdrawals to virgin addresses you control
just sell your clean money tokens back into the liquidity pool and walk away, this is indistinguishable from everything that happens today. who cares if Chainlink was pumped by Tornado Cash funds, for example of something relatable.
Are they going to shut down banks and ban cash in the US since the US dollar is the most used currency in terms of money laundering?
Those curious, paranoid or with unique threat models. The same ones who distrust banks and use only cash. (They, like anyone using a mixer, should maintain records in case they fall under suspicion.)
Using a blockchain that's designed to work this way, and then claiming to need tools capable of laundering money in order to avoid that outcome, doesn't strike me as a particularly good argument in favor of either of those things.
“It’s a good thing that the people that designed ________ are dead because they’d have a heart attack if they saw what I use it for!”
My fear is not that crypto project A or B stumbles or fails while trying to do something different. My fear is that the place that I once considered crucial for the development of a counterculture becomes dominated by reactionary "intellectuals" who got so rich by tech and now have become the status quo.
My fear is that the place that I once considered crucial for the development
of a counterculture becomes dominated by reactionary "intellectuals" who got
so rich by tech and now have become the status quo.
There was marketing aimed at the libertarian inclined spouting nonsense about ending war and governments or whatnot. But that’s old news. It mirrors Treasury pitches in the 50s (more anti-banker than anti-state) and gold buggery in the 80s and 2000s (more anti-state). Crypto unified those pitches right after a financial crisis and during an ongoing series of political crises.