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Comment by basch | Hacker News Reader

How is a stable coin a Ponzi scheme?

How is a stablecoin stable? They're stable until you get rugpulled.

That was an Algorithmic Stablecoin. USDC is not, it was backed by dollars in banks with a 1:1 backing and 3rd party audited.

"was backed" hehe

Many the mortgage bonds in the 2008 crisis were AAA or AA rated by a "third party". And they were dogshit.

Is it audited by the SEC or some "auditing firm"?

I’ll repeat. How is a stable coin a Ponzi scheme.

A Ponzi scheme pays a dividend or share of fake “revenue.” Stablecoins don’t make money, unless lent out.

How'd that work out for it.

Plenty of stable coins have been proven to be ponzi schemes.

Terra/Luna anyone?

When its assets don’t exist.

That's not what a Ponzi scheme is.

I think there's a shockingly large number of people that think Ponzi scheme just means fraud.

Then what is it? A ponzi scheme is inherently an embezzlement.

Is a bank a ponzi scheme if its assets don't exist also?

Like if a bank has $10B in customer deposits and one of their armored truck drivers escapes across the border with $2B, then some customers can't be paid back when they try to withdraw, does that make it a ponzi?

If you can't be paid at all it's not a Ponzi. The point is to rely on newer funds to pay the older requests.

Banks also rely on “newer funds” (from loan payments) to pay “older requests” (customers withdrawing their deposits). When withdrawals from old requests rise so much that they can’t be covered by new funds, banks collapse.

Not just to pay old requests. To pay revenue sharing / dividends / interest to shareholders. A Ponzi scheme is repurposing inflows to appear as revenue to a fake business.

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