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Comment by spir | Hacker News Reader

You're right, last weekend, USDC dropped to a low of ~$0.88.

However note

- SVB was closed on a Friday (as is the FDIC's custom). This meant that USDC could not process redemptions over the weekend as banks were closed, and this created fear in the market.

- USDC had 8% of their reserves trapped in SVB. The fair market value of USDC would have been $0.92 if all SVB deposits were lost, which was never likely.

- crucially, USDC operator Circle has acknowledged the need to transition to a "full reserve" model where reserves aren't subject to bank runs. https://twitter.com/jerallaire/status/1635548066185871360

- over the weekend, USDC did lose its $1 peg and trade as low as ~$0.88. However, all USDC holders were able to maintain access their USDC to do whatever they wanted with it, which is a lot better than SVB depositors frozen and waiting to see what happened.

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> stablecoins are about to become a Very Good Deal for ordinary people

> the UX of stablecoins is becoming vastly superior to bank deposits because you'll be immune to bank runs, control your own money, and have instant access to global markets, including for low-risk yield on your stablecoins, such as in treasuries or over-collateralized lending

I disagree, but OK

> over the weekend, USDC did lose its $1 peg and trade as low as ~$0.88

Hmmm doesn't seem like a Very Good Deal for an ordinary person.

> However note

Oh, now I see what you're doing. It's a Very Good Deal, except reasons

> However, all USDC holders were able to maintain access their USDC to do whatever they wanted with it

So it might have dropped 12%, but they still had access. That's a win to you?

Your definition of stable is vastly different than mine.

My FDIC backed bank account is guaranteed not to lose value.

I don't understand the cognitive dissonance on display here.

For your objection to refute my thesis, you'd need to explain how a world with stablecoins that are immune to bank runs, where those stablecoins are held in next-gen wallets and can be swapped into any asset in the world 24/7 any time you want at the click of a button, is not a superior UX vs. today's bank deposits.

> you'd need to explain how a world with stablecoins that are immune to bank runs...

Wait... I need to explain this? I don't even believe in it.

I'm not really interested in arguing theoretical constructs. You yourself admitted that just last weekend a stablecoin dropped to 88 cents on the dollar (while my bank dollars were still worth one dollar each).

Before I prove anything, why don't you start by proving (heck just demonstrate) a long term stable stablecoin. Just saying it's stable doesn't make it so.

I have dollar deposit protections now. Love or hate the fed, at least you're dealing with a known quantity, and a boatload of laws that are actually (historically demonstrable) enforceable.

There are no regulations or protections in the crypto space, only a bunch of hollow promises.

Until the crypto community can actually demonstrate long term stability (and stable audited reserves) of any so called "stable" coin, I'm not interested in discussing financial theocraticals, let alone moving my dollars out of my FDIC insured bank accounts.

Over the weekend, before an FDIC settlement was announced, uninsured SVB deposits were reportedly trading between $0.75 and $0.90 among private sellers.

In other words, both USDC and uninsured SVB deposits had the same market response over the weekend. But every USDC holder had unfettered access, whereas only large SVB depositors were able to access the informal market of private sellers.

I want you to remember this interaction because by the end of the decade, there will be over $1 trillion of USD stablecoins in circulation (in today's dollars), and at least one of the five largest banks in America will run a major stablecoin product of some kind, such as their own stablecoin, redemptions for an existing coin, or consumer on/off-ramps to the crypto financial system.

> before an FDIC settlement was announced, uninsured SVB deposits were reportedly trading between $0.75 and $0.90

The key point is that those were uninsured deposits.

Anyone under FDIC protection was fine.

At best a stablecoin is like an uninsured bank deposit, in an unregulated bank. No thanks, I'll stick to FDIC coverage.

> theocraticals

This is an excellent Freudian slip

Whoopsie! Good catch.

In order to refute your thesis, we have to explain why your imaginary situation is not superior to reality? How about it's completely made up?

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