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The fatal flaw in Tether is that you have to trust the company behind it. The whole point of cryptocurrency is you shouldn't have to trust anyone. And the comp

The fatal flaw in Tether is that you have to trust the company behind it. The whole point of cryptocurrency is you shouldn't have to trust anyone. And the company itself is so opaque it should send you running to the hills. I've been working on a new cryptocurrency pegged to the dollar. It's implemented as a smart contract on the Ethereum blockchain, so you can audit it's reserves yourself, at any time, instantly. You can also audit the source code to see that there's no way for me, or anyone else, to withdraw from the reserves. You can buy and sell the currency, Unum, for Ether or a few other cryptocurrencies. Buying and selling occurs directly on the blockchain. If anyone's interested in checking it out, it's on the Ethereum Ropsten testnet now. https://unum.one https://unum.one

wslh 9y ago
What do you mean with auditing the reserves yourself? Can I check your bank account to see if the amount is equal to the price*qty of your token? Regarding the auditing, not anyone, indeed very few, has the capability to audit an smart contract. Was your smart contract, oracle, and software in general audited by a recognized and third party entity? I am not saying that your approach is not correct but you need a lot of transparency measures beyond the technical solution implemented.
- jatsign 9y ago
  There is no bank account, just the smart contract. It holds the Ether, OMG, or whatever other cryptocurrency you send to it when you buy Unum. There's a function on the contract to return the total reserve in USD, or you can check the actual values of the variables being used. Anything on a smart contract is public. You're right that relatively few people have the technical skills to query a smart contract, but that relative few is still a LOT of people who can verify the reserves independently. Versus the almost 0 people who can audit Tether. If you're interested in interacting with the smart contract (or any smart contract), you may want to install Mist. It's non-trivial to get started, I admit, and the tooling around smart contract is incredibly immature, but..man it's cool ;) https://github.com/ethereum/mist/releases https://github.com/ethereum/mist/releases
  - empath75 9y ago
    It seems to me that your currency loses its peg the minute that the cryptocurrency price collapses.
    - 55555 9y ago
      The parent comment (empath75) sounds correct to me. If people deposit a bunch of cryptos, but cryptos are highly correlated in downward movement, and the general crypto market suffers, then this new crypto is no longer pegged to USD. EDIT: looks like this is covered under "Reserve Deficit Sell Penalty". I don't really understand this part but regardless this won't be pegged to the dollar.
  - Mouse47 9y ago
    Stupid question - how do you peg your currency to the dollar if you're holding ETH, etc?
    - jatsign 9y ago
      When you buy Unum, the smart contract looks up the price of ETH and gives you a dollar equivalent of Unum. So if you send in $400 worth of ETH, you get 400 Unum. Then, a month from now, if you want to sell Unum and get ETH, maybe the price of ETH is $500. So you send in your 400 Unum, and get .8 ETH.
      - Mouse47 9y ago
        So isn't it possible that Unum becomes insolvent? Forgive me if there's an easy place to read up on this :) In other words, you send in $400 of ETH for 400 Unum, and if the price of ETH goes down to $300 and they try to cash out all 400 Unum...?
        jstanley 9y ago
        Yes it is possible. That doesn't make it meritless. You might equally say "isn't it possible that Tether could just print Tethers out of thin air"? And the answer would be "yes", but people still find utility in it.
- 55555 9y ago
  > Can I check your bank account to see if the amount is equal to the price*qty of your token? People deposit BTC and ETH and other cryptos, and the smart contract uses the conversion rate between these and USD in order to gauge its reserve in USD. Sounds risky but definitely sounds useful and like a step in the right direction!
  - wslh 9y ago
    You answered the question yourself below but you cannot peg a currency to another if you don't have the reserves, less with cryptocurrencies where you don't have a central bank who can rescue you. This is economy 101 not an opinion. Fractional reserves can work in fiat currencies but not in the cryptocurrency world. For more information you can check research about this topic: https://scholar.google.com.ar/scholar?hl=en&as_sdt=0%2C5&q=convertibility+currencies+reserves&btnG= https://scholar.google.com.ar/scholar?hl=en&as_sdt=0%2C5&q=c...
    - jstanley 9y ago
      It's a different set of tradeoffs compared to Tether. You gain the risk of insolvency, but you lose the risk of corruption.
      - wslh 9y ago
        Are you saying this to the average "non-professional" investor? When people read about a cryptocurrency that represents fiat money they think about something simple and they assume you have the money to convert back and forth. The first page clearly says "A decentralized cryptocurrency pegged the U.S. dollar". This message is a scam, plain scam, you don't need to bring the SEC to realized that. After reviewing all this thread I flagged the top comment.
        jstanley 9y ago
        I'm not saying it to any investor, I'm arguing it from a purely disinterested perspective. I think it's a fascinating project. That the SEC thinks risk of insolvency is more of a problem than risk of corruption is irrelevant.
brepl 9y ago
> The fatal flaw in Tether is that you have to trust the company behind it. How is Unum any different? Looking at the contract: 1. Contract owner can withdraw the ETH balance at any time. 2. Contract owner can control the Oracle. 3. If there's not enough ETH balance in the contract, you can't change your unum tokens back to ETH.
- jatsign 9y ago
  1) Contract owner CANNOT withdraw ETH. 2) True. The Price Oracle is a separate contract that I want to modify to be more like Ark's superdelegate method - a certain number of delegates stake Unum and get to control the price oracle, and in return get to collect the fees from the Unum contract. There's a bit of a chicken-and-egg problem with that for now - it requires people who are interested in collecting a part of the Unum fee. 3) True, but the contract is backed by more than ETH. If the entire crypto market tanks, you'd have to wait for a recovery before you could sell your Unum.
  - jstanley 9y ago
    If I'm interested in becoming one of your price oracle delegates, what do I do?
    - jatsign 9y ago
      For now that's just a plan. Assuming people become interested in, and start using Unum, I'll post more about it on the blog. For now, I'd really appreciate any help in getting people to take a look at Unum. https://www.medium.com/unum https://www.medium.com/unum
  - RileyJames 9y ago
    Very interesting. Do you have any further info on 'Ark's superdelegate method'? I only found yourself mentioning it via google. I'm interested in how oracles / off-chain data can be decentralised.
    - 9y ago
jstanley 9y ago
I'm glad people are working on improvements to Tether. While your project doesn't solve every problem with Tether, it still has merit as an improvement compared to Tether, at least in some aspects.
lurker456 9y ago
Can you explain the math behind the "Reserve Deficit Sell Penalty" example ? If 1M loses 50k in value (5% loss), then surely someone holding $320 would face a $16 haircut ? The example shows $2.

wslh 9y ago

What do you mean with auditing the reserves yourself? Can I check your bank account to see if the amount is equal to the price*qty of your token? Regarding the auditing, not anyone, indeed very few, has the capability to audit an smart contract. Was your smart contract, oracle, and software in general audited by a recognized and third party entity? I am not saying that your approach is not correct but you need a lot of transparency measures beyond the technical solution implemented.

jatsign 9y ago
There is no bank account, just the smart contract. It holds the Ether, OMG, or whatever other cryptocurrency you send to it when you buy Unum. There's a function on the contract to return the total reserve in USD, or you can check the actual values of the variables being used. Anything on a smart contract is public. You're right that relatively few people have the technical skills to query a smart contract, but that relative few is still a LOT of people who can verify the reserves independently. Versus the almost 0 people who can audit Tether. If you're interested in interacting with the smart contract (or any smart contract), you may want to install Mist. It's non-trivial to get started, I admit, and the tooling around smart contract is incredibly immature, but..man it's cool ;) https://github.com/ethereum/mist/releases https://github.com/ethereum/mist/releases
- empath75 9y ago
  It seems to me that your currency loses its peg the minute that the cryptocurrency price collapses.
  - 55555 9y ago
    The parent comment (empath75) sounds correct to me. If people deposit a bunch of cryptos, but cryptos are highly correlated in downward movement, and the general crypto market suffers, then this new crypto is no longer pegged to USD. EDIT: looks like this is covered under "Reserve Deficit Sell Penalty". I don't really understand this part but regardless this won't be pegged to the dollar.
- Mouse47 9y ago
  Stupid question - how do you peg your currency to the dollar if you're holding ETH, etc?
  - jatsign 9y ago
    When you buy Unum, the smart contract looks up the price of ETH and gives you a dollar equivalent of Unum. So if you send in $400 worth of ETH, you get 400 Unum. Then, a month from now, if you want to sell Unum and get ETH, maybe the price of ETH is $500. So you send in your 400 Unum, and get .8 ETH.
    - Mouse47 9y ago
      So isn't it possible that Unum becomes insolvent? Forgive me if there's an easy place to read up on this :) In other words, you send in $400 of ETH for 400 Unum, and if the price of ETH goes down to $300 and they try to cash out all 400 Unum...?
      - jstanley 9y ago
        Yes it is possible. That doesn't make it meritless. You might equally say "isn't it possible that Tether could just print Tethers out of thin air"? And the answer would be "yes", but people still find utility in it.
55555 9y ago
> Can I check your bank account to see if the amount is equal to the price*qty of your token? People deposit BTC and ETH and other cryptos, and the smart contract uses the conversion rate between these and USD in order to gauge its reserve in USD. Sounds risky but definitely sounds useful and like a step in the right direction!
- wslh 9y ago
  You answered the question yourself below but you cannot peg a currency to another if you don't have the reserves, less with cryptocurrencies where you don't have a central bank who can rescue you. This is economy 101 not an opinion. Fractional reserves can work in fiat currencies but not in the cryptocurrency world. For more information you can check research about this topic: https://scholar.google.com.ar/scholar?hl=en&as_sdt=0%2C5&q=convertibility+currencies+reserves&btnG= https://scholar.google.com.ar/scholar?hl=en&as_sdt=0%2C5&q=c...
  - jstanley 9y ago
    It's a different set of tradeoffs compared to Tether. You gain the risk of insolvency, but you lose the risk of corruption.
    - wslh 9y ago
      Are you saying this to the average "non-professional" investor? When people read about a cryptocurrency that represents fiat money they think about something simple and they assume you have the money to convert back and forth. The first page clearly says "A decentralized cryptocurrency pegged the U.S. dollar". This message is a scam, plain scam, you don't need to bring the SEC to realized that. After reviewing all this thread I flagged the top comment.
      - jstanley 9y ago
        I'm not saying it to any investor, I'm arguing it from a purely disinterested perspective. I think it's a fascinating project. That the SEC thinks risk of insolvency is more of a problem than risk of corruption is irrelevant.

brepl 9y ago

> The fatal flaw in Tether is that you have to trust the company behind it. How is Unum any different? Looking at the contract: 1. Contract owner can withdraw the ETH balance at any time. 2. Contract owner can control the Oracle. 3. If there's not enough ETH balance in the contract, you can't change your unum tokens back to ETH.

jatsign 9y ago
1) Contract owner CANNOT withdraw ETH. 2) True. The Price Oracle is a separate contract that I want to modify to be more like Ark's superdelegate method - a certain number of delegates stake Unum and get to control the price oracle, and in return get to collect the fees from the Unum contract. There's a bit of a chicken-and-egg problem with that for now - it requires people who are interested in collecting a part of the Unum fee. 3) True, but the contract is backed by more than ETH. If the entire crypto market tanks, you'd have to wait for a recovery before you could sell your Unum.
- jstanley 9y ago
  If I'm interested in becoming one of your price oracle delegates, what do I do?
  - jatsign 9y ago
    For now that's just a plan. Assuming people become interested in, and start using Unum, I'll post more about it on the blog. For now, I'd really appreciate any help in getting people to take a look at Unum. https://www.medium.com/unum https://www.medium.com/unum
- RileyJames 9y ago
  Very interesting. Do you have any further info on 'Ark's superdelegate method'? I only found yourself mentioning it via google. I'm interested in how oracles / off-chain data can be decentralised.
  - 9y ago

jstanley 9y ago

I'm glad people are working on improvements to Tether. While your project doesn't solve every problem with Tether, it still has merit as an improvement compared to Tether, at least in some aspects.

lurker456 9y ago

Can you explain the math behind the "Reserve Deficit Sell Penalty" example ? If 1M loses 50k in value (5% loss), then surely someone holding $320 would face a $16 haircut ? The example shows $2.