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> 3.8 Risk of undercollateralization > In Example C, if the price of ETH falls by 50%, Alice’s balance in the channel is effectively worth nothing. If the pric
by GenericsMotors 8y ago
> 3.8 Risk of undercollateralization
> In Example C, if the price of ETH falls by 50%, Alice’s balance in the channel is effectively worth nothing. If the price of ETH falls further than that,the channel would become undercollateralized—Bob would no longer be able to withdraw his USD at its current value.
This can and will happen in the real world, and seeing how the "crypto-sphere" is teeming with scammers running pump-and-dumps, and exchanges manipulating prices, it's pretty much guaranteed.
- hrdwdmrbl 8y agoLet's restrict the discussion to the top 10 cryptoassets. All of those would be pretty hard to manipulate in to a price decrease of 50% considering how much money you'd have to spend. So it seems like this concern is really only a function of how volatile or risky the asset is. And as for price manipulation, any exchange doing that is not going to be a top-10 exchange either.
- fapjacks 8y ago> And as for price manipulation, any exchange doing that is not going to be a top-10 exchange either. You mean... Like MtGox or btc-e or GDAX? Okay, so I have no evidence that GDAX is actually running the bots that comprise a tremendous amount of its transactions, but you get my point.
- GenericsMotors 8y agoThere's some strong research to support Tether being used to manipulate Bitcoin's value, and Tether's site was recently updated to clarify that it is in fact not backed 100% by USD. Both of these are top 10 crypto assets... Not to mention MtGox manipulated prices during the 2013 bullrun. You're trying to paint this as some sort of hypothetical scenario when this has already happened! And will happen again if this "rainbow network" gains any significant traction.