5 ms·
> But to oversimplify, under the Mirror Protocol, the idea is to keep prices of the synthetic -- or “mirrored” -- equities in the ballpark of the real thing by
by bko 5y ago
> But to oversimplify, under the Mirror Protocol, the idea is to keep prices of the synthetic -- or “mirrored” -- equities in the ballpark of the real thing by offering incentives for traders to arbitrage price discrepancies and manage the actual supply of tokens. Users can create, or “mint,” new tokens when prices are too high by posting collateral, and destroy, or “burn,” tokens when prices are too low, driving the price up or down.
> Binance, the world’s biggest cryptocurrency exchange, has already drawn the attention of Germany’s financial regulator by offering tokens that are tied to the performance of popular U.S. stocks but backed by the actual equities. Binance may have violated securities rules when it issued the tokenized shares of Tesla, MicroStrategy Inc. and Coinbase, BaFin said in April.
Binance's version of this seemed relatively straight forward, although you had considerable third party risk. But I imagine if they were regularly audited or had a redemption mechanism for the underlying stock, this is much preferable to the more complex method used in the Mirror protocol.
So much of DeFi is focused on getting around regulatory barriers. I get that the state uses finance and money as a way to control nerfarious activity (illicit substance sales, tax avoidance etc), but it leads to giving up a lot in privacy and freedom. Maybe they should give up on trying to attack it at the money level and focus more upstream. Why shouldn't you allow just about anyone to buy Tesla stock?
- tdhoot 5y ago> But to oversimplify, under the Mirror Protocol, the idea is to keep prices of the synthetic -- or “mirrored” -- equities in the ballpark of the real thing by offering incentives for traders to arbitrage price discrepancies and manage the actual supply of tokens. Users can create, or “mint,” new tokens when prices are too high by posting collateral, and destroy, or “burn,” tokens when prices are too low, driving the price up or down. This seems pretty similar to the authorized participant model used successfully with ETFs, so not sure if it's actually an issue.
- ethn 5y agoIt’s the redemption of the real underlying that allows ETFs to work.
- arcticbull 5y agoYes, its important for tracking that authorized participants are able to both create and redeem the ETFs for the underlying. This is why the Grayscale family does such a god-awful job of tracking the underlying. Check out the premium over time. [1] I suspect these are more like perpetual futures or CFDs? [1] https://ycharts.com/companies/GBTC/discount_or_premium_to_nav https://ycharts.com/companies/GBTC/discount_or_premium_to_na...
- nly 5y agoNot always. There are synthetic ETFs backed by nothing but swap contracts. For example, commodities ETFs typically work by throwing cash in to treasuries and purchasing the total return swap contracts between those treasuries and some benchmark of commodity future contracts. The major difference with these blockchain tokens is that the collateral (the stablecoin) held against the stock benchmark is itself completely synthetic.
- nradov 5y agoJust about anyone is already allowed to buy Tesla stock.
- arcticbull 5y agoWho isn't allowed to buy TSLA?
- tcoff91 5y agopeople who live in countries that are under US sanctions i would presume? I'm not an expert on this stuff but I'd be surprised if buying or selling US securities was not heavily restricted for people in sanctioned countries like Iran.
- arcticbull 5y agoThere's a reason they got sanctioned, though, right? Broadly, attempting to develop nuclear warheads in unstable regions. So yeah, I'm ok with sanctioned people not trading TSLA to pressure the regime. Frankly, I can't think of a reason why that would be ok.
- from 5y agoThe sanctions affect everyone in Iran. The elites and people actually involved in the nuclear program in Iran have access to dollars/western markets via smuggling networks and other underground efforts (see https://en.wikipedia.org/wiki/Reza_Zarrab https://en.wikipedia.org/wiki/Reza_Zarrab, https://www.justice.gov/opa/pr/two-us-citizens-one-pakistani-national-charged-moving-us-currency-iran https://www.justice.gov/opa/pr/two-us-citizens-one-pakistani..., NIOC and ship-to-ship transfers, etc). The result is that unconnected people suffer and the elites continue on like before. Is it fair to deny a rug vendor in Tehran who wants to export some of their carpets to Europe their living because they live in a country with a terrible government?
- arcticbull 5y agoIs it possible to exert pressure on the regime without also exerting pressure on the people? It's obviously sad collateral but IMO avoiding the Iranians getting a nuke is worth the cost. Undercutting the effort seems the worst of all worlds with most Iranians continuing to pay a high price for longer.