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> But to stop mirrored stocks and other synthetic assets from trading, you would have to shut down the underlying open-source software code that makes up the bl

by cesarb 5y ago

> But to stop mirrored stocks and other synthetic assets from trading, you would have to shut down the underlying open-source software code that makes up the blockchain and is used by a global user base that includes many anonymous players, he added. Don't these synthetic assets need an oracle to inject the price of the real assets into the blockchain? To stop these synthetic assets from working, couldn't they just go after the oracle provider, and make it stop providing the price?

abrookewood 5y ago
Pretty sure you are correct. It's something of an Achilles heel for any smart contract trying to interact with information that is off-chain.
3np 5y ago
That is, indeed, the week spot in these constructs. Commonly, oracles are composed of an aggregate of multiple independent providers. So roughly a majority of them have to collude to manipulate the price and you would have to take multiple oracle providers down to stop the price updates. Any token derivative that relies on one or a few providers are very risky. ChainLink (the mainstream choice today) doesn't seem to be officially providing stock prices, but to give you an idea there are currently 16 providers for gold-USD prices: https://data.chain.link/ethereum/mainnet/commodities/xag-usd https://data.chain.link/ethereum/mainnet/commodities/xag-usd
- 3np 5y ago
  I forgot to add, re Chainlink: Chainlink can, as a single party, remove and add providers to the oracle feeds. So in this case, they are the one SPoF here. Maybe that will change with the introduction of some governance system at some point as things mature and stabilize, but presently despite the smoke and mirrors they can be coerced or compelled to shut down individual price-feeds. In principle this could be "unstoppable", but as of right now it is not.
woah 5y ago
Hard to keep the price of Apple stock a secret
- marton78 5y ago
  That is not the point. By manipulating the Apple stock price the system sees and acts upon you can extract huge amounts of money. The actual price is irrelevant in this case.
  - SCM-Enthusiast 5y ago
    There are many mechanisms of trading. Some use a couple different oracles and average(more complex but essentially that's what it is). In order to 'minipulate' the oracles, you would get eaten alive by arbitrage. If there's a difference across exchanges, HFT bots will equalize. Chain link takes that to the extreme and requires no oracle, only arbitrage. Since any arbitrage opportunity will be exploited, you can allow the active trading price and take that at face value. You can actually minipulate that price, by selling at a reduced rate but the thesis is that it would be economically disadvantages to do so.
caf 5y ago
It seems like you wouldn't need an oracle if you created a mirror token in the same way USDT (supposedly) mirrors USD - issue one SynTSLA token in exchange for one actual TSLA stock certificate, and promise to redeem them 1:1 as well.
deleted 5y ago
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by cesarb 5y ago

abrookewood 5y ago

Pretty sure you are correct. It's something of an Achilles heel for any smart contract trying to interact with information that is off-chain.

3np 5y ago

That is, indeed, the week spot in these constructs. Commonly, oracles are composed of an aggregate of multiple independent providers. So roughly a majority of them have to collude to manipulate the price and you would have to take multiple oracle providers down to stop the price updates. Any token derivative that relies on one or a few providers are very risky. ChainLink (the mainstream choice today) doesn't seem to be officially providing stock prices, but to give you an idea there are currently 16 providers for gold-USD prices: https://data.chain.link/ethereum/mainnet/commodities/xag-usd https://data.chain.link/ethereum/mainnet/commodities/xag-usd

3np 5y ago
I forgot to add, re Chainlink: Chainlink can, as a single party, remove and add providers to the oracle feeds. So in this case, they are the one SPoF here. Maybe that will change with the introduction of some governance system at some point as things mature and stabilize, but presently despite the smoke and mirrors they can be coerced or compelled to shut down individual price-feeds. In principle this could be "unstoppable", but as of right now it is not.

woah 5y ago

Hard to keep the price of Apple stock a secret

marton78 5y ago
That is not the point. By manipulating the Apple stock price the system sees and acts upon you can extract huge amounts of money. The actual price is irrelevant in this case.
- SCM-Enthusiast 5y ago
  There are many mechanisms of trading. Some use a couple different oracles and average(more complex but essentially that's what it is). In order to 'minipulate' the oracles, you would get eaten alive by arbitrage. If there's a difference across exchanges, HFT bots will equalize. Chain link takes that to the extreme and requires no oracle, only arbitrage. Since any arbitrage opportunity will be exploited, you can allow the active trading price and take that at face value. You can actually minipulate that price, by selling at a reduced rate but the thesis is that it would be economically disadvantages to do so.

caf 5y ago

It seems like you wouldn't need an oracle if you created a mirror token in the same way USDT (supposedly) mirrors USD - issue one SynTSLA token in exchange for one actual TSLA stock certificate, and promise to redeem them 1:1 as well.

deleted 5y ago

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