3 ms·

>the stablecoin companies Why do so many crypto critics pretend DAI doesn’t exist?

by zionic 5y ago

dudus 5y ago
DAI represents less than 6% of the current stablecoins marketcap. It's just not big enough to be representative of the whole market.
- zionic 5y ago
  Wow, TIL. Can anyone explain why? DAI seems superior to tether/USDC in every way.
  - mv1234 5y ago
    Because Tether and USDC print billions monthly with only "trust us" as backing.
    - throw_nbvc1234 5y ago
      Jon Stewart got an ex-Fed CEO to describe the US economy as a faith based system [1] when trying to get him to explain why the USA can't just "print money" to pay off the national debt. There's a lot of "trust us" in the foundation of millions/billions of peoples lives; ironically "In God we trust" is literally written on USD bills. I'm assuming the ex-CEO didn't exactly mean what he said but Jon's response is pretty relatable. HN comments are 'worried' that Tether (and other Stable coins) injecting money into the bitcoin/crypto markets are artificially inflating prices and makes the whole thing a scam. Yet that's pattern is the underlying premise of Quantitative Easing that kept the stock market from crashing (or inflated the bubble depending on your point of view) for the past 2 years. I'm open to a conclusion that both are a scam. I'm also open to a simple and understandable explanation for how these two approaches are fundamentally different from each other. But if someone's viewpoint is one approach is better then the other because a) USD has worked fine for USA up to this point or b) USD is back by USA govt and it's military, then i think they should realize that those are factors are not some unalienable truth that's guaranteed to continue forever. An anti-fragile system would consider hedging against them. [1] https://youtu.be/psSYiidw-v0?t=279 https://youtu.be/psSYiidw-v0?t=279
      - spupe 5y ago
        Every monetary system is based on a shared belief of value, therefore "faith". That does not mean that any cryptocoin is the same as USD. For example, there is no independent auditing to help assure me that Tether actually has the reserves they claim. And there is no transparent way to know where this money supposedly is, making it much easier to scam people than a traditional bank. If there is a problem with a bank, there are several legal and financial consequences for everyone involved, enforced by the government. The government also will, as it has, try to undo the mess even if it is at the expense of inflation or debt. So yes, USD, Tether and my poker chips at home do share a fundamental characteristic of any method of exchange, a subjective belief about their worth that is ultimately decided by collective agreement. That does not mean they are anywhere close to the same thing, or scams.
        throw_nbvc1234 5y ago
        My point is less about tether and more with the assets tether is inflating. I'm saying the narrative that BTC is inflated/manipulated because of tether, means that many other assets are also inflated due to accepted government fiscal policy. > If there is a problem with a bank, there are several legal and financial consequences for everyone involved, enforced by the government. What if that bank is the central bank? Which entity is responsible for judging the actions of that bank and deal out consequences if their actions cause more harm then good? And who would end up on the receiving end of those consequences (guessing not any individuals)? Time will tell if the doomsday folks (3 sigma bubble) are right or the mainstream folks (everything will go back to normal after a few interest rate hikes) are right but I'm pretty certain nobody will face meaningful consequences for being wrong.
  - VHRanger 5y ago
    DAI is collateralized by crypto. A lot of it is USDC. The problem with unstable collateral is that it unwinds in market downturns, making the stable coin less useful when most needed
VHRanger 5y ago
DAI is small and half of DAI collateral is USDC in any case.
Kranar 5y ago
DAI is great in principle and is built on fascinating technology, but the incentives for issuing DAI are not worth the risks. DAI is only created as a means of leverage, you take your collateral, lock it into a contract and receive 1/3rd of the collateral's value back in the form of DAI with the idea being that you can immediately sell that DAI and buy more crypto with it. But because of this, DAI is created precisely when its demand is fairly low and it's destroyed precisely when its demand is fairly high. When crypto markets are volatile there's more demand to cash out of crypto and into a stable coin, but volatility is also when people take on the least amount of leverage meaning that it's also when there's the least amount of DAI available. When crypto markets are not volatile, then the utility of a stable coin goes down and yet that's also when people assume the most amount of leverage and hence when the most amount of DAI is available. The end result is that the incentives for DAI don't really work out all that well.
- randomhodler84 5y ago
  It’s so much more complex, with the money markets and lending markets and stablecoin liquidity pools. And the emerging tech is other stable coins for decentralized forex. So there are many reasons for minting DAI, interest rate arbitrage is a good one.

>the stablecoin companies Why do so many crypto critics pretend DAI doesn’t exist?

by zionic 5y ago

>the stablecoin companies Why do so many crypto critics pretend DAI doesn’t exist?

DAI represents less than 6% of the current stablecoins marketcap. It's just not big enough to be representative of the whole market.

zionic 5y ago
Wow, TIL. Can anyone explain why? DAI seems superior to tether/USDC in every way.
- mv1234 5y ago
  Because Tether and USDC print billions monthly with only "trust us" as backing.
  - throw_nbvc1234 5y ago
    Jon Stewart got an ex-Fed CEO to describe the US economy as a faith based system [1] when trying to get him to explain why the USA can't just "print money" to pay off the national debt. There's a lot of "trust us" in the foundation of millions/billions of peoples lives; ironically "In God we trust" is literally written on USD bills. I'm assuming the ex-CEO didn't exactly mean what he said but Jon's response is pretty relatable. HN comments are 'worried' that Tether (and other Stable coins) injecting money into the bitcoin/crypto markets are artificially inflating prices and makes the whole thing a scam. Yet that's pattern is the underlying premise of Quantitative Easing that kept the stock market from crashing (or inflated the bubble depending on your point of view) for the past 2 years. I'm open to a conclusion that both are a scam. I'm also open to a simple and understandable explanation for how these two approaches are fundamentally different from each other. But if someone's viewpoint is one approach is better then the other because a) USD has worked fine for USA up to this point or b) USD is back by USA govt and it's military, then i think they should realize that those are factors are not some unalienable truth that's guaranteed to continue forever. An anti-fragile system would consider hedging against them. [1] https://youtu.be/psSYiidw-v0?t=279 https://youtu.be/psSYiidw-v0?t=279
    - spupe 5y ago
      Every monetary system is based on a shared belief of value, therefore "faith". That does not mean that any cryptocoin is the same as USD. For example, there is no independent auditing to help assure me that Tether actually has the reserves they claim. And there is no transparent way to know where this money supposedly is, making it much easier to scam people than a traditional bank. If there is a problem with a bank, there are several legal and financial consequences for everyone involved, enforced by the government. The government also will, as it has, try to undo the mess even if it is at the expense of inflation or debt. So yes, USD, Tether and my poker chips at home do share a fundamental characteristic of any method of exchange, a subjective belief about their worth that is ultimately decided by collective agreement. That does not mean they are anywhere close to the same thing, or scams.
      - throw_nbvc1234 5y ago
        My point is less about tether and more with the assets tether is inflating. I'm saying the narrative that BTC is inflated/manipulated because of tether, means that many other assets are also inflated due to accepted government fiscal policy. > If there is a problem with a bank, there are several legal and financial consequences for everyone involved, enforced by the government. What if that bank is the central bank? Which entity is responsible for judging the actions of that bank and deal out consequences if their actions cause more harm then good? And who would end up on the receiving end of those consequences (guessing not any individuals)? Time will tell if the doomsday folks (3 sigma bubble) are right or the mainstream folks (everything will go back to normal after a few interest rate hikes) are right but I'm pretty certain nobody will face meaningful consequences for being wrong.
- VHRanger 5y ago
  DAI is collateralized by crypto. A lot of it is USDC. The problem with unstable collateral is that it unwinds in market downturns, making the stable coin less useful when most needed

VHRanger 5y ago

DAI is small and half of DAI collateral is USDC in any case.

Kranar 5y ago

DAI is great in principle and is built on fascinating technology, but the incentives for issuing DAI are not worth the risks. DAI is only created as a means of leverage, you take your collateral, lock it into a contract and receive 1/3rd of the collateral's value back in the form of DAI with the idea being that you can immediately sell that DAI and buy more crypto with it. But because of this, DAI is created precisely when its demand is fairly low and it's destroyed precisely when its demand is fairly high. When crypto markets are volatile there's more demand to cash out of crypto and into a stable coin, but volatility is also when people take on the least amount of leverage meaning that it's also when there's the least amount of DAI available. When crypto markets are not volatile, then the utility of a stable coin goes down and yet that's also when people assume the most amount of leverage and hence when the most amount of DAI is available. The end result is that the incentives for DAI don't really work out all that well.

randomhodler84 5y ago
It’s so much more complex, with the money markets and lending markets and stablecoin liquidity pools. And the emerging tech is other stable coins for decentralized forex. So there are many reasons for minting DAI, interest rate arbitrage is a good one.