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Hard to find a reason for new LUNA to exist now that the stablecoin idea did not work and collapsed. Nothing different than all the other platforms out there l

Hard to find a reason for new LUNA to exist now that the stablecoin idea did not work and collapsed. Nothing different than all the other platforms out there like Ethereum, Solana, Polygon now. Expect price to slide even further https://www.coingecko.com/en/coins/terra https://www.coingecko.com/en/coins/terra its $2.9 now, surely everyone have learnt the lesson

bowsamic 4y ago
Algorithmic stablecoins probably (almost certainly) do not work, but other types of stablecoins should
- arcticbull 4y ago
  The only kind of stablecoin that can work 100% of the time is one that's backed 100% by the currency it purports to maintain a peg to. Anything less than that cannot work 100% of the time. And that can be ok, but at minimum, the only one I'd touch with a ten-foot pole would be audited (AFAIK only the Gemini dollar is), and hold itself to the same standards as a proper money market fund. The problem is, you can't get rich off that.
  - bowsamic 4y ago
    In practise, people aren't going to try and withdraw 100% of the coins to USD. As another commenter pointed out, we would have the same problem in banks if everyone came to withdraw all of their money at the same time. It's probably not as risky as Terra. I agree that we should wait for auditing though.
    - deleted 4y ago
      [deleted]
  - forum_ghost 4y ago
    None of your bank balances are 100% backed.
    - deleted 4y ago
      [deleted]
    - vkou 4y ago
      Bank balances are actually >100% backed. They aren't 100% backed in liquid USD owned by the bank. If that amount isn't enough during a bank run, federal insurance kicks in, to cover the rest. Which is why not a single deposit dollar was lost in a bank collapse in the United States over the past, what... 40 years? The crypto space can barely claim that sort of thing for 40 days.
      - matheusmoreira 4y ago
        > not a single deposit dollar was lost in a bank collapse The federal reserve will print money in order to inject liquidity into banks. This means they are creating money out of nowhere, inflating the currency, essentially taxing everyone holding USD in order to maintain the illusion that banks are solvent.
        arcticbull 4y ago
        That's not how deposit insurance works. The FDIC has a $125B fund (the BIF) that banks pay into, to insure against a default. If that's somehow not enough, the FDIC does have a $100B credit facility with the Fed. However, in the event of an actual, real-wold bank collapse, the Office of Thrift Supervision (OTS) will take ownership of the bank and sell the book to someone else. That's how WaMu's collapse in 2008 was mitigated (WaMu -> OTS -> JPMorgan Chase) without ever drawing on the BIF let alone the credit facility at the Fed. Remember, the fractional reserve is where the supply of currency in the economy comes from so this is a pretty big misunderstanding of modern monetary policy. Dollars are backed by the obligation to repay the fractional reserve loans that created the dollars in the first place, and the entire social system on which it is built.
        matheusmoreira 4y ago
        https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008 https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008 > As part of national fiscal policy response to the Great Recession, governments and central banks, including the Federal Reserve, the European Central Bank and the Bank of England, provided then-unprecedented trillions of dollars in bailouts and stimulus, including expansive fiscal policy and monetary policy to offset the decline in consumption and lending capacity, avoid a further collapse, encourage lending, restore faith in the integral commercial paper markets, avoid the risk of a deflationary spiral, and provide banks with enough funds to allow customers to make withdrawals. > The Federal Reserve created then-significant amounts of new currency as a method to combat the liquidity trap.
  - kgwgk 4y ago
    With rising interest rates the party issuing the stablecoin has an opportunity to get rich with the yield of the collateral. The question why would people want to buy large amounts of a non-yielding stablecoin.
  - hiq 4y ago
    > the Gemini dollar is [audited] Is it? https://news.ycombinator.com/item?id=31423873 https://news.ycombinator.com/item?id=31423873
    - arcticbull 4y ago
      To the best of my knowledge (and I'm well known as a hater) they are actually audited by auditors. [1] > "Audit reports of the GUSD reserve are published monthly by an independent registered accounting firm, BPM LLP." [1] https://www.gemini.com/dollar https://www.gemini.com/dollar
      - hiq 4y ago
        To quote the comment I linked to: > GUSD's site claims audits - under a heading titled "Review the Gemini dollar reserve-funds independent accountant audits" but links to attestations (example: https://assets.ctfassets.net/jg6lo9a2ukvr/3ZfEIugZkOLsArm4JK https://assets.ctfassets.net/jg6lo9a2ukvr/3ZfEIugZkOLsArm4JK..., "conducted in accordance with attestation standards").
        arcticbull 4y ago
        Good lord. Thanks for letting me know.
  - xg15 4y ago
    I'm still amazed that this whole algorithmic stablecoin hype as really managed to make Tether look reputable in comparison. "Well yes, we might be pulling most of our money out of thin air, but at least we're not pulling all of it out of nothing like the new guys do". Based on that, I wouldn't be surprised if the next thing is that something even more sketchy and handwavy than algorithmic stablecoins will appear and continue the scam. Self-collateralized stablecoin futures? Multi-pegged multi-chain coins with auto-arbitrage? Probabilistic stablecoins? I have no idea...
    - headsoup 4y ago
      Even better is the other coins (like Celsius) pulling money out of Tether's thin air. Impressive! Why not just make the next one obvious and call them 'Holy Stablecoins' ...
      - ilikehurdles 4y ago
        If you squint a bit it almost looks like a derivative of a derivative, and the underlying assets are already over-leveraged.
  - tootie 4y ago
    And the only reason to use a stablecoins is to obscure your financial transaction.
popcorncowboy 4y ago
> Hard to find a reason for new LUNA to exist now that the stablecoin idea did not work and collapsed. Except there is no more fervent pursuit than the pursuit of the greater fool. So that race will continue until laws finally catch up and close the staggeringly massive incentives to continue to lie, cheat and steal from those who believe themselves one step removed from the greatest fool.

bowsamic 4y ago

Algorithmic stablecoins probably (almost certainly) do not work, but other types of stablecoins should

arcticbull 4y ago
The only kind of stablecoin that can work 100% of the time is one that's backed 100% by the currency it purports to maintain a peg to. Anything less than that cannot work 100% of the time. And that can be ok, but at minimum, the only one I'd touch with a ten-foot pole would be audited (AFAIK only the Gemini dollar is), and hold itself to the same standards as a proper money market fund. The problem is, you can't get rich off that.
- bowsamic 4y ago
  In practise, people aren't going to try and withdraw 100% of the coins to USD. As another commenter pointed out, we would have the same problem in banks if everyone came to withdraw all of their money at the same time. It's probably not as risky as Terra. I agree that we should wait for auditing though.
  - deleted 4y ago
    [deleted]
- forum_ghost 4y ago
  None of your bank balances are 100% backed.
  - deleted 4y ago
    [deleted]
  - vkou 4y ago
    Bank balances are actually >100% backed. They aren't 100% backed in liquid USD owned by the bank. If that amount isn't enough during a bank run, federal insurance kicks in, to cover the rest. Which is why not a single deposit dollar was lost in a bank collapse in the United States over the past, what... 40 years? The crypto space can barely claim that sort of thing for 40 days.
    - matheusmoreira 4y ago
      > not a single deposit dollar was lost in a bank collapse The federal reserve will print money in order to inject liquidity into banks. This means they are creating money out of nowhere, inflating the currency, essentially taxing everyone holding USD in order to maintain the illusion that banks are solvent.
      - arcticbull 4y ago
        That's not how deposit insurance works. The FDIC has a $125B fund (the BIF) that banks pay into, to insure against a default. If that's somehow not enough, the FDIC does have a $100B credit facility with the Fed. However, in the event of an actual, real-wold bank collapse, the Office of Thrift Supervision (OTS) will take ownership of the bank and sell the book to someone else. That's how WaMu's collapse in 2008 was mitigated (WaMu -> OTS -> JPMorgan Chase) without ever drawing on the BIF let alone the credit facility at the Fed. Remember, the fractional reserve is where the supply of currency in the economy comes from so this is a pretty big misunderstanding of modern monetary policy. Dollars are backed by the obligation to repay the fractional reserve loans that created the dollars in the first place, and the entire social system on which it is built.
        matheusmoreira 4y ago
        https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008 https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008 > As part of national fiscal policy response to the Great Recession, governments and central banks, including the Federal Reserve, the European Central Bank and the Bank of England, provided then-unprecedented trillions of dollars in bailouts and stimulus, including expansive fiscal policy and monetary policy to offset the decline in consumption and lending capacity, avoid a further collapse, encourage lending, restore faith in the integral commercial paper markets, avoid the risk of a deflationary spiral, and provide banks with enough funds to allow customers to make withdrawals. > The Federal Reserve created then-significant amounts of new currency as a method to combat the liquidity trap.
- kgwgk 4y ago
  With rising interest rates the party issuing the stablecoin has an opportunity to get rich with the yield of the collateral. The question why would people want to buy large amounts of a non-yielding stablecoin.
- hiq 4y ago
  > the Gemini dollar is [audited] Is it? https://news.ycombinator.com/item?id=31423873 https://news.ycombinator.com/item?id=31423873
  - arcticbull 4y ago
    To the best of my knowledge (and I'm well known as a hater) they are actually audited by auditors. [1] > "Audit reports of the GUSD reserve are published monthly by an independent registered accounting firm, BPM LLP." [1] https://www.gemini.com/dollar https://www.gemini.com/dollar
    - hiq 4y ago
      To quote the comment I linked to: > GUSD's site claims audits - under a heading titled "Review the Gemini dollar reserve-funds independent accountant audits" but links to attestations (example: https://assets.ctfassets.net/jg6lo9a2ukvr/3ZfEIugZkOLsArm4JK https://assets.ctfassets.net/jg6lo9a2ukvr/3ZfEIugZkOLsArm4JK..., "conducted in accordance with attestation standards").
      - arcticbull 4y ago
        Good lord. Thanks for letting me know.
- xg15 4y ago
  I'm still amazed that this whole algorithmic stablecoin hype as really managed to make Tether look reputable in comparison. "Well yes, we might be pulling most of our money out of thin air, but at least we're not pulling all of it out of nothing like the new guys do". Based on that, I wouldn't be surprised if the next thing is that something even more sketchy and handwavy than algorithmic stablecoins will appear and continue the scam. Self-collateralized stablecoin futures? Multi-pegged multi-chain coins with auto-arbitrage? Probabilistic stablecoins? I have no idea...
  - headsoup 4y ago
    Even better is the other coins (like Celsius) pulling money out of Tether's thin air. Impressive! Why not just make the next one obvious and call them 'Holy Stablecoins' ...
    - ilikehurdles 4y ago
      If you squint a bit it almost looks like a derivative of a derivative, and the underlying assets are already over-leveraged.
- tootie 4y ago
  And the only reason to use a stablecoins is to obscure your financial transaction.

popcorncowboy 4y ago

> Hard to find a reason for new LUNA to exist now that the stablecoin idea did not work and collapsed. Except there is no more fervent pursuit than the pursuit of the greater fool. So that race will continue until laws finally catch up and close the staggeringly massive incentives to continue to lie, cheat and steal from those who believe themselves one step removed from the greatest fool.