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What specifically would you say was different in 2018 that made the DAI peg more workable?
by DennisP 4y ago
What specifically would you say was different in 2018 that made the DAI peg more workable?
- JumpCrisscross 4y ago> What specifically would you say was different in 2018 that made the DAI peg more workable? Rates were low. There is less dumb money now. And its quantity will predictably decline over the coming 12 to 18 months.
- blitzar 4y agoTotal value in Dai in 2018 (it launched in dec 2017) was < USD200mil - in the period where ETH lost most of its value (Q1 2018) the total value of dai issued was ~ USD 50mil (to ETH's ~75bn market cap). Its ~ USD 7bn now (vs ETH 220bn market cap - and not the only stable coin holding eth ...). https://bravenewcoin.com/insights/maker-price-analysis-multicollateral-dai-released https://bravenewcoin.com/insights/maker-price-analysis-multi...
- JumpCrisscross 4y ago> USD 7bn now (vs ETH 220bn market cap 3% is a large enough fraction of value to induce fire sales at less than a 50% price drop. (I don't know precisely where below 50%. Nobody does.) Every shaky currency board in the history of pegged currencies hobbled through attacks when hard currency was easy in the absence of a solvency crisis. Let's assume Tether doesn't de-peg and Celsius's ETH loan [1] doesn't spark a run. That leaves rates. In 2018, we had relatively easy money, taper tantrums aside. Today, we don't. And hard money is only getting tighter. [1] https://www.bloomberg.com/news/articles/2022-06-13/bitcoin-sinks-to-18-month-low-as-us-inflation-impact-spreads?srnd=premium https://www.bloomberg.com/news/articles/2022-06-13/bitcoin-s...