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MakerDAO may execute ‘emergency shutdown’ if sanctions hit DAI

• senttoschool 4y ago
  • michaelsbradley 4y ago
    Open p2p consensus protocol/s on the Internet Open p2p messaging protocol/s on the Internet Open p2p storage protocol/s on the Internet All secured by mathematics/tech from the field of cryptography, itself informed by pioneers in those p2p applications! I want all three (Web3). I believe all three are crucial for the future of our diverse and Internet-connected societies on this planet Earth. Therefore, I choose to spend my remaining years and resources advancing such projects, in whatever ways I can, no matter any consequences, i.e. "what other people think" or more extreme things. When there are no longer central actors specifying/implementing/revising the protocols for ultimately-social interactions, or such central actors are rendered impotent, the world will be a better place, even if it remains a complicated and divided place.
    • shadowgovt 4y ago
      We can do all three of those today if we substitute "just a little bit of trust" for "distributed cryptography." So these applications do not a killer app make.
      • verdverm 4y ago
        It's not like you can trust the content of the blockchain, only that the content has not changed. Big fallacy about blockchain and trust has been spread
    • arcticbull 4y ago
      All those things are means, not ends. Nobody starts their day off saying "wow I could really go for some open p2p consensus this morning" in the same way nobody starts the day off with "damn I really need my TCP/IP to start the day off right." The things you can build with these tools are better built without these tools. It's been 13 years. Crypto is old enough to be in high school, and it still hasn't found a use case better served with it than without it - despite a list proponents pull out as long as my arm of 'killer applications' that are 'just around the corner, @remind me 6 months'. Soon crypto will be old enough to go off to college without a use case. But of course we're still early, right? They've lost the plot. They're not building products, you know things people want and use.
      • whizzter 4y ago
        I think it's a dual case of architecture astronauts combined with the stickiniess of money that's made a weird mess out of everything. What many wanted (many still wants) is a bittorrent-equivalent-for-social-media,etc.. "free" of the clutches of companies like FB, somehow along the way Etherum made the promise of monetary incentives for distributed computing (even if the computation wasn't the "work" function but rather something more focused on Etherum needs itself). p2p storage,messaging,etc is what people envisions as the building blocks for this (because they don't want to be stuck with a single design). The saddest part is that seemingly most enthusiasts of these kind-of exciting technologies strapped themselves onto the dead end cryptocash bandwagon(bitcoin is fundamentally unscalable, lighting is an interesting bandaid but nowhere near needs required for global scale in practice) and still hasn't let go.
        • shadowgovt 4y ago
          If people want distributed social media, there are already great models for that. Mastodon is one. Hell, you can make the case that USENET is still a great fit for that application. Adding crypto and blockchains to the story really doesn't gain us anything, and it may lose us the ability to delete messages, which is actually a feature you sometimes want in a social network. If everything you said when you were 12 was indelibly chiseled into cryptographic Stones somewhere, why would you speak into the device that does that in the first place?
      • deleted 4y ago
        [deleted]
    • senttoschool 4y ago
      >When there are no longer central actors specifying/implementing/revising the protocols for ultimately-social interactions Hm? What? Even Bitcoin has central actors implementing, revising, specifying changes.
      • deleted 4y ago
        [deleted]
  • edm0nd 4y ago
    Cash/USD/EURO/etc is still used to do all of those things by a vast majority.
    • arcticbull 4y ago
      Do you think that might be because the overwhelming majority of people don't use crypto? Per capita I think the numbers are quite different. Where's the majority of ransomware happening again? And of course, you know that in the fiat world, we try and stop it whereas in the crypto world it's embraced with open arms as economic freedom.
      • edm0nd 4y ago
        Most certainly. Most "normies" or everyday people do not use or interact with crypto yet. Likely also just a case of using the best tool fit for the job. If you tried to ransomware a company and demanded cash, that would make it a lot harder to obtain without being caught. Although there are nation-state ransomware groups like Moses Staff (Iran) who deploy ransomware without a demand for money. They do it to cause disruption and to make the company have to spend $ to get fixed.
    • verdverm 4y ago
      but they are also used to much much more too
  • Ajedi32 4y ago
    Just like Tor. And BitTorrent. And non-backdoored cryptography. All super useful if you're doing something illegal, right? Governments really should be cracking down on all this stuff, it enables way too much criminal activity. If you disagree with the paragraph above as I do but don't feel the same way about cryptocurrency, consider why. Tor, BitTorrent, etc undeniably do enable criminals, and cryptocurrencies undeniably do have legitimate uses. My personal position is consistent: I'm on the side of freedom, even if it does sometimes come at the expense of a little safety.
    • cortesoft 4y ago
      The comment you replied to never said it should be made illegal.
      • volkk 4y ago
        it takes only a second of thought to realize the pessimistic intent behind that sentence
        • senttoschool 4y ago
          Oh for sure. I don't hide the fact that I'm pessimistic on cryptocurrencies. You can check my post history too. Note that I said cryptocurrencies.
        • deleted 4y ago
          [deleted]
    • superchroma 4y ago
      The thing is that torrents haven't clearly been linked to losses, whilst crypto has been responsible for crime, huge market distortions and waste.
  • dang 4y ago
    Please don't repeat this generic flamewar for the n-thousandth time. It doesn't matter who's right or wrong at this point—the repetition is killing us. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  • mypastself 4y ago
    According to Peter L. Bernstein’s The Power of Gold: The History of an Obsession (a book I’d highly recommend), fractional banking has its origins in scams perpetrated by goldsmiths, who’d issue promissory notes for more precious metal than they had in stock. Once they saw how they could utilize it for its own purposes, European governments legalized what was previously a widespread criminal practice. So if governments end up appreciating this particular “scam”, crypto might conceivably (although I personally doubt it) go through a similar process in the future.
• shadowgovt 4y ago
  > If we get nuked by the U.S. government, we simply die This may not be the fiat-breaking revolutionary digital currency we're looking for.
  • Jasper_ 4y ago
    Just like cyberspace in the 90s where Napster thought they were untouchable because they added computers to things, people often confuse "uncensorable digital technology" with "nobody just gives a shit, yet". When people start giving a shit, it all goes to hell very quickly.
    • api 4y ago
      People also thought it would be a new age of transparency in media. It took the typical propagandists and spin doctors about five years to figure out how to completely subvert online discourse. The "firehose of falsehood" technique was also discovered as a way to herd people back to traditional media by DOSing the digital public square.
      • warkdarrior 4y ago
        This was a completely foreseeable outcome. The primary function of the Internet is to accelerate and broaden communications. Somehow people thought that it would accelerate good communications (for whatever definition of 'good' you prefer)!!! But it turns out that bad actors also know how to use the Internet to accelerate their bad communications. Surprise, surprise!
        • gerikson 4y ago
          It's basically Gresham's law for information.
    • gfodor 4y ago
      I don't think this is the same thing. There are technologies now within crypto that are outside of the ability of the US government to nuke from orbit, like the Bitcoin blockchain. The frontiers of DeFi and DAOs however still have not hit the same level of 'escape velocity' to survive this kind of direct hit. If the US Treasury sanctioned Bitcoin, yes, it would be a significant event, but I don't think it's feasible to think such a thing would destroy Bitcoin at this point. The question really boils down to how extendible this dynamic is to other downstream applications of blockchains and subsequent technologies adjacent to blockchains.
• highwaylights 4y ago
  It almost seems like lolling at the idea of a government seeking regulation and oversight of a money supply network was a touch premature.
  • JumpCrisscross 4y ago
    Money-centre economies (e.g. the U.S., U.K. and Singapore) are using a light tough. Rulemaking is competitive. And prosecution is de-prioritised. There was marketing aimed at the libertarian inclined spouting nonsense about ending war and governments or whatnot. But that’s old news. It mirrors Treasury pitches in the 50s (more anti-banker than anti-state) and gold buggery in the 80s and 2000s (more anti-state). Crypto unified those pitches right after a financial crisis and during an ongoing series of political crises.
• josephd79 4y ago
  I'm not sure of all the details but what about people that maybe used tornado.cash legally? Not everyone who participates in the crypto space, is doing so illegally.. Are they going to shut down banks and ban cash in the US since the US dollar is the most used currency in terms of money laundering?
  • deleted 4y ago
    [deleted]
  • superchroma 4y ago
    That's, what, people evading regimes? Is there literally anyone else truly affected who isn't a bad actor?
    • JumpCrisscross 4y ago
      > there literally anyone else truly affected who isn't a bad actor? Those curious, paranoid or with unique threat models. The same ones who distrust banks and use only cash. (They, like anyone using a mixer, should maintain records in case they fall under suspicion.)
      • Scoundreller 4y ago
        If I could tick a box every time I spend money that said: “let the recipient know all of the history of where this money came from”, I’d avoid ticking it.
        • mrsteveman1 4y ago
          > let the recipient know all of the history of where this money came from Using a blockchain that's designed to work this way, and then claiming to need tools capable of laundering money in order to avoid that outcome, doesn't strike me as a particularly good argument in favor of either of those things.
          • 4y ago
• gzer0 4y ago
  At this point I'm convinced Satoshi Nakamoto was actually a public administration professor trying to teach kids why financial institutions have the rules in place that they do given enough time the entire crypto space will have reinvented every regulation they tried to get rid of and understood why they existed in the first place
  • hotpotamus 4y ago
    The best theory (by which I mean darkly thought provoking) is one I saw from HN that Satoshi is actually an extragalactic intelligence wiping out humanity with the least possible effort.
    • myownpetard 4y ago
      It's looking more and more like we've had a built in self-destruct timer from the beginning.
  • rglullis 4y ago
    At this point I am convinced that every know-it-all on HackerNews is just a corporate drone who never understood the spirit of independency and freedom from overtly authoritarian societies. My fear is not that crypto project A or B stumbles or fails while trying to do something different. My fear is that the place that I once considered crucial for the development of a counterculture becomes dominated by reactionary "intellectuals" who got so rich by tech and now have become the status quo.
    • zaphar 4y ago
      My fear is that the place that I once considered crucial for the development of a counterculture becomes dominated by reactionary "intellectuals" who got so rich by tech and now have become the status quo. So basically, you are beginning to understand the "why" regulatory structures spring up but do not yet accept it?
      • rglullis 4y ago
• yieldcrv 4y ago
  to make this happen faster: withdraw your sanctioned Tornado Cash notes to a virgin address, don't worry about cashing them out at an exchange, just deposit them as collateral in MakerDao to create DAI deposit those funds into lending protocols until you have a LTV ratio of 80% or higher Sell all the borrowed funds and walk away from the collateral and that address protip: Uniswap V2 swap/exchange code has a recipient feature that isn't present on the GUI. When you trade assets, you can designate yet another address as the beneficiary. Exchanges don't read custom smart contract inputs to flag source of funds to prevent you from cashing out, for now.
  • from 4y ago
    > Exchanges don't read custom smart contract inputs to flag source of funds to prevent you from cashing out, for now This will probably happen eventually but I imagine it would be pretty easy to circumvent. There are lots of convoluted ways of transferring ETH that I'm not sure Chainlysis would pick up on. Stuff like: 1. Withdraw from Tornado to address A 2. From address A, call a contract that flashloans the amount you just withdrew minus the fee from dydx to a new address B 3. Repay flashloan with funds from address A, but address B keeps the ETH that was "from" dydx. or 1. Withdraw from Tornado to address A 2. From address A, convert ETH to WETH 3. From address A, transfer WETH to Uniswap v2 DAI/WETH pool 4. From a new address B, call skim() on the Uniswap contract and get all the WETH you just transferred to it, but now it looks like it was from Uniswap. Both of these rely on the fact that they probably aren't going to flag all the funds in a defi protocol just because one of its users used Tornado Cash.
    • yieldcrv 4y ago
      > 3. From address A, transfer WETH to Uniswap v2 DAI/WETH pool > 4. From a new address B, call skim() on the Uniswap contract and get all the WETH you just transferred to it, but now it looks like it was from Uniswap. the second one is dangerous! are you suggesting to just transfer WETH to the pool address without using the pool's swap function? that means anyone can see the imbalance and skim before you do! and if you did a composable or flash loan style transaction to do it all in a single transaction, that just makes it more obvious (eventually) that the same party was involved and even that could be frontrun! which is actually kind of funny because maybe you could frontrun yourself for plausible deniability, and put MEV protection around that transaction!
• mypastself 4y ago
  Had no idea DAI was so heavily backed by USDC. Goes to show how much of the ecosystem is interconnected. More importantly, as the article shows, much of it is at the mercy of governments, completely defeating the technology’s original purpose.
  • yieldcrv 4y ago
    The MakerDAO/DAI community fucked up. People have criticized that community's collateral choices for a long time, as the article mentions, it is pejoratively called "wrapped USDC". Their primary issue was being early and there weren't really collateral choices. There was no trustless bridge for Bitcoin when they needed it. So they wound up using BitGo's WBTC. People got afraid of the volatility of the assets so started approving stablecoins as collateral, and Tether wasn't an option, other stables didn't exist, so they went with USDC. For more modern iteration of this concept with different collateral choices and community ethos, look at Magic Internet Money $MIM (yes, naming is intentional re-appropriation). So far all the collateral are yield generating assets, they generate yield from liquidity pools and volume. The automated liquidation functions the same and its worked. It has ancillary issues from its founder's reputation on other projects, so there is still room for yet another stablecoin that inspires more confidence without really needing the baggage of a leader.
    • zaphar 4y ago
      At some point when the incentives keep driving these "institutions" to make choices like this maybe you need to start questioning how the existing structures drive those incentives forward.
      • yieldcrv 4y ago
        This rhetorical comment actually has a specific answer. MakerDAO tokens were sold to VCs like Andreesen Horowitz and Polychain and Dragonfly, the latter of which are less patient crypto native funds, who wanted the infrastructure for trading immediately. Their outsized ownership allowed for ethos breaking changes, to great financial success, but before organically created infrastructure was in place. There were no liquidity pools, liquidity pool optimizers, borrowing and lending protocols, value extraction. Again taking a look at Magic Internet Money, one part of the structure is that their SPELL token (the equivalent of the MAKER token) was launched more organically and at least has been able to keep an ethos within the owners. Nothing here prevents more consolidated ownership, or any novelties in governance (and I argue that governance can be vassstly improved, there are no bylaws or even continuity between governance anywhere). Only a case study into the contrast between MakerDAO and the answer to your rhetorical comment.
• yieldcrv 4y ago
  MakerDAO can burn the emergency shutdown administrative capabilities.