We’re discontinuing the Stablegains service(blog.stablegains.com)
blog.stablegains.com
We’re discontinuing the Stablegains service
https://blog.stablegains.com/were-discontinuing-the-stablegains-service-please-withdraw-your-remaining-funds-405e6bfb89c4
387 comments
What most people don't understand about finance is that there are fundamental rules that you really cannot break without consequences.
Anyone who has studied quantitative finance knows that it is a HARD science. I worked with a Nobel prize winner in economics, and the math dominated. There was no politics, no opinions, no ethics involved. It really is a science.
Most social media characterize finance as some ethical vice or organized political power structure - and those people simply don't understand finance.
Talking to people who are looking to just tear down modern finance are no different than climate change deniers, antivax, or flat earthers... and yes, they even exist in crypto (and on HN).
Anyone who has studied quantitative finance knows that it is a HARD science. I worked with a Nobel prize winner in economics, and the math dominated. There was no politics, no opinions, no ethics involved. It really is a science.
Most social media characterize finance as some ethical vice or organized political power structure - and those people simply don't understand finance.
Talking to people who are looking to just tear down modern finance are no different than climate change deniers, antivax, or flat earthers... and yes, they even exist in crypto (and on HN).
> Anyone who has studied quantitative finance knows that it is a HARD science. I worked with a Nobel prize winner in economics, and the math dominated. There was no politics, no opinions, no ethics involved. It really is a science.
Your comment makes no sense. Just because there's modeling involved that does not make it a hard science. A hard science requires stuff like the ability to perform controlled experiments and replicability, in order to arrive at a high degree of accuracy in predictions.
Throwing around partial differential equations does not turn something into a hard science. You need to meet way more requirements before you're in a position to claim that.
Your comment makes no sense. Just because there's modeling involved that does not make it a hard science. A hard science requires stuff like the ability to perform controlled experiments and replicability, in order to arrive at a high degree of accuracy in predictions.
Throwing around partial differential equations does not turn something into a hard science. You need to meet way more requirements before you're in a position to claim that.
It doesn't necessarily invalidate your point, but I would say astrophysics is a hard science, and yet a ton of it is based on observation and modeling of events we can't control or reproduce.
Some part of physics are not hard science at the moment as long as we can't perform observations/experiments to validate or invalidate theory (for example string theory). Some part of astrophysics are clearly not hard science at the moment.
I don’t think astrophysics is a hard science anymore.
The controlled experiments are in the trading. The market validates the model, not the peers.
The scientific mindset is there, but not the publishing because the publishing destroys the value of the model. Once your model is known, others trade against your model and it becomes invalid.
The scientific mindset is there, but not the publishing because the publishing destroys the value of the model. Once your model is known, others trade against your model and it becomes invalid.
> It really is a science.
Physics is a science. Math is. Or Biology. Finance is not. Because it deals with the madness of crowds.
> Recipe for Disaster: The Formula That Killed Wall Street
> And Li's Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.
> Nassim Nicholas Taleb is particularly harsh when it comes to the copula. "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked," he says. "Co-association between securities is not measurable using correlation," because past history can never prepare you for that one day when everything goes south. "Anything that relies on correlation is charlatanism."
https://www.wired.com/2009/02/wp-quant/
Physics is a science. Math is. Or Biology. Finance is not. Because it deals with the madness of crowds.
> Recipe for Disaster: The Formula That Killed Wall Street
> And Li's Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.
> Nassim Nicholas Taleb is particularly harsh when it comes to the copula. "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked," he says. "Co-association between securities is not measurable using correlation," because past history can never prepare you for that one day when everything goes south. "Anything that relies on correlation is charlatanism."
https://www.wired.com/2009/02/wp-quant/
> Physics is a science. Math is. Or Biology. Finance is not. Because it deals with the madness of crowds.
If you follow the scientific method, it's science. If you write an observational essay, it's not. You can build theories around falsifiable, replicable experiments pertaining to the madness of crowds. The error bars are longer. But they are not infinite.
If you follow the scientific method, it's science. If you write an observational essay, it's not. You can build theories around falsifiable, replicable experiments pertaining to the madness of crowds. The error bars are longer. But they are not infinite.
If you generate a process using a Cauchy distribution, you can observe finite error bars, but actually the variance of the generating process is infinite.
No matter how hard you model you won’t be able to predict processes that are fundamentally unpredictable. And you would get fooled because you only observe finite amount of data.
It is surprising how complicated the math gets even if you try to model very simple processes (eg think of the n-body problem and how complexity increases with every addition of a body). It is not a given that complicated models mean you’re modelling a complicated process.
No matter how hard you model you won’t be able to predict processes that are fundamentally unpredictable. And you would get fooled because you only observe finite amount of data.
It is surprising how complicated the math gets even if you try to model very simple processes (eg think of the n-body problem and how complexity increases with every addition of a body). It is not a given that complicated models mean you’re modelling a complicated process.
You are correct.
But when people say "finance is science" what they usually mean is "here is the complicated math that proves you can't lose money on this, we've modeled everything".
As the joke goes, 6 sigma events happen in finance every week.
But when people say "finance is science" what they usually mean is "here is the complicated math that proves you can't lose money on this, we've modeled everything".
As the joke goes, 6 sigma events happen in finance every week.
> when people say "finance is science" what they usually mean is "here is the complicated math that proves you can't lose money on this, we've modeled everything"
100% agree. When I was an algorithmic derivatives trader, we joked that the math was there to scare up investors and scare off compliance. Little did we know...
100% agree. When I was an algorithmic derivatives trader, we joked that the math was there to scare up investors and scare off compliance. Little did we know...
> we've modeled everything
That's a great science joke.
That's a great science joke.
This is silly.
This is like saying physics is not science because the nutjobs claiming we will recieve divine revelation by praying to "the quantum energy field" use physics-y terms in their BS.
This is like saying physics is not science because the nutjobs claiming we will recieve divine revelation by praying to "the quantum energy field" use physics-y terms in their BS.
Re: "The error bars are not infinite."
I feel like they are infinite? Because, for example, in hyperinflation, there's no upper bound on how long someone is going to keep printing money.
Any given instance will stop at a finite number, but you can't bank of that being the high water mark.
I feel like they are infinite? Because, for example, in hyperinflation, there's no upper bound on how long someone is going to keep printing money.
Any given instance will stop at a finite number, but you can't bank of that being the high water mark.
Error bars aren't limits, they're percentiles.
Of course that can happen. But it's a low-risk event that falls outside the, say, 99% confidence interval.
It's like the notion of a 100-year flood. Of course there could be a tsunami or a dam failure that completely inundates an entire city, but at some point you've got to accept a small risk and ensure you are covered for it.
It's like the notion of a 100-year flood. Of course there could be a tsunami or a dam failure that completely inundates an entire city, but at some point you've got to accept a small risk and ensure you are covered for it.
> If you follow the scientific method, it's science.
OP's claim was that quantitative finance was *hard science*. Requirements regarding predictability are way more stringent than merely observing stuff and seeing how it responds to an input.
OP's claim was that quantitative finance was *hard science*. Requirements regarding predictability are way more stringent than merely observing stuff and seeing how it responds to an input.
> OP's claim was that quantitative finance was hard science*
These are colloquial terms [1]. We might as well argue about whether Pop Tarts are ravioli or tacos sandwiches.
[1] https://en.wikipedia.org/wiki/Hard_and_soft_science
These are colloquial terms [1]. We might as well argue about whether Pop Tarts are ravioli or tacos sandwiches.
[1] https://en.wikipedia.org/wiki/Hard_and_soft_science
What is(n't) a taco is a semi-solved problem[0].
[0]: https://cuberule.com/
[0]: https://cuberule.com/
> These are colloquial terms [1].
Colloquial terms whose concrete meaning does not correspond to OP's claim.
There is no ambiguity in this: if your models are not testable and fail to predict behavior then it's not hard science.
Colloquial terms whose concrete meaning does not correspond to OP's claim.
There is no ambiguity in this: if your models are not testable and fail to predict behavior then it's not hard science.
Math is not science. Arithmetic and geometry were two of the original liberal arts (defined by Plato). Math doesn’t follow the scientific method. Math is a foundation for much of science and social science, but it is distinct from them.
I always tell people, Maths isn't a science. It's theoretical philosophy.
I think it is rather the most practical philosophy there is.
> Most social media characterize finance as some ethical vice or organized political power structure - and those people simply don't understand finance.
Just because quantitative analysis has solid grounding doesn't mean that its use is unrelated to ethics. The finance establishment is an organized power structure whose decisions are political.
If you want an analogy, I'm pretty sure that you'll find plenty of people who used ballistics to achieve goals that you would find pretty unethical.
Just because quantitative analysis has solid grounding doesn't mean that its use is unrelated to ethics. The finance establishment is an organized power structure whose decisions are political.
If you want an analogy, I'm pretty sure that you'll find plenty of people who used ballistics to achieve goals that you would find pretty unethical.
That can also be said for nearly all specializations/ventures of us humans, right? Physics (nukes), chemistry (explosives and refined sugars), electronics engineering ("engagement optimization"), biology (human experiments maybe), philosophy (started many wars), etc. There doesn't seem to be many things where we haven't corrupted in some way. Everything is about ethics and politics(?)
Everything is political, and everything has ethical considerations, yes.
Refusing to take a side _is_ a side, it means you're fine with how things are going on their own.
This isn't corruption, it's just recognition that life has choices, and those choices have consequences, for yourself and others.
Refusing to take a side _is_ a side, it means you're fine with how things are going on their own.
This isn't corruption, it's just recognition that life has choices, and those choices have consequences, for yourself and others.
Using math does not make something scientific. Math is a language based on logic, physics is a science using that language. Economics is Scholasticism that uses math as a language.
This comment is why the humanities should be a prerequisite for all academical endeavors...
This comment is why the humanities should be a prerequisite for all academical endeavors...
The maths used in economics is widely known to be wrong.
When informed the maths in economics is wrong, the economists don't go and fix their maths either.
Economics is more like sociology with some random incorrect formulas written on the black board as set dressing.
Economics might in self loathing claim they are the "dismal science", but the cold hard truth is they simply speaking are not doing their jobs properly. It's a broken research field.
When informed the maths in economics is wrong, the economists don't go and fix their maths either.
Economics is more like sociology with some random incorrect formulas written on the black board as set dressing.
Economics might in self loathing claim they are the "dismal science", but the cold hard truth is they simply speaking are not doing their jobs properly. It's a broken research field.
You're not talking about the same "economics". Quantitative analysis, as the person wrote, is pretty good at predicting things.
> There was no politics, no opinions, no ethics involved. It really is a science.
Except that there are humans involved. How do you boil arbitrary human action down to a HARD science?
Except that there are humans involved. How do you boil arbitrary human action down to a HARD science?
> social media ... organized political power structure
It's not just social media and it is somewhat disingenuous to dismiss the idea that finance, specially specially international finance, does not have (some form of) power [that actually trumps and transcends political power].
This is a somewhat interesting film that I was watching the other day. It's mere existence addresses the first bit -- that perception is certainly not limited to "social media". And of course the film itself is about a super secret gathering of G8 ministers where they struggle with the decision to put in place some (undisclosed) policy change that they all know will have very drastic consequences for the global average joe.
The Confessions (2016): https://www.imdb.com/title/tt4647784
It's not just social media and it is somewhat disingenuous to dismiss the idea that finance, specially specially international finance, does not have (some form of) power [that actually trumps and transcends political power].
This is a somewhat interesting film that I was watching the other day. It's mere existence addresses the first bit -- that perception is certainly not limited to "social media". And of course the film itself is about a super secret gathering of G8 ministers where they struggle with the decision to put in place some (undisclosed) policy change that they all know will have very drastic consequences for the global average joe.
The Confessions (2016): https://www.imdb.com/title/tt4647784
As a single actor you can bend, but never break the rules. So you can achieve way better returns than the market as a whole does. Over time 10 - 200 x returns is achievable, don't think it comes cheap though, you need to dedicate large chunks of your life to it, and nothing is a guarantee.
However, the math approach to finance works because in its essence it is quantifying human reactions and or emotions, which in large crowds turns out to be more predictable. In the short run, still, software holds its edge with its probability approach but its not smart so that it is basically a rent seeker.
However, the math approach to finance works because in its essence it is quantifying human reactions and or emotions, which in large crowds turns out to be more predictable. In the short run, still, software holds its edge with its probability approach but its not smart so that it is basically a rent seeker.
[deleted]
If finance is a HARD science, where are replicated experiments? How did they account for alternative hypothesis?
Will understanding the math make me rich? :)
It won't make you rich but it'll at the very least keep you from making yourself more poor.
Work at a HFT firm in Amsterdam. That type of finance knowledge will make you rich.
So you can guarantee 20% returns? We're back where started.
look - there are companies out there - Renaissance for one - who do make very good returns consistently. The difference is that not all returns are infinite. in fact, most good investments are finite - the market eventually catches on and then prices equilibrate. saying that there are no guaranteed 20% returns does not mean that with hard work and good strategy there are not 20% returns to be made on some arbitrary amount of principal at any given time.
put another way, its easy to earn 20% on a dollar. its hard to earn 20% on a billion dollars.
put another way, its easy to earn 20% on a dollar. its hard to earn 20% on a billion dollars.
What the fuck are you talking about? The Renaissance medallion fund isn't open to the public and is no longer generating double digit returns as of 2020 or 2021. Much of their performance can be attributed to the fact that they just didn't pay their taxes. A $6.8 billion fine just doesn't cut it in the face how much money they were making. The Medallion fund saw $11 billion in net outflows due to low returns in 2021. Their funds that are open to the public regularly offer negative and low single digit returns annually. Please do tell us more about how efficient this market.
https://www.pionline.com/hedge-funds/renaissance-technologie...
https://www.pionline.com/hedge-funds/renaissance-technologie...
I was talking about the topic at hand: the possibility of consistent good rate of return. You are right - medallion has had some hard times recently. But, prior to that, it generated very good returns for a while.
You are not addressing the substance of my comment, namely that many investments are finite, and this is why infinite riskless investments don't work.
You are not addressing the substance of my comment, namely that many investments are finite, and this is why infinite riskless investments don't work.
> You are not addressing the substance of my comment, namely that many investments are finite, and this is why infinite riskless investments don't work.
I agree that "infinite riskless investments don't work" and agree with the "possibility of consistent good rate of return." Many investments are indeed finite on a human scale. An investor will almost always want their money back with some return, no? At some point they'll take their money out of the investment or market and spend it. The particular issue was the claim that the Medallion Fund from Renaissance Technologies was a good example for a consistent rate of return. They may have done that but how would we know? Their data is self reported, and as far as I'm aware there's no publically available audits of their performance. Even if there were, we have evidence of their cheating at taxes through abuse of options. If I were you, I would take their claims with a very large lump of salt. Do you know who else claimed guaranteed double digit rates of return? Bernie Madoff. We might not have found out about his fraud either if it weren't for some whistleblowing and for his admission of wrongdoing.
The Medallion Fund may have returned 30-70% over decades. Do we really know for sure? I think you'd have been better off simply suggesting index funds for consistent returns for the average person or citing Warren Buffett or Bill Gross for generating alpha/consistent returns.
I agree that "infinite riskless investments don't work" and agree with the "possibility of consistent good rate of return." Many investments are indeed finite on a human scale. An investor will almost always want their money back with some return, no? At some point they'll take their money out of the investment or market and spend it. The particular issue was the claim that the Medallion Fund from Renaissance Technologies was a good example for a consistent rate of return. They may have done that but how would we know? Their data is self reported, and as far as I'm aware there's no publically available audits of their performance. Even if there were, we have evidence of their cheating at taxes through abuse of options. If I were you, I would take their claims with a very large lump of salt. Do you know who else claimed guaranteed double digit rates of return? Bernie Madoff. We might not have found out about his fraud either if it weren't for some whistleblowing and for his admission of wrongdoing.
The Medallion Fund may have returned 30-70% over decades. Do we really know for sure? I think you'd have been better off simply suggesting index funds for consistent returns for the average person or citing Warren Buffett or Bill Gross for generating alpha/consistent returns.
Market makers/HFT firms can have astronomical returns, hundreds of percents is not uncommon depending on how capital intensive the strategies are. The returns don't compound since strategies in this space are usually very capital constrained.
And they're also context constrained, so highly-successful strategies don't work indefinitely.
It's really striking how in recent years the Godwin point has been replaced from "everybody who disagrees is Hitler" to "everybody who disagrees is a anti-climate flat-vax earth-denier".
It's really not helping getting any point across. In a way it is self-realizing polarization: because you are casting any criticism of "modern finance" into this "bundle of badness" this is likely to reinforce their position.
I think you have the point, and it makes me worried to see your comment downvoted to oblivion.
It is worrying to see that people tend to just click thumbs down when they don't agree rather than to pick the towel and build a strong argument against what they don't agree with.
It is worrying to see that people tend to just click thumbs down when they don't agree rather than to pick the towel and build a strong argument against what they don't agree with.
[deleted]
its the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, not a Nobel Prize.
Is the math meaningful though?
> Is the math meaningful though?
"Meaningful" is squishy. Is it strongly predictive, and in some cases, definitive? Yes.
"Meaningful" is squishy. Is it strongly predictive, and in some cases, definitive? Yes.
If we could all get a stable (guaranteed) 15% per year, everyone would invest. But the world economy doesn’t grow at 15%.
The US economy doesn’t grow at 7% a year but that’s what the s&p is expected to do
Well, the S&P (assuming the S&P 500) doesn't represent the entire US economy, but 500 companies that represent, arguably, the "winners" of the US economy, so expecting them to grow 7% while the entire economy as a whole grows less is not unexpected.
How much of that is inflation? If, historically, GDP growth is about 3% and inflation is about 3%, and you're trying to invest in the strongest companies, is that how you get to 7%+?
how many companies lose money for a few years and fold? if the S&P is winners, then it is counterbalanced by all the bad investments, pre revenue startups, and other businesses which are losing money. balancing out to 3% is not impossible.
Population growth + inflation + transfer of wealth from workers to capital owners + productivity gains has over the long run been pretty close to 7%.
[deleted]
To the same extent that money is meaningful.
The 20% APY provided by Anchor was way above the average yields for safe DeFi lending. Which indicated that even among crypto users, this was considered a degen play!
The whole Terra saga was a typical example of speculative bubble. Everyone knew it was risky, but its sheer size and the caliber of people endorsing it (https://twitter.com/novogratz/status/1478535972560195585) was providing an aura of safety. Too big to fail.
It's also similar to the stock market as a whole before it started correcting. Everyone knew valuations were detached from every fundamental except liquidity, yet everyone went along thinking the music just had to keep going.
The whole Terra saga was a typical example of speculative bubble. Everyone knew it was risky, but its sheer size and the caliber of people endorsing it (https://twitter.com/novogratz/status/1478535972560195585) was providing an aura of safety. Too big to fail.
It's also similar to the stock market as a whole before it started correcting. Everyone knew valuations were detached from every fundamental except liquidity, yet everyone went along thinking the music just had to keep going.
Every fundamental except liquidity - nice phrasing. It would be illuminating to see more analysis of liquidity in crypto markets and less purely technical analysis.
In the linked Terra Revival post there's this gem of a term:
> Pre-attack Luna
I love how we went straight from "what happened" to "it was an attack."
> Pre-attack Luna
I love how we went straight from "what happened" to "it was an attack."
I'm not surprised the attack narrative is so popular and rarely challenged. Whether there was an actual attack or not, the attack narrative gives everyone a convenient out. The creator can disavow responsibility for creating a stablecoin that doesn't work and the investors get to feel like they weren't taken in by a con but we're instead attacked by an outside entity.
Also the straight up call to start shilling the new network immediately or you won't get a cut:
> Essential app developers looking to join for emergency allocation should signal public support for the net network on Twitter and social channels.
> Essential app developers looking to join for emergency allocation should signal public support for the net network on Twitter and social channels.
The fact that people are putting their money on the line without realising this extremely basic fact of finance is concerning to say the least.
And the fact that YC actually invested in this company which claimed to contravene that basic rule is staggering.
And the fact that YC actually invested in this company which claimed to contravene that basic rule is staggering.
> And the fact that YC actually invested in this company which claimed to contravene that basic rule is staggering.
StableGains was skimming off the top so they weren’t directly exposed to the risk of the underlying asset.
StableGains was skimming off the top so they weren’t directly exposed to the risk of the underlying asset.
> without realising this extremely basic fact of finance
More like claiming they didn’t know when they lose it all. Admitting “I gambled and I lost” isn’t a recipe for sympathy and possible compensation.
More like claiming they didn’t know when they lose it all. Admitting “I gambled and I lost” isn’t a recipe for sympathy and possible compensation.
I invested money with Stablegains rather than in UST/Anchor more directly because of the YCombinator branding.
I figured that if the system collapsed, I would be able to notice it early and withdraw, and that YC-affiliated investor money would help compensate me with more luck than if I had to liquidate out of the system myself.
I withdrew after seeing a friend on Cryptography Twitter send a message showing the destabilization; this turned out to be many hours before Stablegains announced "we will honor withdrawals before this announcement at 1:1", and I got all my money back out.
The YC brand worked here, I think.
I figured that if the system collapsed, I would be able to notice it early and withdraw, and that YC-affiliated investor money would help compensate me with more luck than if I had to liquidate out of the system myself.
I withdrew after seeing a friend on Cryptography Twitter send a message showing the destabilization; this turned out to be many hours before Stablegains announced "we will honor withdrawals before this announcement at 1:1", and I got all my money back out.
The YC brand worked here, I think.
> The YC brand worked here, I think.
Congratulations? You weren't one of those who lost all of their money to this YC supported scam. Scams and get-rich-quick or get-more-rich off of the backs of others: that's the YC brand here and increasingly elsewhere. Paul Graham started this accelerator to make himself and his wife rich. YC exists to enrich its owners not as your litmus test for trustworthiness. Money over morality is the motto here. Libertarian values, limited government, startups as silver bullets, founding workers working themselves to death to enrich venture capitalists, and Dunning-Kruger for days in the form of Paul Graham. Are you poor? 'Have you tried making a startup?' is Paul Graham's solution to poverty as with everything else. You might as well ask 'Have you tried not being poor?'
Congratulations? You weren't one of those who lost all of their money to this YC supported scam. Scams and get-rich-quick or get-more-rich off of the backs of others: that's the YC brand here and increasingly elsewhere. Paul Graham started this accelerator to make himself and his wife rich. YC exists to enrich its owners not as your litmus test for trustworthiness. Money over morality is the motto here. Libertarian values, limited government, startups as silver bullets, founding workers working themselves to death to enrich venture capitalists, and Dunning-Kruger for days in the form of Paul Graham. Are you poor? 'Have you tried making a startup?' is Paul Graham's solution to poverty as with everything else. You might as well ask 'Have you tried not being poor?'
> YC-affiliated investor money would help compensate me
Not sure why you believe a mere investor is liable for any compensation if the 15% APY gambling scheme goes under.
Not sure why you believe a mere investor is liable for any compensation if the 15% APY gambling scheme goes under.
It seems like what worked for you was having a source who was paying close attention, not the branding at all.
Never forget, its always "different this time", even though as you've said its reached the place its in over thousands of years. The mistakes made and mania's are in all the text books and histories so really people should know better, but its seems that nothing is more influential on a person than greed.
> I get the innovator mentality of sweeping away the old but there seems to be a fine line between innovation and ignorance.
I think that this is the "innovator mentality" insofar that, as a group, we tend to idolize/cargo cult innovation as if it was always a good thing. As the pile of things that I miss grows much faster than the things that I feel that I've gained I have come to think of "innovation" as a force for destruction, rent-seeking, and greed, just as much as it can be a force for improvement.
As you say, in many cases things are the way they are because reasons. And some snot-nosed wanterpreneur is just as likely to degrade the situation as they are to improve it.
I think that this is the "innovator mentality" insofar that, as a group, we tend to idolize/cargo cult innovation as if it was always a good thing. As the pile of things that I miss grows much faster than the things that I feel that I've gained I have come to think of "innovation" as a force for destruction, rent-seeking, and greed, just as much as it can be a force for improvement.
As you say, in many cases things are the way they are because reasons. And some snot-nosed wanterpreneur is just as likely to degrade the situation as they are to improve it.
Here's a funny little anecdote. In the early life of bitfinex, you could lend money to levered traders at ~1000% interest. I did so personally, but only fairly small sums, and I did not sleep easy at night lol. It was pretty obvious it could blow up at any time, but somehow it didn't. Times were different then of course, ecosystem so much smaller - more room to grow.
https://web.archive.org/web/20130411113418/https://www.bitfi...
https://web.archive.org/web/20130411113418/https://www.bitfi...
What I find upsetting about these developments is that over a year ago I shopped around an offer to borrow at higher rates with an early repayment option, backed by an actual arbitrage opportunity, and raised way less than these scammers.
Usually there is an answer, I’m not familiar with the stablegains service but usually there is enough information for you to tell objectively why to use or avoid a service according to your risk profile.
There was enough in the terra ecosystem to come to a conclusion of avoiding completely
There was enough in the terra ecosystem to come to a conclusion of avoiding completely
> There was enough in the terra ecosystem to come to a conclusion of avoiding completely
There is enough information in a ten or 20% yield to come to a conclusion. That doesn't stop unsophisticated investors from getting screwed.
When they do so because they bought magic beans, I have no sympathy. When are lied to and sold deposit-like products [1], it's infuriating.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
There is enough information in a ten or 20% yield to come to a conclusion. That doesn't stop unsophisticated investors from getting screwed.
When they do so because they bought magic beans, I have no sympathy. When are lied to and sold deposit-like products [1], it's infuriating.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
Consider what we see if there isn't enough information: https://en.wikipedia.org/wiki/The_Market_for_Lemons And on a totally separate note, consider what we see in DeFi.
That's a great point. Even if there were actually legitimate products that could somewhat use cryptocurrency as part of their offering, they would probably get rid of it eventually just to avoid the association with the endless scams that fester in the ecosystem.
> Finance is the way it is for many reasons. There are thousands of years of lessons that have made the system the way it is. I get the innovator mentality of sweeping away the old but there seems to be a fine line between innovation and ignorance.
I feel like the only benefit of all this is being able to see posttrade services rewritten with some sane API instead of crazy legacy garbage riddled with CSVs.
I feel like the only benefit of all this is being able to see posttrade services rewritten with some sane API instead of crazy legacy garbage riddled with CSVs.
And the Crypto Andys were all like "you just don't understand DeFi!" to which the retort is "No, you just don't understand finance".
If you believe the statement "if someone is promising you consistent above-market returns it's either a scam or there is unknown or undisclosed risk" it might be true that you don't understand DeFi to some degree. DeFi isn't a single market, it's millions of micro markets that are accessible through what amounts to a single API.
So when you have millions of markets with different returns that can be traded in every imaginable way (and some you probably haven't imagined), throw in an insane amount of dumb money, people willing to borrow at high interest rates (relative to the real world), and a laundry list of factors that introduce inefficiencies into the market, it's quite easy to find pockets of above-average returns if you're smart. I have no idea if Stablegains was actually smart, but it's more than possible to achieve above-market gains in DeFi without exposing yourself to outsized risks.
If you believe the statement "if someone is promising you consistent above-market returns it's either a scam or there is unknown or undisclosed risk" it might be true that you don't understand DeFi to some degree. DeFi isn't a single market, it's millions of micro markets that are accessible through what amounts to a single API.
So when you have millions of markets with different returns that can be traded in every imaginable way (and some you probably haven't imagined), throw in an insane amount of dumb money, people willing to borrow at high interest rates (relative to the real world), and a laundry list of factors that introduce inefficiencies into the market, it's quite easy to find pockets of above-average returns if you're smart. I have no idea if Stablegains was actually smart, but it's more than possible to achieve above-market gains in DeFi without exposing yourself to outsized risks.
> it's more than possible to achieve above-market gains in DeFi without overexposing yourself to insane risks
"Insane" is subjective. The point is nothing safe yields ten or 20%. Someone saying "you will not lose your funds" [1] when paying above-market yields is lying.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
"Insane" is subjective. The point is nothing safe yields ten or 20%. Someone saying "you will not lose your funds" [1] when paying above-market yields is lying.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
I run arb and loan liquidation bots, and have for over a year now. These are atomic transactions almost always using flash swaps/loans that exist only exist for the life of the transaction. I am only exposed to potential losses on transaction fees, but have never had a losing day while running production code. My yield on my investment (mostly infrastructure costs) is closer to 5,000%...per month. I will not lose my funds, whether the market is good or bad.
There are funds out there that conduct these activities, I know because I recently consulted for one. They are promising risk free returns and getting them.
There are things that exist in DeFi (such as flash loans) that have no real world equivalent, which is why blanket statements made about traditional markets don't necessarily apply. If used properly, these things do in fact offer "too good to be true" types of returns.
There are funds out there that conduct these activities, I know because I recently consulted for one. They are promising risk free returns and getting them.
There are things that exist in DeFi (such as flash loans) that have no real world equivalent, which is why blanket statements made about traditional markets don't necessarily apply. If used properly, these things do in fact offer "too good to be true" types of returns.
> My yield on my investment (mostly infrastructure costs) is closer to 5,000%...per month.
As in, $100 in January becomes $500 in February, $2,500 in March, ... $976,562,500 in December?
Edit: actually I read that wrong, that would only be 500%. 5,000% per month (money x 50) would turn the $100 into $9,765,625,000,000,000,000 by December.
Unless by 5,000% yield you mean you get 50x your original investment on top of the original investment, like how 5% yield on a dollar gets me $1.05. In that case it would be more. But I think the 9.8 billion billion would be good enough for me.
As in, $100 in January becomes $500 in February, $2,500 in March, ... $976,562,500 in December?
Edit: actually I read that wrong, that would only be 500%. 5,000% per month (money x 50) would turn the $100 into $9,765,625,000,000,000,000 by December.
Unless by 5,000% yield you mean you get 50x your original investment on top of the original investment, like how 5% yield on a dollar gets me $1.05. In that case it would be more. But I think the 9.8 billion billion would be good enough for me.
No, sadly that return is based on my infrastructure costs, which I can't keep increasing and get the same return. But yes, I'm doing better than 50X my monthly infrastructure costs with this, which are my only actual risk.
Ah, ok, so this is more like a thing where you drive around looking for loose change on the ground, and you find enough to exceed your fuel and maintenance expenses. But you can't scale it up by hiring more drivers, because there is only so much loose change to be found.
Surely you see how even a 10% safe return on investment like these DeFi schemes offer is a whole different thing, when it's a compounding return. There's no way to sustain it. All the arbitrage opportunities in the world can't deliver the funds required to make investors' money grow exponentially.
Surely you see how even a 10% safe return on investment like these DeFi schemes offer is a whole different thing, when it's a compounding return. There's no way to sustain it. All the arbitrage opportunities in the world can't deliver the funds required to make investors' money grow exponentially.
You are correct, but all investments have a maximum size at which returns will stop. That said, even large banks are seeing returns considered impossible in traditional markets with DeFi strategies, often with lower risk. Arb bots like mine are now generating more than $1 billion per year in risk-free earnings, so the pie is not exactly small. Estimates are that statistical arbitrage bots, which do take on some small capital risk, generated over $5 billion in profits last year.
I agree with you that throwing money at anyone who tells you they can take an unlimited investment and offer compounding returns on it is a recipe for disaster. But in DeFi, intelligence and strategy translate directly to greater yield. Math has proven time and again that those things matter very little in traditional markets.
I agree with you that throwing money at anyone who tells you they can take an unlimited investment and offer compounding returns on it is a recipe for disaster. But in DeFi, intelligence and strategy translate directly to greater yield. Math has proven time and again that those things matter very little in traditional markets.
>But in DeFi, intelligence and strategy translate directly to greater yield. Math has proven time and again that those things matter very little in traditional markets.
You're all over the place with your usage of concepts.
Here you say that intelligence and strategy matter little in "traditional" (vague) markets. Yet, in DeFi, they do.
Not buying it. It feels like I could copy and replace your replace all of your uses of "DeFi" in this thread with <insert ponzi scheme>.
It's "different" than normal markets...I made it work personally (but not at scale)...
You're all over the place with your usage of concepts.
Here you say that intelligence and strategy matter little in "traditional" (vague) markets. Yet, in DeFi, they do.
Not buying it. It feels like I could copy and replace your replace all of your uses of "DeFi" in this thread with <insert ponzi scheme>.
It's "different" than normal markets...I made it work personally (but not at scale)...
There are countless articles showing that literal monkeys throwing darts at a dart board can pick sticks as well or better than most fund managers. This is not the case with DeFi. I’m not all over the place with anything, DeFi is a place where skill still matters because of inefficiencies and the presence of a large amount of “dumb” money.
> I will not lose my funds, whether the market is good or bad
Is your counterparty risk always zero (between you and the chain)? Custody? What if a chain is halted or amended?
These systems run on novel rails. You couldn’t honestly tell an investor “you will not lose your funds,” and you’d refrain from using the word “deposit.” Because you’re trying to honestly communicate an opportunity, not to defraud.
Is your counterparty risk always zero (between you and the chain)? Custody? What if a chain is halted or amended?
These systems run on novel rails. You couldn’t honestly tell an investor “you will not lose your funds,” and you’d refrain from using the word “deposit.” Because you’re trying to honestly communicate an opportunity, not to defraud.
Is your counterparty risk zero? Custody risk?
In the case of flash loans/swaps, the answer is yes. It's 0. Further, I never have any capital at risk, all of my bots use flash loans/swaps. These transactions are atomic, which means that either all parts of it succeed or they all fail (it's a "revert" in blockchain parlance). So I can borrow $200 million without any prior permission and do an arb/liquidation or anything else I want with it for the life of my transaction, with the only requirement being that I must return it by the end. If my arb/liquidation/whatever succeeds and I return the loan, I keep the profits. If not, it's as if the whole thing never happened. The only risk is the transaction fee, which on the chains I do this on are miniscule.
I realize that it sounds unbelievable, but it exists. My code does thousands of these daily. I am not the only one doing this. See https://eigenphi.io/ . With the exception of sandwich transactions, every one of the bots you see on there is making profits without any capital at risk.
In the case of flash loans/swaps, the answer is yes. It's 0. Further, I never have any capital at risk, all of my bots use flash loans/swaps. These transactions are atomic, which means that either all parts of it succeed or they all fail (it's a "revert" in blockchain parlance). So I can borrow $200 million without any prior permission and do an arb/liquidation or anything else I want with it for the life of my transaction, with the only requirement being that I must return it by the end. If my arb/liquidation/whatever succeeds and I return the loan, I keep the profits. If not, it's as if the whole thing never happened. The only risk is the transaction fee, which on the chains I do this on are miniscule.
I realize that it sounds unbelievable, but it exists. My code does thousands of these daily. I am not the only one doing this. See https://eigenphi.io/ . With the exception of sandwich transactions, every one of the bots you see on there is making profits without any capital at risk.
> it’s 0
The risk of the trade on chain defaulting is virtually non-existent, agreed. Custody risk is never zero. Dollar in / dollar out returns involve lots of counterparties.
The risk of the trade on chain defaulting is virtually non-existent, agreed. Custody risk is never zero. Dollar in / dollar out returns involve lots of counterparties.
Hi there.
My name is Bryan, and I'm a member of the EigenPhi team. Thanks for recommending us; twice!! :D Would you please spare a few minutes to have a quick chat? I'd love to receive your feedback and provide more valuable data! Here is my email: bryan at eigenphi.com.
Looking forward to your reply!!
> DeFi isn't a single market, it's millions of micro markets that are accessible through what amounts to a single API.
Millions of micro markets that produce what, exactly? Last time I checked there has to be at least something on the other side of the calculation what a coin is worth.
You think crypto coins magically make people work harder, better, faster, stronger?
That's not how the constraints of the physical world work.
Millions of micro markets that produce what, exactly? Last time I checked there has to be at least something on the other side of the calculation what a coin is worth.
You think crypto coins magically make people work harder, better, faster, stronger?
That's not how the constraints of the physical world work.
Millions of micro markets that produce what, exactly?
You seem to be asking me to defend the merits of crypto, which is beyond the scope of this conversation. But generally speaking, most of the coins people actually buy are tied to protocols that are attempting to do things that interesting to at least some part of the population.
But, the ability to prove the provenance and ownership of any asset, whether physical or digital, has value. The ability to move value across borders instantly, cheaply, and reliably, has value.
In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value.
The possibilities are endless.
You seem to be asking me to defend the merits of crypto, which is beyond the scope of this conversation. But generally speaking, most of the coins people actually buy are tied to protocols that are attempting to do things that interesting to at least some part of the population.
But, the ability to prove the provenance and ownership of any asset, whether physical or digital, has value. The ability to move value across borders instantly, cheaply, and reliably, has value.
In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value.
The possibilities are endless.
> In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value.
This assumes that 100% of the ecosystem is already some form of blockchain.
And guess what: It isn't and it never will be due to the democratic nature of the proposed system architecture.
The flaws of every coin I've seen is that there are too many assumptions about markets, and dependencies of the markets in the sense of goods and/or services that are just "assumed" to migrate to their blockchain at some point. That's not how incentive proposals should work, as they will (logically) lead to exit scams because a couple of people cannot write and reinvent an ecosystem from scratch.
Look at how long IPFS took to mature. Look at how long DAT was refactored in a backwards-incompatible manner. Look at how long it took to write the hypercore protocol stack.
Systems like this and - especially markets like this - need time to evolve, which means that the proposed DeFi assumptions about rapid growth bullshit are anti-market proposals, and literally the same way hyped and unverified bonds in the legacy financial systems lead to market crashes.
This assumes that 100% of the ecosystem is already some form of blockchain.
And guess what: It isn't and it never will be due to the democratic nature of the proposed system architecture.
The flaws of every coin I've seen is that there are too many assumptions about markets, and dependencies of the markets in the sense of goods and/or services that are just "assumed" to migrate to their blockchain at some point. That's not how incentive proposals should work, as they will (logically) lead to exit scams because a couple of people cannot write and reinvent an ecosystem from scratch.
Look at how long IPFS took to mature. Look at how long DAT was refactored in a backwards-incompatible manner. Look at how long it took to write the hypercore protocol stack.
Systems like this and - especially markets like this - need time to evolve, which means that the proposed DeFi assumptions about rapid growth bullshit are anti-market proposals, and literally the same way hyped and unverified bonds in the legacy financial systems lead to market crashes.
> But, the ability to prove the provenance and ownership of any asset, whether physical or digital, has value.
This only works for assets which themselves exist on the blockchain and for whom the blockchain is the only source of truth - such as cryptocurrencies.
Anything else that involves off-chain activity would require a bulletproof way of keeping the on-chain and off-chain state in sync which is typically a neutral, trusted party, at which point you may as well just let them operate a conventional database and forget the whole blockchain bullshit.
> In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value.
I don't see how blockchain/cryptocurrencies help here? Cryptographic signing is all you need.
This only works for assets which themselves exist on the blockchain and for whom the blockchain is the only source of truth - such as cryptocurrencies.
Anything else that involves off-chain activity would require a bulletproof way of keeping the on-chain and off-chain state in sync which is typically a neutral, trusted party, at which point you may as well just let them operate a conventional database and forget the whole blockchain bullshit.
> In a world where so much has been made of fake news, imagine if you could know with absolute certainty that a given quote you read from someone in an article is authentic and given to the specific outlet you are reading it at, not taken from somewhere else, perhaps out of context. Imagine if Google integrated such information/quote verification into its search results, and could use it to prioritize sites with real quotes or information. SERPs wouldn’t be full of trash, and small sites that manage to scoop large ones could get instant #1 rankings. Authenticity verification has value.
I don't see how blockchain/cryptocurrencies help here? Cryptographic signing is all you need.
> it's quite easy to find pockets of above-average returns if you're smart…
Right, but even then how deep are those pockets (what amount of investment can they absorb without being tapped out), how big a time window will they exist for, how will you know if those limits are being reached, and are you really sure you can quantify all the risks?
By definition if it’s a pocket of opportunity, it’s very constrained opportunity. As soon as those constraints are breached it will suddenly stop being low risk and might collapse completely. A lot of people have lost a lot of money on sure fire pockets of opportunity that were great when they lasted.
Right, but even then how deep are those pockets (what amount of investment can they absorb without being tapped out), how big a time window will they exist for, how will you know if those limits are being reached, and are you really sure you can quantify all the risks?
By definition if it’s a pocket of opportunity, it’s very constrained opportunity. As soon as those constraints are breached it will suddenly stop being low risk and might collapse completely. A lot of people have lost a lot of money on sure fire pockets of opportunity that were great when they lasted.
Of course there are limits to every opportunity. I make money everyday from opportunities that exist on microsecond timescales. I run arb and loan liquidation bots, so I haven't had a single losing day, ever. The last two weeks were quite profitable for me, actually the best two week period I have ever had. There are other strategies that are easier to pull off, such as market making, that have moderate risks and outsized returns.
The point is that these opportunities exist, and they always will exist, you just have to be smart enough to be able to get into them. If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point.
The point is that these opportunities exist, and they always will exist, you just have to be smart enough to be able to get into them. If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point.
> If someone needed money for infrastructure to run an arb bot, for example, and offered you above market, risk-free returns, it's at least possible they aren't lying to you. That was my point.
If you needed money for infrastructure for more arb bot, would you look for random novices and offer them 15% (and raise $3m in VC to market to random novices)? Or would you take out an unsecured personal loan from a bank at a lower rate, or a much lower cost loan from a counterparty involved crypto, especially one who understands the nature your trades?
If you needed money for infrastructure for more arb bot, would you look for random novices and offer them 15% (and raise $3m in VC to market to random novices)? Or would you take out an unsecured personal loan from a bank at a lower rate, or a much lower cost loan from a counterparty involved crypto, especially one who understands the nature your trades?
I’m sure it’s a great business, but what would happen if 10 competitors all spun up arb bots tomorrow morning?
There’s a very low chance of that happening, but not zero.
There’s a very low chance of that happening, but not zero.
A market where, with work, you can "find pockets of above-average returns if you're smart" is MILES away from one where companies are "promising you consistent above-market returns"
You’ve kind of just demonstrated the OP’s point. What do you think modern finance looks like?
I'm looking forward to your followup post where you lost all your money and can't figure out where you went wrong.
It always happens with people who think they are smarter than the "dumb money" they're taking advantage of. "Sure it's a scam, but I'm smart enough to not be the one getting scammed!"
It always happens with people who think they are smarter than the "dumb money" they're taking advantage of. "Sure it's a scam, but I'm smart enough to not be the one getting scammed!"
[[This is what DeFI people actually believe]]
Whoever thinks "millions of markets trading in every way" is a guarantee of making money is in for an awful surprise
Whoever thinks "millions of markets trading in every way" is a guarantee of making money is in for an awful surprise
[deleted]
[deleted]
If you are in the U.S. and lost money, please write to your state's Attorney General [1].
The company is Stablegains, Inc. and the people to name are Kamil Ryszkowski and Emil Rasmessen, co-founders and, I think, Board members. Copy Ken Paxton, Office of the Attorney General, P. O. Box 12548, Austin, Texas as well as his challenger George P. Bush at P. O. Box 26677, also in Austin. (Stablegains and its founders are in Texas. They are spearheading the criminal complaint.)
[1] https://www.usa.gov/state-attorney-general
The company is Stablegains, Inc. and the people to name are Kamil Ryszkowski and Emil Rasmessen, co-founders and, I think, Board members. Copy Ken Paxton, Office of the Attorney General, P. O. Box 12548, Austin, Texas as well as his challenger George P. Bush at P. O. Box 26677, also in Austin. (Stablegains and its founders are in Texas. They are spearheading the criminal complaint.)
[1] https://www.usa.gov/state-attorney-general
Hopefully the A.G. will recuse himself. He's under indictment for the same crime.
https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fr...
https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fr...
He didn't recuse himself when he investigated his friend/donor and fired whistleblowers. Why would he now?
yeah, Ken Paxton is … let’s go with “not clear and free of scandal”.
Pyramid schemes and political corruption in the US is a very iconic duo (See: Amway is somehow still in the fraud business. The amount of collusion between it and past presidents is, to put simply, sickening.)
Take it from someone who lost his father’s money (all $11,000 of it) in 2014: it’s easier to just get over it as quickly as possible.
None of this will amount to anything, and you’ll feel awful until you give up. Then the healing can begin.
On the other hand, I’m not sure if I was mentally capable of hearing this advice back then, so…
But it’s true. It’s 2022 now. That’s almost a decade ago. In fact I forget when exactly Gox collapsed, which is how little it matters to me now. But back then, it felt like the end of the world.
None of this will amount to anything, and you’ll feel awful until you give up. Then the healing can begin.
On the other hand, I’m not sure if I was mentally capable of hearing this advice back then, so…
But it’s true. It’s 2022 now. That’s almost a decade ago. In fact I forget when exactly Gox collapsed, which is how little it matters to me now. But back then, it felt like the end of the world.
> it’s easier to just get over it as quickly as possible. None of this will amount to anything, and you’ll feel awful until you give up
You don't write to your A. G. to get your money back. (You won't.) You do as an act of civic service.
These people will defraud again. Their investors will back people who will defraud again. Putting people in jail doesn't get anyone's money back. But it deters the next fraud.
Write the letter, send the evidence, write off the loss and then move on.
You don't write to your A. G. to get your money back. (You won't.) You do as an act of civic service.
These people will defraud again. Their investors will back people who will defraud again. Putting people in jail doesn't get anyone's money back. But it deters the next fraud.
Write the letter, send the evidence, write off the loss and then move on.
I guess. Just as long as you really embrace the “move on” part.
It was a mistake I made, so I’m just hoping to help people realize that things get so much easier when you stop caring.
It was a mistake I made, so I’m just hoping to help people realize that things get so much easier when you stop caring.
So you’re suggesting apathy in the face of victim-hood?
Surely acceptance contains a certain level of neutral emotion. Apathy might be healthier for them than anger, on a historical situation that they can’t bandage. Perhaps they shouldn’t advise apathy, but I see some people move on from some horrific events in a variety of ways, and some of those ways would be marked as unhealthy by pop psychologists. If apathy works for them, who should argue.
Also: are you suggesting they should look at themselves as a victim? They might be in one sense, but in other senses they might not be.
Also: are you suggesting they should look at themselves as a victim? They might be in one sense, but in other senses they might not be.
Thinking you’re a victim while speculating is only going to make you miserable in the long run.
Did you have $11k in BTC or in cash?
The way the rehabilitation proceedings are going you will either be able to recover ~20% of the cash, or ~20% of the BTC which would be a considerable gain at this point.
The way the rehabilitation proceedings are going you will either be able to recover ~20% of the cash, or ~20% of the BTC which would be a considerable gain at this point.
Creating a public permanent record of having fallen for the latest crypto shitcoin will likely be too embarrassing for some. But then again I'm having trouble relating.
Successful "crypto startups" hardly exist, and most of those are selling shovels to suckers. What was the expectation here?
Successful "crypto startups" hardly exist, and most of those are selling shovels to suckers. What was the expectation here?
Isn't it already "a public permanent record" because it's already in the news?
It's in the news about this company, but it's not in the news that I fell for the scam for example.
A blockchain is already a public permanent record in the first place.
It won’t be once it shuts down. Blockchains are as permanent as the miners that power them.
These were technically coins which were processed as smart contracts in Ethereum. Even if these coins "cease operations" their history will continue to exist in the Ethereum blockchain, forever.
This is incorrect. Terra is a Cosmos chain. Some Luna and UST exists on other chains, but these tokens represent claims to tokens on Terra.
There's no such thing as a blockchain permanent public record. Some entity has to keep that up forever, maintained, public & accessible, for it to be such - that's not going to happen. Nearly all of them will fail and be wiped by time.
And certainly all of them can go away, they're mere digital storage systems. There's nothing permanent about any of it, not by any stretch of the imagination.
They're particularly, almost pathetically, temporary records. Most of these garbage coins will have no comprehensive financial records remaining several decades from now. By contrast, I know a lot of small businesses that have elaborate financial records going back 30-40 years, and the country is surely filled with similar (and most large corporations will have such).
And certainly all of them can go away, they're mere digital storage systems. There's nothing permanent about any of it, not by any stretch of the imagination.
They're particularly, almost pathetically, temporary records. Most of these garbage coins will have no comprehensive financial records remaining several decades from now. By contrast, I know a lot of small businesses that have elaborate financial records going back 30-40 years, and the country is surely filled with similar (and most large corporations will have such).
Time to donate to Internet Archive asking them to preserve final block state of as many chains as possible. Shouldn’t be too expensive, my laptop is a bitcoin node and lets be do all my work, and I guess the smaller chains are smaller in disk and compute and network.
For what it's worth, they are also a YC backed company.
> For what it's worth, they are also a YC backed company
Severely disappointing. I respect PG too much to believe he would knowingly condone this. The partner who did this didn't understand what they were investing in or should be decoupled with haste.
At the very least, the Alaska RMB, U of M Endowment, Bloomberg's family office and SMC should be asking why their capital is backing what should have been clear as day ex ante a fraud. Anyone living in Alaska, going to or an alumni of U of M or Stanford, or working for Bloomberg should be asking the same question.
Severely disappointing. I respect PG too much to believe he would knowingly condone this. The partner who did this didn't understand what they were investing in or should be decoupled with haste.
At the very least, the Alaska RMB, U of M Endowment, Bloomberg's family office and SMC should be asking why their capital is backing what should have been clear as day ex ante a fraud. Anyone living in Alaska, going to or an alumni of U of M or Stanford, or working for Bloomberg should be asking the same question.
What does Paul Graham have to do with any of this? He hasn't been operationally involved with YC for years, lots of them, so far as I know. Also: YC invests in companies that are 2-3 people and a vague idea; that's the whole concept. Why wouldn't YC end up backing a shady cryptocurrency company? I read all of your comments and guess we're on the same page about "crypto" and wish YC was staying the hell away from it --- but if they're going to invest in "crypto" startups, they're going to get their share of companies like this.
If you believe this company is an outright fraud (I don’t have an opinion) “shrug its crypto” is a horrendous defense for the funds backing it.
At a bare minimum they should be doing due diligence for their own investors to prevent losses if not the higher standard of being a good citizen and shutting down the fraud.
We would not think it’s ok for a fund backing pharma startups to give cash to Avon Barksdale…
At a bare minimum they should be doing due diligence for their own investors to prevent losses if not the higher standard of being a good citizen and shutting down the fraud.
We would not think it’s ok for a fund backing pharma startups to give cash to Avon Barksdale…
I think I'm saying that YC by design funds companies at a point where it's too early to reliably determine whether they're an outright fraud. And YC can't shut down anything; they invest relatively little money and take zero control over their portfolio companies. The best they can do is performatively kick companies out of the program, so they can't access Bookface or whatever.
I don’t think public disavowals by early investors are performative. I think that would go a long way to limiting the damage actually.
Fair enough. I mean, it's performative by definition! This company appears dead in the water. But you're right, sometimes the performance itself has value.
Let’s be honest, a VC fund would be backing Marlo, he’s got way more startup energy.
Let’s not even get started with Sama pushing Worldcoin, a pretty exploitative attempt at getting everyone’s irises with a pre-mined currency supposed to revolutionize world finance.
The VC drive to jump into the crypto world was startling to me. People hold varying opinions on various crypto products, but so many of the ones getting investment are making claims that should gather extreme scrutiny from a crowd that should be familiar with finance and returns. "We expect 10%+ returns for a long time"? Folks investing in companies instead of banks should know firsthand that guaranteed market-beating returns are almost definitionally suspect!
Even if you think it's not fraudulent on the part of the founders, the industry is frothy and unproven and fraud-adjacent enough that investing in many companies in the space should appear to be a huge potential reputational risk beyond just losing some invested money. The people putting up the cash should be looking long and hard at this whole story.
And then once you get into the details, the moment you hear about one of the use cases for defi lending leading to these high interest rates being "put up crypto collateral to borrow to buy even more crypto since it's appreciating rapidly"... run!
Even if you think it's not fraudulent on the part of the founders, the industry is frothy and unproven and fraud-adjacent enough that investing in many companies in the space should appear to be a huge potential reputational risk beyond just losing some invested money. The people putting up the cash should be looking long and hard at this whole story.
And then once you get into the details, the moment you hear about one of the use cases for defi lending leading to these high interest rates being "put up crypto collateral to borrow to buy even more crypto since it's appreciating rapidly"... run!
VC has always been about getting in really early and getting out early.
This is their bread and butter.
This is their bread and butter.
The industry terms are: angel and seed investors -> venture capital (A,B,C round) -> private equity. Yeah, there are grey areas. First Google hit says: https://corporatefinanceinstitute.com/resources/careers/jobs...
VC doesn’t want to get out early #386. What drives their decisions is far more complex than your pithy summary.
VC doesn’t want to get out early #386. What drives their decisions is far more complex than your pithy summary.
> VC doesn’t want to get out early #386. What drives their decisions is far more complex than your pithy summary.
Ah, yes, VC's decision making process is too great for us mere mortals to understand. Their motivation and calculus are beyond our ken. Woe to the uninformed laypeople who cannot fathom their singular desire for money and influence. The nuances of 'make more money' justify the great wealth which their discerning judgement deserves. As if a simple understanding of finance and deal making under advisement in most cases and a larger capacity for risk due to having excess wealth makes them any better than the rest of us humans.
Ah, yes, VC's decision making process is too great for us mere mortals to understand. Their motivation and calculus are beyond our ken. Woe to the uninformed laypeople who cannot fathom their singular desire for money and influence. The nuances of 'make more money' justify the great wealth which their discerning judgement deserves. As if a simple understanding of finance and deal making under advisement in most cases and a larger capacity for risk due to having excess wealth makes them any better than the rest of us humans.
You original comment was low quality, and now you are doubling down by being rude. I definitely think your reply breaks site guidelines. I suggest you read the section below the heading Comments https://news.ycombinator.com/newsguidelines.html
I admit my second comment wasn’t much better, sorry.
VCs want to hold on to their successful investments as long as possible, with some limitations depending on the contracts for when LPs expect their money back. VCs obviously do not sellout their successful investment(s) as early as they could, usually they are buying into it and doubling down instead.
In some situations a VC might push to sell early: https://www.investopedia.com/terms/d/drive-bydeal.asp In others, they won’t, as is mentioned in that article. Perhaps if there is a good IRR they might wish to delay marking to market for as long as possible, so they can tell a story on their existing funds based on numbers that are not realistic? It really depends on the particular fund, the VC, the current market, and the specifics of each investment.
Disclaimer: I am an engineer.
I admit my second comment wasn’t much better, sorry.
VCs want to hold on to their successful investments as long as possible, with some limitations depending on the contracts for when LPs expect their money back. VCs obviously do not sellout their successful investment(s) as early as they could, usually they are buying into it and doubling down instead.
In some situations a VC might push to sell early: https://www.investopedia.com/terms/d/drive-bydeal.asp In others, they won’t, as is mentioned in that article. Perhaps if there is a good IRR they might wish to delay marking to market for as long as possible, so they can tell a story on their existing funds based on numbers that are not realistic? It really depends on the particular fund, the VC, the current market, and the specifics of each investment.
Disclaimer: I am an engineer.
> Your original comment was low quality, and now you are doubling down by being rude.
I was not the original commenter with whom you were speaking. I'll admit that my comment could be rude, and for that I'm sorry. The length of the mockery was a bit much, but I don't think it was uncalled for. To assume that venture capital exists without the primary motivation and purpose of making money is misleading at best and delusional more generally. Tangential motivations such as investing for impact or being motivated by other considerations don't change the underlying goal and assumption of the act of venture capital.
> I admit my second comment wasn’t much better, sorry.
Placing venture capitalists within some special class whose reasoning or motivations are beyond the understanding of most people is where I take umbrage. Yes, there are considerations such as the underlying technology, exit strategy and timing, rounds of investing, and risk assumption. The vast majority of the time venture capital is performed under advisement of attorneys, accountants, and consiltants. Venture capitalists perform no special function beyond writing the check, transferring the money, and rarely coaching or dealmaking with founders. However the chief expectation is outsized returns for above average risk in a least a few of the ventures to make up for all of the startups that failed. If the aim was social good, there are very many worthy causes and charities that need that capital. 'Stablegains' is not and was not a charity working for the collective good of society and neither are an alarming number of startups and YC-backed startups these days.
I was not the original commenter with whom you were speaking. I'll admit that my comment could be rude, and for that I'm sorry. The length of the mockery was a bit much, but I don't think it was uncalled for. To assume that venture capital exists without the primary motivation and purpose of making money is misleading at best and delusional more generally. Tangential motivations such as investing for impact or being motivated by other considerations don't change the underlying goal and assumption of the act of venture capital.
> I admit my second comment wasn’t much better, sorry.
Placing venture capitalists within some special class whose reasoning or motivations are beyond the understanding of most people is where I take umbrage. Yes, there are considerations such as the underlying technology, exit strategy and timing, rounds of investing, and risk assumption. The vast majority of the time venture capital is performed under advisement of attorneys, accountants, and consiltants. Venture capitalists perform no special function beyond writing the check, transferring the money, and rarely coaching or dealmaking with founders. However the chief expectation is outsized returns for above average risk in a least a few of the ventures to make up for all of the startups that failed. If the aim was social good, there are very many worthy causes and charities that need that capital. 'Stablegains' is not and was not a charity working for the collective good of society and neither are an alarming number of startups and YC-backed startups these days.
> The length of the mockery
Snarkiness, Mockery, Sarcasm are very strongly discouraged or outright “banned” depending on context. https://news.ycombinator.com/item?id=21187460 https://news.ycombinator.com/item?id=23482110
Your “replies” are not engaging, and it feels like you are mocking me with strawman shit I never said. That is very unpleasant, and nobody likes that. You have read an awful lot into sentences where I am just trying to be factual.
You have no idea what I think about VCs morally, so why are you responding with moral points?
For example: “To assume that venture capital exists without the primary motivation and purpose of making money is misleading at best and delusional more generally”. Who are you arguing against? Who assumes what? And “delusional” is an unpleasant flamebait word.
>> I admit my second comment wasn’t much better, sorry.
> Placing venture capitalists within some special class whose reasoning or motivations are beyond the understanding of most people is where I take umbrage
I mean, where is your reply even connected to what you quoted? Are you just baiting?
The quality of your two comments is extremely low in my opinion. Please, reread the guidelines (I do regularly), and try and learn to follow the unwritten standards the community follows.
Snarkiness, Mockery, Sarcasm are very strongly discouraged or outright “banned” depending on context. https://news.ycombinator.com/item?id=21187460 https://news.ycombinator.com/item?id=23482110
Your “replies” are not engaging, and it feels like you are mocking me with strawman shit I never said. That is very unpleasant, and nobody likes that. You have read an awful lot into sentences where I am just trying to be factual.
You have no idea what I think about VCs morally, so why are you responding with moral points?
For example: “To assume that venture capital exists without the primary motivation and purpose of making money is misleading at best and delusional more generally”. Who are you arguing against? Who assumes what? And “delusional” is an unpleasant flamebait word.
>> I admit my second comment wasn’t much better, sorry.
> Placing venture capitalists within some special class whose reasoning or motivations are beyond the understanding of most people is where I take umbrage
I mean, where is your reply even connected to what you quoted? Are you just baiting?
The quality of your two comments is extremely low in my opinion. Please, reread the guidelines (I do regularly), and try and learn to follow the unwritten standards the community follows.
pg defended YC funding a company making installer adware [0], you shouldn't really be surprised
[0] https://news.ycombinator.com/item?id=5092711
[0] https://news.ycombinator.com/item?id=5092711
VCs promoting this sort of blatant and obvious Ponzi - and there are many VCs getting into ponzinomic crypto enterprises - is a good reason to start making some of the investors more liable.
> is a good reason to start making some of the investors more liable
I'm beginning to agree.
Piercing the corporate veil is reserved for "serious misconduct" [1]. If you're told someone will sell an unlicensed deposit-like product [2], promise depositors (their words) "will not lose [their] funds" [3] and pay a ten or 20% interest rate, and you give them money to do it, you aided and abetted fraud. (At the very least you were grossly negligent with your LPs' money.) You should have to make the people you scammed and hoped to profit off whole.
[1]https://www.law.cornell.edu/wex/piercing_the_corporate_veil
[2] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
[3] https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
[a] Thank you nrmitch https://news.ycombinator.com/item?id=31462617
I'm beginning to agree.
Piercing the corporate veil is reserved for "serious misconduct" [1]. If you're told someone will sell an unlicensed deposit-like product [2], promise depositors (their words) "will not lose [their] funds" [3] and pay a ten or 20% interest rate, and you give them money to do it, you aided and abetted fraud. (At the very least you were grossly negligent with your LPs' money.) You should have to make the people you scammed and hoped to profit off whole.
[1]https://www.law.cornell.edu/wex/piercing_the_corporate_veil
[2] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
[3] https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
[a] Thank you nrmitch https://news.ycombinator.com/item?id=31462617
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Until and such time as there are consequences I wouldn't hold my breath. America is nice if you're rich. It's not so great otherwise.
What should you write exactly?
> What should you write exactly?
The facts.
Copies of marketing you saw, statements showing what you invested and what you were paid, e-mails and other communication from the company and a statement of loss. There are links in this thread where promises were made that turned out to be lies; I would include those as well if you saw them ex ante.
The facts.
Copies of marketing you saw, statements showing what you invested and what you were paid, e-mails and other communication from the company and a statement of loss. There are links in this thread where promises were made that turned out to be lies; I would include those as well if you saw them ex ante.
Here's a sample letter:
Dear government I'm trying to subvert, I complain about the instability of your useful, fiat currency, so I entered into a get rich quick scheme with no intention of reporting gains on my taxes. This obvious scam fell apart. Please punish them with the government system I don't believe in.
Dear government I'm trying to subvert, I complain about the instability of your useful, fiat currency, so I entered into a get rich quick scheme with no intention of reporting gains on my taxes. This obvious scam fell apart. Please punish them with the government system I don't believe in.
Are we blaming victims now? What’s next? It was her fault for wearing those clothes?
I think comparing getting scammed by get rich quick schemes to that is a morally reprehensible comparison.
Gravity in both situations may not be comparable but victim blaming is always reprehensible.
> While we have informed users that there are no absolute guarantees against risks
I'm... uh.... fairly certain this was not the crux of their marketing which severly downplayed the underlying risk. There is also a huge spectrum between "we cannot guarantee that there is 0 risk" (which seems to be what the above sentence is saying), and "there exists a risk that all of your funds disappears in 24 hours".
It seems like there is some serious rewriting of history going on here.
Question though, do the founders here have any potential criminal liability from this whole situation (including apparently lying about what they were doing with their customers funds)?
I'm... uh.... fairly certain this was not the crux of their marketing which severly downplayed the underlying risk. There is also a huge spectrum between "we cannot guarantee that there is 0 risk" (which seems to be what the above sentence is saying), and "there exists a risk that all of your funds disappears in 24 hours".
It seems like there is some serious rewriting of history going on here.
Question though, do the founders here have any potential criminal liability from this whole situation (including apparently lying about what they were doing with their customers funds)?
Further little notes from their documentation that, lets just say, "downplay the risk":
- "You will not lose your funds because all loans are 100% asset-backed." (https://stablegains.zendesk.com/hc/en-us/articles/4402680425...)
- "Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable." (https://stablegains.zendesk.com/hc/en-us/articles/4402687671...)
It's kind of shocking really that these statements are still up give how many of their other docs have been editted in the last 10 days.
---
Edit: u/ushakov is the hero of the hour for archiving those pages (https://archive.ph/O2lZV, https://archive.ph/ItERp)
- "You will not lose your funds because all loans are 100% asset-backed." (https://stablegains.zendesk.com/hc/en-us/articles/4402680425...)
- "Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable." (https://stablegains.zendesk.com/hc/en-us/articles/4402687671...)
It's kind of shocking really that these statements are still up give how many of their other docs have been editted in the last 10 days.
---
Edit: u/ushakov is the hero of the hour for archiving those pages (https://archive.ph/O2lZV, https://archive.ph/ItERp)
>How long do you expect users can earn such high yields?
>The basis for Stablegains' rate is Anchor Protocol's yield. At the time of writing, Anchor yield is set at 18% - 20% APY and expected to remain so for a long time.
>We expect the rates of open finance protocols to beat those of traditional finance for a very long time.
https://stablegains.zendesk.com/hc/en-us/articles/4402680471...
>The basis for Stablegains' rate is Anchor Protocol's yield. At the time of writing, Anchor yield is set at 18% - 20% APY and expected to remain so for a long time.
>We expect the rates of open finance protocols to beat those of traditional finance for a very long time.
https://stablegains.zendesk.com/hc/en-us/articles/4402680471...
Both of those were good to, but I didn't include them because both are either "expectations", or a reference to someone else's expectation/statement, and are not definitive statements.
https://archive.is/Rw891 archived just in case
archived for future reference
https://archive.ph/O2lZV
https://archive.ph/ItERp
https://archive.ph/O2lZV
https://archive.ph/ItERp
[deleted]
The statements are kind of true if treat funds as the UST in your account. While the UST has remained safe, the value of UST hasn't.
“No honey, I did not lose the house in a poker game. I know exactly where it is, the only difference is that Bob owns it now”.
The statement is kind of true if you want to be very disingenuous to what people actually care about.
Also, As far as I know, no one deposited UST with stablegains. Stablegains took funds in other formats and converted it themselves.
The statement is kind of true if you want to be very disingenuous to what people actually care about.
Also, As far as I know, no one deposited UST with stablegains. Stablegains took funds in other formats and converted it themselves.
Wow they need to see prison time for losing investors money saying their main coin was USDC
This was their old marketing:
https://news.ycombinator.com/item?id=31431915
-"15% interest. No surprises."
https://news.ycombinator.com/item?id=31431915
-"15% interest. No surprises."
To be fair, the collapse of an algorithmic stablecoin is no surprise ;)
I can tell you right now that there is absolutely no safe yield in crypto currently that goes beyond 4% on a “safe” stablecoin like USDC. For truly safe (as in, huge value locked, never been hacked), the yield is more like 1.5-2%
All the high yield is in algoponzis or new protocols that carry massive protocol risk
All the high yield is in algoponzis or new protocols that carry massive protocol risk
There is absolutely no safe crypto. Full stop.
There is also no safe stock, right?
(No need to list the differences between stocks and cryptocurrencies.)
(No need to list the differences between stocks and cryptocurrencies.)
Eh, there are CeFi lenders like BlockFi/Gemini offering 7%. It's not zero risk, but the loans are partly collateralized and the borrowers are institutional entities who aren't your everyday scammer. It's better than unsecured corporate bonds in my view.
15% interest? No, surprises!
Thank you! I was looking for that image (which I'd seen before) but couldn't find it.
Will be interesting to hear the argument "Well technically there were no surprises here, because customers should not be surprised when they lose all their money investing in risky assets. Therefore, technically, we did not lie."
Will be interesting to hear the argument "Well technically there were no surprises here, because customers should not be surprised when they lose all their money investing in risky assets. Therefore, technically, we did not lie."
> "15% interest. No surprises."
I’m honestly not surprised about how things turned out.
I’m honestly not surprised about how things turned out.
[deleted]
Was it 15% monthly or 15% annual?
Well 15% monthly woud be ~535% annual and at that point you're well past "highly unlikely" and into "I'm printing money in my 20k sqft basement" territory.
We had a big Ponzi that exploded last month in Argentina (and extended to a few nearby countries). They promised a monthly interest from 7.5% to 20% (and IIRC they has even better offers for special "investors"). For example see https://www.ambito.com/informacion-general/generacion-zoe/le... autotranslation https://www-ambito-com.translate.goog/informacion-general/ge...
[deleted]
[deleted]
Dont rely on any websites & webpages existing like this link.
I can show you links where even the Wayback machine has removed content, most people will know how Google Cache has removed content, so print all copies and have hard copies safely stored away where they cant be destroyed. Houses will be broken into in order to destroy evidence, I know I've had it done to me!
This may be your only chance to out the criminals that run the world!
I can show you links where even the Wayback machine has removed content, most people will know how Google Cache has removed content, so print all copies and have hard copies safely stored away where they cant be destroyed. Houses will be broken into in order to destroy evidence, I know I've had it done to me!
This may be your only chance to out the criminals that run the world!
>Houses will be broken into in order to destroy evidence, I know I've had it done to me!
>This may be your only chance to out the criminals that run the world!
Given that the screenshot is an (instagram?) ad, there's probably such a huge papertrail that can be subpoenaed that you don't have to worry about the founder breaking into your house to destroy the only copy of the marketing materials.
>This may be your only chance to out the criminals that run the world!
Given that the screenshot is an (instagram?) ad, there's probably such a huge papertrail that can be subpoenaed that you don't have to worry about the founder breaking into your house to destroy the only copy of the marketing materials.
Maybe you could store it on the blcokchain…
>Question though, do the founders here have any potential criminal liability from this whole situation (including apparently lying about what they were doing with their customers funds)?
While they're not exactly forthcoming with the risks, their marketing pages[1] were also careful to not make any explicit claims of safety (eg. "your principal is protected", or "you won't lose money"). The most that they claimed were "stable" returns. For good measure there's also a disclaimer mentioning the risks.
>There is a range of safeguards in place to help secure your deposits, however holding and depositing stablecoins with Stablegains and third party lending platforms still carries significant risk. Please carefully read our Terms of Use and Risk disclosures in our Learning Center before making a deposit. Any deposit with Stablegains and third party lending platforms is entirely your responsibility. You understand that your principal is at risk.
[1] https://web.archive.org/web/20220108232821/https://www.stabl...
While they're not exactly forthcoming with the risks, their marketing pages[1] were also careful to not make any explicit claims of safety (eg. "your principal is protected", or "you won't lose money"). The most that they claimed were "stable" returns. For good measure there's also a disclaimer mentioning the risks.
>There is a range of safeguards in place to help secure your deposits, however holding and depositing stablecoins with Stablegains and third party lending platforms still carries significant risk. Please carefully read our Terms of Use and Risk disclosures in our Learning Center before making a deposit. Any deposit with Stablegains and third party lending platforms is entirely your responsibility. You understand that your principal is at risk.
[1] https://web.archive.org/web/20220108232821/https://www.stabl...
> careful to not make any explicit claims of safety (eg. "your principal is protected", or "you won't lose money").
These are both explicit examples of explicit claims of safety that are still up on their documentation (at least as of 5 minutes ago)
- "You will not lose your funds because all loans are 100% asset-backed." (https://stablegains.zendesk.com/hc/en-us/articles/4402680425...)
- "Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable." (https://stablegains.zendesk.com/hc/en-us/articles/4402687671...)
Edit: Updating link to fix truncated urls
These are both explicit examples of explicit claims of safety that are still up on their documentation (at least as of 5 minutes ago)
- "You will not lose your funds because all loans are 100% asset-backed." (https://stablegains.zendesk.com/hc/en-us/articles/4402680425...)
- "Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable." (https://stablegains.zendesk.com/hc/en-us/articles/4402687671...)
Edit: Updating link to fix truncated urls
And now those are gone.
These people need to be in jail. Deleting evidence isn't going to look good in front of the judge.
These people need to be in jail. Deleting evidence isn't going to look good in front of the judge.
In this case it's just sloppy copy pasting (copying the truncated link?) breaking the link. The original links from his other comment still works:
https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
https://stablegains.zendesk.com/hc/en-us/articles/4402687671...
https://stablegains.zendesk.com/hc/en-us/articles/4402680425...
https://stablegains.zendesk.com/hc/en-us/articles/4402687671...
Yupp that was it. I guess that's the better result here.
I updated the the parent comment with the correct urls
I updated the the parent comment with the correct urls
Until they are given notice of a judicial proceedings, they don't have an obligation to retain evidence. (There is an exception that doesn't appear to apply here.)
oh. my. god.
Everyone pour one out for u/ushakov, hero of the hour: https://news.ycombinator.com/item?id=31462674
Everyone pour one out for u/ushakov, hero of the hour: https://news.ycombinator.com/item?id=31462674
Thanks for unearthing this. In light of this, I'll admit it looks pretty bad for them.
The pages are gone... That was too fast.
See my other comment, the links were just improperly pasted, not taken down.
https://news.ycombinator.com/item?id=31462851
https://news.ycombinator.com/item?id=31462851
Written as if no mistakes were made on their end. Paraphrasing:
"We all thought UST and Anchor were a source of stable >10%/yr gains that you could trust for your corporate treasury. That the yield instead turned out to be -99% is quite disappointing, and makes this a natural time for us to bring our service to an end. It's been a pleasure to serve you."
"We all thought UST and Anchor were a source of stable >10%/yr gains that you could trust for your corporate treasury. That the yield instead turned out to be -99% is quite disappointing, and makes this a natural time for us to bring our service to an end. It's been a pleasure to serve you."
Anybody who believes that kind of logic deserves to lose their stake. Crypto has spent most of it's formative years riding an historic bull market and claiming it's immune to market forces. Now we have pretty clear evidence that crypto is just a multiple of the Nasdaq.
In a yield-chasing world, there's always a fair amount of correlation between liquid "assets".
There's also the part of "by the way, if you want any of the crappy UST we bought into using your money, make sure you claim it before the fork on May 27th or before the end of June! Peace out!"
>-99%
You know the scene in Office Space when Peter says, “I have eight bosses, Bob.” And then Tall Bob (Dr Cox) leans forward with a surprised look on his face?
I don’t think I’ve ever empathized with Bob in that scene. Until just now.
You know the scene in Office Space when Peter says, “I have eight bosses, Bob.” And then Tall Bob (Dr Cox) leans forward with a surprised look on his face?
I don’t think I’ve ever empathized with Bob in that scene. Until just now.
May I suggest another Office Space clip for this situation: https://twitter.com/liron/status/1527376821045473304
Even serious crypto people knew that UST was highly unstable lol
How did these guys raise funding? They literally just built a fiat onramp
How did these guys raise funding? They literally just built a fiat onramp
> How did these guys raise funding?
either the investors didn’t do enough research or they were on it
https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-fu...
either the investors didn’t do enough research or they were on it
https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-fu...
This article is spot on to what I saw in the VC space (I won’t name where). Tons of little copycat crypto “companies” taking VC money for tokens which were collateralized with BTC. I know this article is going after a16z but it’s not just them, it was pretty much everyone.
Wow!
Don't you need a board resolution to be able to open any financial accounts, yet alone to invest into risky or leveraged assets?
Unless they were targeting crypto projects/companies that usually don't care about legal stuff.
Don't you need a board resolution to be able to open any financial accounts, yet alone to invest into risky or leveraged assets?
Unless they were targeting crypto projects/companies that usually don't care about legal stuff.
Previous discussion:
YC W22 Stablegains is being sued for losing $42m in funds from 4878 customers https://news.ycombinator.com/item?id=31431224
After I read about this Terra ecosystem, it looks very suspicious: first, you buy UST tokens, investing real money. You are promised a yield up to 20% (suspicious point 1). Then, you deposit your UST so that other people can lend it. But the terms look weird to me (suspicious point 2): first, the loans are "overcollateralized", so, for example, you need to put down equivalent of $100 to get a loan of $70. Second, the interest rate on the loan is ridiculously high - in the range of 30%. Who would take such a loan?
They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don't think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens.
The support page at Stablegains site says [1]:
> They [Digital finance protocols] are more efficient than traditional finance
I can't see how 30% interest rate overcollateralized loans are "more efficient" than traditional bank loans with rates below 10% per year.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
They seemed to have a third kind of token, that you could get as a reward for taking a loan (or depositing UST). But I don't think that by juggling three related tokens around one can generate any value. The only source of money was from people buying any of these tokens.
The support page at Stablegains site says [1]:
> They [Digital finance protocols] are more efficient than traditional finance
I can't see how 30% interest rate overcollateralized loans are "more efficient" than traditional bank loans with rates below 10% per year.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4402680375...
By the way, here is an idea about new type of coin, that I would call "investcoin". Do you see any potential problems with it?
This would be a coin that is backed by stocks. When you buy my investcoin, you can choose any kind of stock from a preapproved list and I will buy them for your money. If you decide to cash out, I will sell stocks of my choice to repay you. The stocks are managed in a public account, so anyone can ensure that the amount of stocks matches the amount of coins. You are guaranteed a share of stocks proportional to amount of coins that you own.
Of course, hard work of thinking out a hypothetical cryptocurrency must be rewarded, so I will take a reasonable fee from every transaction involving buying or selling stocks.
To make things more interesting, we could manage those stocks by voting of coin holders.
Why this is much better than stablecoins:
- first, in contrast to existing stablecoins, anyone can easily check that I hold the amount of stocks matching the amount of coins
- second, unlike existing stablecoins, the value of my investcoin is going to grow as on average stock markets grow over time
- third, the money that you have invested is improving world economy instead of just burning electricity
- fourth, you can use this investcoin as a mean of payment
- fifth, there will be no promises of ridiculous yield. The stocks are meant to back the value of coin, not to be a source of a significant profit.
Looks like a perfect business plan, or am I missing something?
This would be a coin that is backed by stocks. When you buy my investcoin, you can choose any kind of stock from a preapproved list and I will buy them for your money. If you decide to cash out, I will sell stocks of my choice to repay you. The stocks are managed in a public account, so anyone can ensure that the amount of stocks matches the amount of coins. You are guaranteed a share of stocks proportional to amount of coins that you own.
Of course, hard work of thinking out a hypothetical cryptocurrency must be rewarded, so I will take a reasonable fee from every transaction involving buying or selling stocks.
To make things more interesting, we could manage those stocks by voting of coin holders.
Why this is much better than stablecoins:
- first, in contrast to existing stablecoins, anyone can easily check that I hold the amount of stocks matching the amount of coins
- second, unlike existing stablecoins, the value of my investcoin is going to grow as on average stock markets grow over time
- third, the money that you have invested is improving world economy instead of just burning electricity
- fourth, you can use this investcoin as a mean of payment
- fifth, there will be no promises of ridiculous yield. The stocks are meant to back the value of coin, not to be a source of a significant profit.
Looks like a perfect business plan, or am I missing something?
Sounds like an ETF traded on cryptocurrency markets instead of the stock exchange, perhaps you could call it a "CTF" (crypto-traded fund).
Would it be regulated like an ETF or mutual fund? There might even be regulations that make exchanges like Coinbase unwilling to deal with it.
Would it be regulated like an ETF or mutual fund? There might even be regulations that make exchanges like Coinbase unwilling to deal with it.
Two problems stand out to me:
- I have to put centralized trust in you that you don’t take my money and run.
- Regulation risk. The SEC will happily shut you down any day. Other centralized attempts of e-currency where shut down in the past.
- I have to put centralized trust in you that you don’t take my money and run.
- Regulation risk. The SEC will happily shut you down any day. Other centralized attempts of e-currency where shut down in the past.
lol. Even beanie babies were a longer-term investment vehicle than this. I just hope these recent very public and very embarrassing failures are enough to discourage the average person from wasting their money on these scams. I also hope the people behind this get investigated for fraud.
That was funny!
> the average person
So I'm riding the subway in NYC and there are these adds for yet another one of these crypto related "businesses" and copy iirc goes something like 'stop boring us at parties trying to explain crypto. just invest with us blah blah'. Pretty sure the irony is lost on the target demographic.
> the average person
So I'm riding the subway in NYC and there are these adds for yet another one of these crypto related "businesses" and copy iirc goes something like 'stop boring us at parties trying to explain crypto. just invest with us blah blah'. Pretty sure the irony is lost on the target demographic.
If Ty had come out with a Beanie Baby NFT project this whole thing would’ve come full circle. Do you think they’d have taken off or tanked at the height of the NFT Bubble?
How on god’s earth did YC invest in this without seeing through the obvious bullshit?
YC has some blood on its hands here - their investment lent legitimacy to this scam.
YC has some blood on its hands here - their investment lent legitimacy to this scam.
Because obvious bullshit is the investment genre du jour. Why shouldn’t YC, a prominent player, take part in the hot obvious bullshit market?
TerraUSD Price (UST) $0.05468
So, 95% of the value is gone.
Can anyone explain how the fork, airdrop, and other gyrations the Terra/USD promoter is proposing will work, and where any actual money comes from?
So, 95% of the value is gone.
Can anyone explain how the fork, airdrop, and other gyrations the Terra/USD promoter is proposing will work, and where any actual money comes from?
It won't work.
What they are trying to sell, is - community was stronger then only relying on UST.
In one in a million chance, there could be a inflow of money and while users from snapshot wouldn't sell their tokens in an instant. So, basically, an utopia.
Hype is lost, wave is over.
Hype is lost, wave is over.
The money comes from incredibly low IQ and poor people thinking they’ll win the lottery. It’s the same thing over and over. Luna2 is just a scam. Do Kwon is a sociopath.
Much the same way as this scam.
Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin.
Problem is, best they can do is reboot with a Bitcoin-collateralized coin. The whole Terra/Luna/Anchor "algorithmic stablecoin" had been exposed as a fraud or a fantasy, so such smaller fraction of suckers and scammers will buy in to that again, and everyone else might buy in to a Bitcoin backed stablecoin, but there's not much profit in that for Terraform, and the users have no reason to choose it over a more reliably backed coin like Tether or USDC or DAI.
Problem is, best they can do is reboot with a Bitcoin-collateralized coin. The whole Terra/Luna/Anchor "algorithmic stablecoin" had been exposed as a fraud or a fantasy, so such smaller fraction of suckers and scammers will buy in to that again, and everyone else might buy in to a Bitcoin backed stablecoin, but there's not much profit in that for Terraform, and the users have no reason to choose it over a more reliably backed coin like Tether or USDC or DAI.
>Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin.
This is not correct. They used those bitcoins to try to defend the peg. Here you can see the actual treasury: https://datastudio.google.com/u/0/reporting/b31cc9e5-c54c-44...
This is not correct. They used those bitcoins to try to defend the peg. Here you can see the actual treasury: https://datastudio.google.com/u/0/reporting/b31cc9e5-c54c-44...
> This is not correct. They used those bitcoins to try to defend the peg.
My understanding is that its more likely that they were allowing connected insiders to cash out at face value rather than "trying to defend the peg" at the prevailing market rates.
My understanding is that its more likely that they were allowing connected insiders to cash out at face value rather than "trying to defend the peg" at the prevailing market rates.
No public evidence of that as of now, but it could definitely be true. The interesting thing is that it doesn't really matter, those "insiders" would have dumped the coins in the open market breaking the peg even further. So yeah, maybe LFG could have sold the bitcoins a bit better in the open market, but I don't think that it would have made a difference.
There’s no public evidence that they were defending the peg. Statements from these charlatans aren’t evidence and shouldn’t be believed without clear evidence of transactions. And I don’t there is any evidence of the transactions using the missing $3B.
You’re actually defending (alleged) collusion, (alleged) fraud and (alleged) insider trading on the basis that the ship was going to sink anyway?
I'm not defending anything, just pointing out the obvious.
But yeah, I'll be surprised if Do Kwon doesn't end up sitting in front of a judge
But yeah, I'll be surprised if Do Kwon doesn't end up sitting in front of a judge
That seems to be the spirit of most crypto advocates...
> Terraform has $3B (ish, stores as Bitcoin) that they could use to try to buy back faith in their coin.
Had. It's gone.
Had. It's gone.
What happened? Last I heard they transferred it to gemini but people weren't sure whether they actually sold it or not.
LFG only said "a counterparty". https://twitter.com/LFG_org/status/1526126703046582272?ref_s...
They transfered 52,189 BTC between May 7th (When UST dipped to $0.9978, indicating the algo peg was under stress) and the 10th, and another 33,206 when UST hit $0.75. After the insiders were paid off, Terra was free to go to zero.
Presumably we'll only find out what actually happened when Do Kwon is in jail and people start testifying against each other in return for lighter sentences.
They transfered 52,189 BTC between May 7th (When UST dipped to $0.9978, indicating the algo peg was under stress) and the 10th, and another 33,206 when UST hit $0.75. After the insiders were paid off, Terra was free to go to zero.
Presumably we'll only find out what actually happened when Do Kwon is in jail and people start testifying against each other in return for lighter sentences.
$3B of Bitcoin was transferred, no one knows what happened to it, and in the same week, lots of Bitcoin was being sold off. Hmm...
What a great system they devised for using these funds in an emergency. /s
I recommend skimming over the list of blog posts shared over the course of a year about the rise and decline of a crypto startup. It's a great post-mortem: https://medium.com/@kamil.ryszkowski
Maybe the real StableGains were the friends we made along the way?
IMO, every single exchange is at least partially responsible for misleading users. Binance.US and OKCoin specifically marketed UST as a stablecoin that you could earn 20%. Marketing it as a stablecoin is a very clear signal that it has less risk.
Yes, users should inform themselves, but exchanges (as well as companies like Stablegains) need to be held accountable.
Yes, users should inform themselves, but exchanges (as well as companies like Stablegains) need to be held accountable.
Binance.US didn't list UST until fairly recently.
Before then, Binance.US had several other "stable coins", the most popular being Binance USD and Tether. (Binance.US also has a dollar asset which is supposedly FDIC insured.)
Binance.US has trading rules that specify things like minimum and maximum price. The minimum price for Binance USD and Tether is something like $0.0001 (and the maximum price is something like $1000.0). IIRC, all of the other stable coins have similar "bounds".
UST when introduced was different. Its minimum price was $0.70 (and its maximum price was $1.30).
When things went to crap, that minimum price basically froze the market, or rather froze people into their positions. (There were people willing to buy at $0.45, for a while, then $0.17.)
FWIW, Binance.US eventually significantly reduced the minimum.
Before then, Binance.US had several other "stable coins", the most popular being Binance USD and Tether. (Binance.US also has a dollar asset which is supposedly FDIC insured.)
Binance.US has trading rules that specify things like minimum and maximum price. The minimum price for Binance USD and Tether is something like $0.0001 (and the maximum price is something like $1000.0). IIRC, all of the other stable coins have similar "bounds".
UST when introduced was different. Its minimum price was $0.70 (and its maximum price was $1.30).
When things went to crap, that minimum price basically froze the market, or rather froze people into their positions. (There were people willing to buy at $0.45, for a while, then $0.17.)
FWIW, Binance.US eventually significantly reduced the minimum.
people who bet early, made big money. people who came in on the hype lost everything. the definition of pyramid schemes.
Oh well. We'll see, it might bounce back as these things do.
Oh well. We'll see, it might bounce back as these things do.
Oh, by that definition, even AAPL is a pyramid schema.
How about we leave the definition for pyramid scheme where it's already at?
> Pyramid scheme: making money based on recruiting an ever-increasing number of "investors."
> Oh well. We'll see, it might bounce back as these things do.
No, it won't. It won't regain the trust of the community and the project is dead in the water now, no way it'll recover from this.
How about we leave the definition for pyramid scheme where it's already at?
> Pyramid scheme: making money based on recruiting an ever-increasing number of "investors."
> Oh well. We'll see, it might bounce back as these things do.
No, it won't. It won't regain the trust of the community and the project is dead in the water now, no way it'll recover from this.
> Pyramid scheme: making money based on recruiting an ever-increasing number of "investors."
This is correct. While looking into this for a friend I came across: "for a full year, you'll earn 0.5% APY on what each person you refer deposits" [1]. Still not a pyramid scheme, since 0.5% is a small fraction of the total yield paid out, but pyramidesque.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4409440197...
This is correct. While looking into this for a friend I came across: "for a full year, you'll earn 0.5% APY on what each person you refer deposits" [1]. Still not a pyramid scheme, since 0.5% is a small fraction of the total yield paid out, but pyramidesque.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4409440197...
It's not a pyramid, it's an inverted funnel.
AAPL has physical and IP assets which could be sold to make investors whole. While I have big issues with them, they're not in the same ballpark as this 'stable' coin company or pyramid schemes.
>AAPL has physical and IP assets which could be sold to make investors whole
While they might have some "physical and IP assets", there isn't nearly enough to "make investors whole" (ie. pay them back). If you invested $100 in apple earlier this year and AAPL somehow needed to be liquidated, you're only getting a fraction of $100 back.
While they might have some "physical and IP assets", there isn't nearly enough to "make investors whole" (ie. pay them back). If you invested $100 in apple earlier this year and AAPL somehow needed to be liquidated, you're only getting a fraction of $100 back.
The investor valuation vs actual company value is a different ordeal.
In the end, AAPL is building a product, that is wildly popular. Makes a massive profit (and writes it all off, which is another discussion), and spreads its wealth to investors. The products they make produces value in and of themselves. Without the stock, the iPhone, iPad, Macs, cloud services, etc would still be valuable and used.
Crypto does not have anything to back itself. It doesn't produce value in and of itself. If suddenly people stop valuing crypto, there would be zero services it produces, unlike an iPhone. If suddenly the AAPL stock drops to 0, they can expose the code for enabling iphones to work and the tech can continue to be used one way or another for an existing an practical utility.
That's the difference people are missing. Even a company like Figma, who produces purely digital products, figma, without any investment, is a useful digital tool which serves a purpose to people who use it, without any need for others to invest into it. Theoretically it can be converted to a self-hosted service without any updates, an d still be a useful tool. The income model doesn't impact the utility of the digital tool. Not so with crypto.
This is what drives me nuts about crypto enthuseists... they forget the crypto has no value. And even saying "neither does money" but money does serve a practical purpose. It allows for one person selling chickens to convert those chickens to long-term value. And while money is only as valuable as people make it, money is backed by a country's production and reputation, so there is inherent anchoring of money to the world.
In the end, AAPL is building a product, that is wildly popular. Makes a massive profit (and writes it all off, which is another discussion), and spreads its wealth to investors. The products they make produces value in and of themselves. Without the stock, the iPhone, iPad, Macs, cloud services, etc would still be valuable and used.
Crypto does not have anything to back itself. It doesn't produce value in and of itself. If suddenly people stop valuing crypto, there would be zero services it produces, unlike an iPhone. If suddenly the AAPL stock drops to 0, they can expose the code for enabling iphones to work and the tech can continue to be used one way or another for an existing an practical utility.
That's the difference people are missing. Even a company like Figma, who produces purely digital products, figma, without any investment, is a useful digital tool which serves a purpose to people who use it, without any need for others to invest into it. Theoretically it can be converted to a self-hosted service without any updates, an d still be a useful tool. The income model doesn't impact the utility of the digital tool. Not so with crypto.
This is what drives me nuts about crypto enthuseists... they forget the crypto has no value. And even saying "neither does money" but money does serve a practical purpose. It allows for one person selling chickens to convert those chickens to long-term value. And while money is only as valuable as people make it, money is backed by a country's production and reputation, so there is inherent anchoring of money to the world.
So here's the thing, the difference between a pyramid scheme and a business is that in the pyramid scheme, all the wealth gets generated by selling shares to other 'investors', while in a business, all the wealth is generated by selling to customers.
Which is why one's illegal, while the other is publicly traded on the stock market.
Which is why one's illegal, while the other is publicly traded on the stock market.
So the options are to withdraw to USD at 5% value, or transfer the ust to another wallet to qualify for a "potential airdrop" but probably lose the 5% as ust goes to 0?
True, however at this point it’s not really up to StableGains - they are doing the right thing here (regardless of their initial - potentially false - advertising) of allowing you to withdraw your holdings and then be at the mercy of the market directly.
I guess they didn't get the memo about going default alive.
Hey these days we're going default ponzi :)
Seriously!
I know this may be an unpopular opinion on this site in particular, but after seeing this I would never even consider raising money from YC. I would not be comfortable having the fate of my business in any way tied to a group of people that are so fucking dumb that they invested in the money version of a perpetual motion machine.
Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_
I know this may be an unpopular opinion on this site in particular, but after seeing this I would never even consider raising money from YC. I would not be comfortable having the fate of my business in any way tied to a group of people that are so fucking dumb that they invested in the money version of a perpetual motion machine.
Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_
No response from YC on their culpability in grifting regular joe's out of $42m. How many people with little savings got advertised, shilled to, and manipulated by social media to put most of their savings into this and will now be in dire straights? "Making the world a better place."
> Seriously, this is the fucking stupidest thing I’ve seen in _YEARS_
C'mon, let's not forget about NFTs.
C'mon, let's not forget about NFTs.
Wait till you hear about "Soulbound" NFTs.
Oh my God. I had not heard about this. I have no words.
Touché
On the other hand, this is your opportunity to make your own money-version of a perpetual motion machine and get lots of real money as investment.
Quiet! The kool-aid tray is coming round again.
Isn't the point that it can only go around once?
There doesn't seem to be a shortage of newcomers who believe that this time, this flavor will be different
Or as PT Barnum put it...
Or as PT Barnum put it...
[deleted]
UST, a stable coin not even pretending to be backed by the very thing it was pegged to fails. Unlike USDT, USDC or GUSD, there was a documented plan of attack to take UST down 6 months ago, someone just raised enough capitol to execute it.
While there was a proposed attack, there is no evidence it (or any other attack) was executed.
Which would be weird. Attacks on blockchains usually have detailed analysis within days, the blockchains are public and any evidence would be right there for people to examine.
All evidence is that UST simply collapsed on under it's own weight because it's algorithmic nature was never stable. As soon as the price of LUNA started falling, it created a feedback loop which drove the price of LUNA to zero, destroying the very thing backing UST.
Which would be weird. Attacks on blockchains usually have detailed analysis within days, the blockchains are public and any evidence would be right there for people to examine.
All evidence is that UST simply collapsed on under it's own weight because it's algorithmic nature was never stable. As soon as the price of LUNA started falling, it created a feedback loop which drove the price of LUNA to zero, destroying the very thing backing UST.
Yes the attack was a loophole in the algorithm not the blockchain itself.
Yes, but the (alleged) attack on the algorithm would have happened on blockchain, and would have been recorded as transactions in the blocks.
Ironically, some attacks on blockchains themselves (like 51% attacks) are actually harder to analyze, because part of the evidence lives in blocks that were deliberately orphined from the blockchain, and the p2p network doesn't have any incentive to share those blocks. I've analyzed such attacks and you actually have to examine the caches and logs of nodes that were running at the time to find evidence.
Ironically, some attacks on blockchains themselves (like 51% attacks) are actually harder to analyze, because part of the evidence lives in blocks that were deliberately orphined from the blockchain, and the p2p network doesn't have any incentive to share those blocks. I've analyzed such attacks and you actually have to examine the caches and logs of nodes that were running at the time to find evidence.
Can you point to the docs? That seems an interesting read.
Might be referring to https://twitter.com/freddieraynolds/status/14639606234029137...
What's interesting is that Do Kwon(the founder) blatantly insulted the researcher at the time..
don't have the link but google it, it's on twitter
[deleted]
It's pathetic that regulators haven't stopped this nonsense. These scams don't even last 6 months anymore, it's a joke
It's pathetic that the U.S. Federal Reserve and Treasury allowed anyone but the U.S. Government to mint a coin 'tethered' to USD, and named anything remotely similar. It's bizarre and a complete reversal from prior practice.
IMO letting crypto die by itself is the best way to prove it sucks.
If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities.
Just let morons fail.
If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities.
Just let morons fail.
Yep. Too many regulators have been on the trail of Tether and its ilk for too long for any of what's about to come to take them by surprise. Crypto being strangled in the crib by regulators makes them look like exactly the villains all the crypto advocates portray them as. Crypto being detonated by a huge number of blatant Ponzi schemes, on the other hand, is nothing but upside for the regulators.
Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."
Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."
Plenty of countries have currencies which have a fixed exchange with USD, including my own (1 KYD = 1.2 USD).
It just takes a shit-tonne of capital, and it helps to have a functioning internal economy and flexibility to be able to defend against malicious agents.
I suspect there are other legal issues with creating an alternative currency in the us though, which is why these aren't currencies but securities. Which is still fine! A tethered coin is conceptually _similar_ to a 0-yield bond.
Presenting it as being "safe" without it actually being so is the problem here.
It just takes a shit-tonne of capital, and it helps to have a functioning internal economy and flexibility to be able to defend against malicious agents.
I suspect there are other legal issues with creating an alternative currency in the us though, which is why these aren't currencies but securities. Which is still fine! A tethered coin is conceptually _similar_ to a 0-yield bond.
Presenting it as being "safe" without it actually being so is the problem here.
It’s trivial to mint tokens that are on a fixed rate to USD - assuming you are ready to keep the full amount of USD locked up somewhere.
Disaster strikes when someone sees the mountain of money and thinks ”If we invest this money, we get to keep the gains”
Disaster strikes when someone sees the mountain of money and thinks ”If we invest this money, we get to keep the gains”
It's not a theoretical problem, but there's a practical one: Banks themselves loan out the money, so a run on a stablecoin can cause a run on actual banks. And FDIC isn't enough to cover the full amount.
This can be mitigated by using many banks, but it's hard to find banks willing to deal with cryptocurrency. So in practice all the deposits are at 1-2 banks.
A stack of paper USD in a safe would work, but there's risk of theft/fire/etc.
This can be mitigated by using many banks, but it's hard to find banks willing to deal with cryptocurrency. So in practice all the deposits are at 1-2 banks.
A stack of paper USD in a safe would work, but there's risk of theft/fire/etc.
As long as someone pays for cryptocurrency somewhere in the world, you will be able to algorithmically mint a coin tethered to USD or any other asset, and there is absolutely nothing the US Government or anyone else can do to stop it. The Pandora's Box is open.
[deleted]
That’s … what banks and credit card companies do all the time. The only true dollars are physical cash and accounts at the Federal reserve. Everything else is a derivative pegged to those.
Let's be clear: YC needs to quit financing ponzi scams. Or better yet, be punished for it.
Yawn, brand new account, take this virtue signaling back to reddit and give me a break: YC can invest in whatever they want to, it's their money. Stablecoin farming may not be sustainable, but it's not a Ponzi scheme, unless you have no idea how a Ponzi actually works.
The thing is that a Stablecoin is either stable, and provides no returns, or it's volatile, and provides 15% returns. You can't have a stablegain that continually goes up in price, that's not stable then!
Stablegains, by their own admission, only invested in stablecoins: https://stablegains.zendesk.com/hc/en-us/articles/4402687671...
> We do not engage in speculation on the prices of volatile cryptocurrencies like Bitcoin or Ether. We only offer deposits in stablecoins whose value is pegged to one dollar.
> Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable.
This is hypocritical on its face. You can't have any returns if the assets are stable!
Sure, YC can do whatever they want with its money, but we can all be very disappointed and sad that VC funds are engaging with any of this. YC has been slowly been losing their image for years now, along with the other VC firms, and this just cements it for me.
Stablegains, by their own admission, only invested in stablecoins: https://stablegains.zendesk.com/hc/en-us/articles/4402687671...
> We do not engage in speculation on the prices of volatile cryptocurrencies like Bitcoin or Ether. We only offer deposits in stablecoins whose value is pegged to one dollar.
> Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable.
This is hypocritical on its face. You can't have any returns if the assets are stable!
Sure, YC can do whatever they want with its money, but we can all be very disappointed and sad that VC funds are engaging with any of this. YC has been slowly been losing their image for years now, along with the other VC firms, and this just cements it for me.
I completely agree with all of this. Stablecoin farming often uses a "secondary" coin which happens to be volatile (or some form of lending/leverage). The risk is obfuscated, but it's still there. My point was only that calling it a Ponzi is just lazy and wrong.
farming is literally a ponzi
https://m.youtube.com/watch?v=C6nAxiym9oc
https://m.youtube.com/watch?v=C6nAxiym9oc
The shorter the term the harder I would imagine it to be for regulators to act.
Governments tend to do things at their own pace.
Governments tend to do things at their own pace.
> It's pathetic that regulators haven't stopped this nonsense.
As a result of the ICO scams in 2017 for example the infamous Ethereum DAO hack, perhaps that is why at least in the US, the SEC banned unregistered ICOs [0]; more countries to follow.
They have done 'something' about it, but it is not going to 'completely' stop otherwise they would have 'totally' banned all of them, including even registering an ICO with the SEC.
I won't be surprised to see stable-coin regulations this year with only a few of them still surviving.
[0] https://www.whitecase.com/publications/alert/regulation-init...
As a result of the ICO scams in 2017 for example the infamous Ethereum DAO hack, perhaps that is why at least in the US, the SEC banned unregistered ICOs [0]; more countries to follow.
They have done 'something' about it, but it is not going to 'completely' stop otherwise they would have 'totally' banned all of them, including even registering an ICO with the SEC.
I won't be surprised to see stable-coin regulations this year with only a few of them still surviving.
[0] https://www.whitecase.com/publications/alert/regulation-init...
nowadays they don’t even do ICOs
find a VC who’d buy coins at low prices and then dump into public by placing on Coinbase/Binance
spend that VC cash on marketing
find a VC who’d buy coins at low prices and then dump into public by placing on Coinbase/Binance
spend that VC cash on marketing
All crypto is a scam and it's so simple to see, it's astonishing anyone fell for this.
Look.
Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money.
But if someone takes a small cut every time the plastic chips move then that person is guaranteed to win and everyone else together is guaranteed to lose. Now, a game where, without knowing anything about the game you can tell ahead of the time which group wins and which one loses is not a game, it's a scam.
Indeed, one of the best moves for players is not to play the game but to sell their chips -- and praise the game to increase the chance of a greater fool buying in. Those will sit on a greater loss than you did which might not materialize yet but it's certainly in the system.
So, any crypto"currency" with transaction fees is a scam. Those who collect transaction fees are guaranteed to win and the rest are guaranteed to lose.
And no, stocks aren't like this because they produce dividend. And no, gold is not like this either because there are uses of gold which transform your gold into higher value products than raw gold (integrated circuits, jewelry) which sell for real money. Neither can happen with crypto"currencies", there the only interfacing with real money is exchange.
Look.
Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money.
But if someone takes a small cut every time the plastic chips move then that person is guaranteed to win and everyone else together is guaranteed to lose. Now, a game where, without knowing anything about the game you can tell ahead of the time which group wins and which one loses is not a game, it's a scam.
Indeed, one of the best moves for players is not to play the game but to sell their chips -- and praise the game to increase the chance of a greater fool buying in. Those will sit on a greater loss than you did which might not materialize yet but it's certainly in the system.
So, any crypto"currency" with transaction fees is a scam. Those who collect transaction fees are guaranteed to win and the rest are guaranteed to lose.
And no, stocks aren't like this because they produce dividend. And no, gold is not like this either because there are uses of gold which transform your gold into higher value products than raw gold (integrated circuits, jewelry) which sell for real money. Neither can happen with crypto"currencies", there the only interfacing with real money is exchange.
> Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money.
Does this not describe CC fees/taxes/online marketplaces/etc? Or is your argument all those are scams as well?
I agree crypto projects are generally a scam but I fully disagree the reason for that is transaction fees (which I assume is what you're alluding to here as the "small cut").
Does this not describe CC fees/taxes/online marketplaces/etc? Or is your argument all those are scams as well?
I agree crypto projects are generally a scam but I fully disagree the reason for that is transaction fees (which I assume is what you're alluding to here as the "small cut").
>Does this not describe CC fees/taxes/online marketplaces/etc?
No, because CCs exchange dollars and the dollars themselves are not worthless (or, rather are given worth via a nuclear arsenal).
The coins themselves are worthless, but accrue "fees" in fiat (ex. when you exchange USD for UST).
No, because CCs exchange dollars and the dollars themselves are not worthless (or, rather are given worth via a nuclear arsenal).
The coins themselves are worthless, but accrue "fees" in fiat (ex. when you exchange USD for UST).
This is effectively circular reasoning
> The coins themselves are worthless, but accrue "fees" in fiat (ex. when you exchange USD for UST).
But why are the coins worthless? I'm sure your answer would be "because they're a scam" (probably more indirectly, but it would boil down to that point). But your reasoning for why the coins are a scam involves them being worthless.
Also, this isn't even true but the standard definition of worth of something like "what the market is willing to pay for something".
> The coins themselves are worthless, but accrue "fees" in fiat (ex. when you exchange USD for UST).
But why are the coins worthless? I'm sure your answer would be "because they're a scam" (probably more indirectly, but it would boil down to that point). But your reasoning for why the coins are a scam involves them being worthless.
Also, this isn't even true but the standard definition of worth of something like "what the market is willing to pay for something".
>But why are the coins worthless?
The coins are worthless because they have no function outside of speculation.
>But your reasoning for why the coins are a scam involves them being worthless.
The coins are a scam because they are worthless but the conmen in the room are telling you that if you just hodl they will be worth a billion dollars. Just like buying seeds for a money tree is a scam. In other words, the coins themselves have as much utility as seeds for a money tree. Sure the market might be willing to pay for seeds for a money tree; but you and I both know that money trees don't exist and the market participants are paying for something that will be worthless in 10 years.
You are now one of those market participants twisting language because you are 100% convinced that you will begin harvesting benjamins in 10 years once you plant your money tree seeds. Once the tree matures and bears no fruit, will money seeds be a scam, or will it just be that your tree was a "Failed project", but the ecosystem of money tree seeds is 100% legitimate?
The coins are worthless because they have no function outside of speculation.
>But your reasoning for why the coins are a scam involves them being worthless.
The coins are a scam because they are worthless but the conmen in the room are telling you that if you just hodl they will be worth a billion dollars. Just like buying seeds for a money tree is a scam. In other words, the coins themselves have as much utility as seeds for a money tree. Sure the market might be willing to pay for seeds for a money tree; but you and I both know that money trees don't exist and the market participants are paying for something that will be worthless in 10 years.
You are now one of those market participants twisting language because you are 100% convinced that you will begin harvesting benjamins in 10 years once you plant your money tree seeds. Once the tree matures and bears no fruit, will money seeds be a scam, or will it just be that your tree was a "Failed project", but the ecosystem of money tree seeds is 100% legitimate?
> The coins are a scam because they are worthless but the conmen in the room are telling you that if you just hodl they will be worth a billion dollars.
So you agree with me the reason they are a scam has nothing to do with transaction fees??? Maybe you should re-read my initial comment.
> You are now one of those market participants twisting language because you are 100% convinced that you will begin harvesting benjamins in 10 years once you plant your money tree seeds.
I have never, am not currently, and do not plan to hold any cryptocurrency or invest in crypto-related projects. Thanks for projecting this onto me though!
> Once the tree matures and bears no fruit, will money seeds be a scam, or will it just be that your tree was a "Failed project", but the ecosystem of money tree seeds is 100% legitimate?
You really should go re-read my first comment - I never said anything close to this.
So you agree with me the reason they are a scam has nothing to do with transaction fees??? Maybe you should re-read my initial comment.
> You are now one of those market participants twisting language because you are 100% convinced that you will begin harvesting benjamins in 10 years once you plant your money tree seeds.
I have never, am not currently, and do not plan to hold any cryptocurrency or invest in crypto-related projects. Thanks for projecting this onto me though!
> Once the tree matures and bears no fruit, will money seeds be a scam, or will it just be that your tree was a "Failed project", but the ecosystem of money tree seeds is 100% legitimate?
You really should go re-read my first comment - I never said anything close to this.
If you don’t think there is fundamental value in permissionless, uncensorable, peer-to-peer online money transfer that is not controlled by any government or any single entity at all then nothing anyone can say will be able to convince you otherwise.
Notice how what I just described does not match the vast majority of these “crypto” projects. That is because they are not crypto. They do not adhere to the ethos of crypto. They are scams. It’s very simple really. If there’s a company behind it, if there’s an ICO, if there’s a single identifiable leader which can be attacked by governments to bring the project down, then it is a scam.
Unfortunately some time in the mid-2010’s the scammers and grifters of traditional finance moved in and started playing all the same games that got regulated out of existence in the legacy markets. They will likely get regulated out of existence again in the crypto world and people like you will gloat about how it’s the end for crypto. But the real crypto projects, Bitcoin, Monero, etc. will keep chugging along and there is absolutely nothing that can stop them.
Notice how what I just described does not match the vast majority of these “crypto” projects. That is because they are not crypto. They do not adhere to the ethos of crypto. They are scams. It’s very simple really. If there’s a company behind it, if there’s an ICO, if there’s a single identifiable leader which can be attacked by governments to bring the project down, then it is a scam.
Unfortunately some time in the mid-2010’s the scammers and grifters of traditional finance moved in and started playing all the same games that got regulated out of existence in the legacy markets. They will likely get regulated out of existence again in the crypto world and people like you will gloat about how it’s the end for crypto. But the real crypto projects, Bitcoin, Monero, etc. will keep chugging along and there is absolutely nothing that can stop them.
It's not money transfer. It's crypto"currency" transfer. See my comment on this thread elsewhere https://news.ycombinator.com/item?id=31462909
My imaginary investcoin [1] is not a scam though. It is backed by stocks and its value comes from the growth of stock market and from being usable as a decentralized mean of payment.
[1] https://news.ycombinator.com/item?id=31463825
[1] https://news.ycombinator.com/item?id=31463825
Only about 8% of the gold demand is from technology. The rest is used a speculation and for luxury goods which are only valuable because you expect someone to pay an equal amount of money or more than you did.
“Gold has two major shortcomings in that it is neither of much use nor productive. While gold does have some industrial and decorative purpose, the demand for these purposes is limited and unable to absorb the amount of new gold being mined. And if you own an ounce of gold for eternity, you still end up owning an ounce.” - Buffet
https://www.statista.com/statistics/299609/gold-demand-by-in...
“Gold has two major shortcomings in that it is neither of much use nor productive. While gold does have some industrial and decorative purpose, the demand for these purposes is limited and unable to absorb the amount of new gold being mined. And if you own an ounce of gold for eternity, you still end up owning an ounce.” - Buffet
https://www.statista.com/statistics/299609/gold-demand-by-in...
Sounds like you're describing the Visa/Mastercard duopoly that charges high interchange fees to merchants so they can bankroll their own rewards programs.
But what about crypto completely revolutionizing transactions, decentralizing the economy and providing a stable universally accessible data exchange medium? What about tracking the food you buy on the blockchain? What about web3? What about muh NFT monkeys?
What about flying cars and hoverboards? I’m sure those have been pitched to the public too. Making a claim does not make a truth.
Some cryptos do have real-world benefits - https://investmentu.com/santos-crypto/
Crypto is a tool.
Is it often used for scam? Yes. But so is email.
Just like stocks can fall 99% in a day. It stock s cam? No.
The problem is that users dive into it without understanding the risks. Also, there should be (and will be) more regulations around it.
But it is as far from the scam as it gets.
Is it often used for scam? Yes. But so is email.
Just like stocks can fall 99% in a day. It stock s cam? No.
The problem is that users dive into it without understanding the risks. Also, there should be (and will be) more regulations around it.
But it is as far from the scam as it gets.
You’re right, it’s not always a scam. Sometimes it’s just useless.
> The problem is that users dive into it without understanding the risks. Also, there should be (and will be) more regulations around it.
Correct. Only a few cryptocurrency projects will survive and the several meme cryptocurrencies or non-compliant coins will wither away.
This is why some companies waited for regulatory clarity to enter back into the cryptocurrency markets. This is what the absolutist crypto-skeptics or absolutist crypto-maximalists won't tell you.
Correct. Only a few cryptocurrency projects will survive and the several meme cryptocurrencies or non-compliant coins will wither away.
This is why some companies waited for regulatory clarity to enter back into the cryptocurrency markets. This is what the absolutist crypto-skeptics or absolutist crypto-maximalists won't tell you.
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If I buy a share of a company, I own it. Buy enough of it, I can control it. Same can not be said for crypto. If I buy a token of BTC it guarantees me no voting rights, no shareholder rights, no FDIC insurance, no insurance whatsoever. When comparing investment instruments, crypto is the worst of all of them, including timeshares.
Aren't most people pretty powerless when it comes to their investments? I can't think of any investments I've ever owned where I felt I had any power.
A lot of companies will restrict voting rights to the top % of investors. Some may even sit on the board.
Yes, the general public retail stockholder doesn’t have a whole lot of power. I was just making a point about ownership and securities. If you own enough stock in a company, your vote Carrie’s weight.
Downvoted I’m sure by the hodl gang.
Yes, the general public retail stockholder doesn’t have a whole lot of power. I was just making a point about ownership and securities. If you own enough stock in a company, your vote Carrie’s weight.
Downvoted I’m sure by the hodl gang.
> All crypto is a scam and it's so simple to see, it's astonishing anyone fell for this.
No, it is not.
Please try to set aside your hatred for all things crypto and understand that there is actual legitimate value in many of the crypto projects, and that the core proposition, that of decentralized peer to peer value transfer, is a legitimate and useful use case.
No, it is not.
Please try to set aside your hatred for all things crypto and understand that there is actual legitimate value in many of the crypto projects, and that the core proposition, that of decentralized peer to peer value transfer, is a legitimate and useful use case.
> decentralized peer to peer value transfer, is a legitimate and useful use case.
I would contest even this. People don't want to transfer "value" they want to transfer money, now to use, say, Bitcoin to transfer money you need to do the following steps:
1. Buy Bitcoin. Let's presume you are already set up with an exchange for this so all you need to do is transfer your money some way to the exchange.
2. Transfer Bitcoin and pay the transaction fee.
3. The receiver wants money. So let's again presume -- despite this is a much shakier presumption -- they are already set up with an exchange then they need to exchange Bitcoin to real money and transfer their money from the exchange to their bank account. I am not mentioning here if they tarry then the exchange rate in #1 and #3 differs -- that could be automated although as far as I am aware there's no service which currently does it.
Turns out the challenge is not #2 but the bank transfers in #1 and #3: integrating with every national banking system in the world. Wise (nee Transferwise) shows this can be done without Bitcoin, creating transparency and predictable fees.
This does not mention the criminal aspects of Bitcoin, I am focusing just on the transfer aspect.
I would contest even this. People don't want to transfer "value" they want to transfer money, now to use, say, Bitcoin to transfer money you need to do the following steps:
1. Buy Bitcoin. Let's presume you are already set up with an exchange for this so all you need to do is transfer your money some way to the exchange.
2. Transfer Bitcoin and pay the transaction fee.
3. The receiver wants money. So let's again presume -- despite this is a much shakier presumption -- they are already set up with an exchange then they need to exchange Bitcoin to real money and transfer their money from the exchange to their bank account. I am not mentioning here if they tarry then the exchange rate in #1 and #3 differs -- that could be automated although as far as I am aware there's no service which currently does it.
Turns out the challenge is not #2 but the bank transfers in #1 and #3: integrating with every national banking system in the world. Wise (nee Transferwise) shows this can be done without Bitcoin, creating transparency and predictable fees.
This does not mention the criminal aspects of Bitcoin, I am focusing just on the transfer aspect.
When you send money through Wise to Argentina, what exchange rate is used? The bullshit one from the government or the blue dollar?
Can you hire someone working in Venezuela and pay them with Wise?
"Oh, they are underdeveloped countries", you will say. Okay, question: If you were in Greece 5 years ago and you wanted to get your money out, could Wise help you in any way?
Can you hire someone working in Venezuela and pay them with Wise?
"Oh, they are underdeveloped countries", you will say. Okay, question: If you were in Greece 5 years ago and you wanted to get your money out, could Wise help you in any way?
There's no transfer of "value". There's a transfer of a ledger entry saying wallet 0xBA11C0CS has 1 unit of fantasy money. That ledger entry only has value to other people playing the fantasy money game.
Unless someone with vast capital assets is willing to accept units of fantasy money in trade for those assets, it has no real value besides hucksters finding Greater Fools.
Worse than cryptocurrency being fantasy money, it literally wastes an Argentina worth of power (and growing) every year. I doubt the entire global financial industry, including all mainframes, office buildings, corporate jets, and commuting workers uses even one Argentina with of power in a year. And the global financial industry is doing billions upon billions of transactions for trillions upon trillions of dollars.
Unless someone with vast capital assets is willing to accept units of fantasy money in trade for those assets, it has no real value besides hucksters finding Greater Fools.
Worse than cryptocurrency being fantasy money, it literally wastes an Argentina worth of power (and growing) every year. I doubt the entire global financial industry, including all mainframes, office buildings, corporate jets, and commuting workers uses even one Argentina with of power in a year. And the global financial industry is doing billions upon billions of transactions for trillions upon trillions of dollars.
Least corrupt crypto company.
Return is directly correlated to risk, so when a black box corporation is promising 15% returns and marketing itself as a “simple and safe” way for its users to benefit from “advances in financial technology.” It's probably not safe, but it is very simple.
Return is directly correlated to risk, so when a black box corporation is promising 15% returns and marketing itself as a “simple and safe” way for its users to benefit from “advances in financial technology.” It's probably not safe, but it is very simple.
Any crypto or web3 startup contains an ad hoc, informally-specified, bug-ridden, slow implementation of "receive_funds.sh > /dev/null".
Thought you were about to say 'a Ponzi scheme'.
>Return is directly correlated to risk
This is really what should be required as the boldface disclaimer on every investment product.
"10-15 % guaranteed return" has another name...fraud....even in the case of old-school imperial plunder, there is always the risk your target might fight back.
This is really what should be required as the boldface disclaimer on every investment product.
"10-15 % guaranteed return" has another name...fraud....even in the case of old-school imperial plunder, there is always the risk your target might fight back.
>Return is directly correlated to risk
This is at least a weak EMH assumption. It's not a law. In crypto sometimes the opposite is true for short to medium periods of time because uninformed people are afraid of 'too high' returns. Best money is made on market inefficiencies like that.
This is at least a weak EMH assumption. It's not a law. In crypto sometimes the opposite is true for short to medium periods of time because uninformed people are afraid of 'too high' returns. Best money is made on market inefficiencies like that.
When I want bright well read people to invest in my scam, I flatter them that they have much better insight than most people and are destined to be ahead of the curve as a result. /s
Return is directly correlated to risk.
Your comment makes you seem like a very easy mark for the scammers targeting you.
Your comment makes you seem like a very easy mark for the scammers targeting you.
Stablehains sounds like something from a 2am infomercial. I have no idea why people would fall for this garbage.
Why did YC fund this fairly obvious fraud?
FYI, for anyone else withdrawing funds:
I requested an ACH withdrawal at 5pm pacific on 5.23 It was processed 13 hours later at 645am on 5.24 The conversion rate I received was 0.03850612745 If you view the UST value during that window, it was worth almost twice that rate on average: https://coinmarketcap.com/currencies/terrausd/
https://etherscan.io/tx/0x6ae021b3bd9848ade6863820092dcf2844...
Just a warning for anyone expecting to get out with even the value of your UST...
I requested an ACH withdrawal at 5pm pacific on 5.23 It was processed 13 hours later at 645am on 5.24 The conversion rate I received was 0.03850612745 If you view the UST value during that window, it was worth almost twice that rate on average: https://coinmarketcap.com/currencies/terrausd/
https://etherscan.io/tx/0x6ae021b3bd9848ade6863820092dcf2844...
Just a warning for anyone expecting to get out with even the value of your UST...
Obviously I'm a little out of the loop, but what is the "attack" they talk about in the new plan? I thought the coin just death spiraled.
Terra: you can always exchange 1 UST for $1 worth of Luna via this smart contract if you'd like to cash out.
Users: OK, don't mind if I do.
Terra: help we're under attack.
Users: OK, don't mind if I do.
Terra: help we're under attack.
http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-...
These guys discuss some details (that were known as of this publish date). It closely resembles the 'attack' on GBP in the 90's by a billionaire.
These guys discuss some details (that were known as of this publish date). It closely resembles the 'attack' on GBP in the 90's by a billionaire.
The thoughts are that someone borrowed lots of BTC and UST, started selling UST to depeg, then started selling BTC as they tried to regain the peg, the joint selling of BTC lowered the price making it harder, actually impossible,to regain the peg.
But wouldn’t that just be mr market, not a particular someone?
A great related article from last year about the "Inherent fragility of algorithmic stablecoins" it also mentions Terra:
http://www.wakeforestlawreview.com/2021/10/built-to-fail-the...
It's very telling that they say they learned of the depeg event on the 10th of May
It actually started on the 9th of May. So not only did they negligently invest 100% of funds in a single highly risky project while they marketed that they diversified risk, but they were also asleep at the wheel and missed the opportunity to salvage some of the terra before the depeg had gone too far
It actually started on the 9th of May. So not only did they negligently invest 100% of funds in a single highly risky project while they marketed that they diversified risk, but they were also asleep at the wheel and missed the opportunity to salvage some of the terra before the depeg had gone too far
> Stablegains is not accepting any new users or any new deposits on our platform. At this time, please DO NOT use your deposit addresses as any funds sent might not be recoverable.
It boggles my mind that people don't see that the inability to block/reject payments is a fundamental flaw of cryptocurrency.
It boggles my mind that people don't see that the inability to block/reject payments is a fundamental flaw of cryptocurrency.
Why would there be a "fundamental" reason for an inability to block/reject payments in cryptocurrencies? Ethereum smart contract can already do that. Just exit with an error while processing an incoming payment.
You can do that with a smart contract if you plan ahead for the possibility that you want to do so.
Very beautifully, because they have used medium dot com to write their web log, the following text continues to appear at the bottom of the article:
>Stablegains.com — 15% APY savings tool. Take control of your financial future. No hidden fees, no minimum balances, no commitment periods.
>Stablegains.com — 15% APY savings tool. Take control of your financial future. No hidden fees, no minimum balances, no commitment periods.
[deleted]
In related news, tether’s market cap dropped another $1B today. Seems like it has been happening in chunks like this every day. At least according to coinmarketcap.com. Down $10B since the Luna collapse, over 10%. Slowly, slowly, then all at once?
We should normalise signing with the names instead of "Team Stablegain".
[deleted]
Hope there is jail time for investing people’s money into your Anchor protocol ponzi and not telling investors clearly.
I thought there was already a big announcement back towards the middle of the week. (Checks mail spool) OK, Thursday.
"Now, as it becomes apparent that UST is not what we all had hoped it would be..."
But it’s only string…
before they become unstable losses?
not that stable...
This is huge news, isnt it? A YC startup going bankrupt because of the Terra collapse?
Fwiw a lot of YC companies have had large collapses. For example Homejoy which is a lot bigger than this company. It happens. Startups are risky. Not huge news.
Meh YC backs a lot of scams masquerading as businesses. This period of easy money and wealth concentration has fostered much in the way of misallocation of capital. Y-Combinator exists to make its owners money. Their primary concern is bloody Benjamins, not morality and the public interest.
As I've said elsewhere, having dealt with them and seen who they invest in, morality does not seem to be an important aspect of YC investments.
Interestingly, they removed their prominent YC branding very recently after the collapse. Compare:
https://twitter.com/stablegains/status/1523874916206059525
https://web.archive.org/web/20220510035811/https://twitter.c...
https://twitter.com/stablegains/status/1523874916206059525
https://web.archive.org/web/20220510035811/https://twitter.c...
A fraudulent company going bankrupt because the fraud collapsed.
Source on the company being fraudulent?
Source on Terra being a fraud?
Please provide sources for your ad-hominems.
Source on Terra being a fraud?
Please provide sources for your ad-hominems.
> Inspired by the possibilities across DeFi, our aim was to go beyond Anchor and to integrate with multiple protocols so that users could have easy access to multiple tools and allocate their assets across all of them based on their judgment of the benefits, costs, and risks of each option. Unfortunately, we didn’t get there in time.
Their previous marketting said (or at least implied) that they were spread across different defi products to protect against this exact risk.
That is not the same thing as "we planned to get there eventually, but didn't in time". This is borderling to an institution saying "We're FDIC insured!" but actually meaning "We hope to be FDIC insured at some point in the future".
Lying to customers about what you're doing with their investment funds is 100% illegal and literally what Martin Shkreli was in prison for (and that case didn't even end with him losing all of his investors money)
Their previous marketting said (or at least implied) that they were spread across different defi products to protect against this exact risk.
That is not the same thing as "we planned to get there eventually, but didn't in time". This is borderling to an institution saying "We're FDIC insured!" but actually meaning "We hope to be FDIC insured at some point in the future".
Lying to customers about what you're doing with their investment funds is 100% illegal and literally what Martin Shkreli was in prison for (and that case didn't even end with him losing all of his investors money)
Do you have a source for the misleading marketing?
Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using Anchor Protocol, a decentralized lending market."
This is in a giant blue block right above a "get started" link. There is no mention of anything other than Anchor being used to store investor funds.
It seems to me that you are trying to twist the post-crash retrospective into a marketing statement that didn't simply exist before the crash. Where, exactly, is the lie?
[1]: http://web.archive.org/web/20220203225905/https://stablegain...
Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using Anchor Protocol, a decentralized lending market."
This is in a giant blue block right above a "get started" link. There is no mention of anything other than Anchor being used to store investor funds.
It seems to me that you are trying to twist the post-crash retrospective into a marketing statement that didn't simply exist before the crash. Where, exactly, is the lie?
[1]: http://web.archive.org/web/20220203225905/https://stablegain...
From https://stablegains.zendesk.com/hc/en-us/articles/4402687632...
> Our main stablecoin is USDC (USD Coin). For every 1 USDC in supply, $1 USD is kept in reserve.
> The other stablecoins we may use are, UST (Terra USD) and DAI.
> Our main stablecoin is USDC (USD Coin). For every 1 USDC in supply, $1 USD is kept in reserve.
> The other stablecoins we may use are, UST (Terra USD) and DAI.
I'd have a hard time trusting their current documentation which seems to have been heavily edited since this whole incident began, but frankly the subheader on their main landing page is "Stablegains makes it simple to earn high and stable interest from DeFi lending markets." Market(s). Plural. That at least heavily implies in their marketing that they weren't taking all of their users funds and shoving it into a single asset.
They state multiple times, both on their (archived) landing page and documentation, that Anchor is the only protocol in use.
That's a lot more indicative than a mere "s" at the end of a word.
That's a lot more indicative than a mere "s" at the end of a word.
Anybody promising low-risk, high-return investment is a fraud. After all, why would they have to convince you to invest money if they could just do it themselves?
> After all, why would they have to convince you to invest money if they could just do it themselves?
Capital. Taking a 5% cut of billions of dollars is going to be worth a lot more than 20% of whatever tiny amount of capital you are able to muster yourself.
Capital. Taking a 5% cut of billions of dollars is going to be worth a lot more than 20% of whatever tiny amount of capital you are able to muster yourself.
If you're so sure of your low-risk, high-reward strategy, get a bank loan. And then once you make more money, get an even bigger bank loan.
There are ways of getting capital that don't involve the public's money.
There are ways of getting capital that don't involve the public's money.
This works sometimes, but banks don't want to be overexposed (even if something is very low risk).
There's the old saying "If you own the bank $1m, that's your problem, but if you owe the bank $100M, that's the bank's problem".
This kind of stuff happens in other industries (like real estate) all the time. Even with bank financing, you'll need another source of funds (typically LPs) to meet loan requirements.
There's the old saying "If you own the bank $1m, that's your problem, but if you owe the bank $100M, that's the bank's problem".
This kind of stuff happens in other industries (like real estate) all the time. Even with bank financing, you'll need another source of funds (typically LPs) to meet loan requirements.
I’d probably assume somebody looked at “15% interest” as a sales pitch and “losing all of your money” as the actual thing that happened and concluded that it was fraud.
What exactly is fraud by your estimation?
What exactly is fraud by your estimation?
There is intent behind fraud.
The "intent" that is necessary is the intent to benefit from the known misrepresentation, which in this case Stablegains did by obtaining investment from these customers.
It would be ludicrous to suggest that Stabelgains needed to "intend" the end result (ie, "catastrophically fail and lose all of their customers funds") for it to be fraud.
It would be ludicrous to suggest that Stabelgains needed to "intend" the end result (ie, "catastrophically fail and lose all of their customers funds") for it to be fraud.
So if you intend for the con to survive longer than it did you're in the clear? Interesting.
(I upvoted you btw, I don't like to censor).
I'm a maximalist and even I am not that disingenous.
I'm a maximalist and even I am not that disingenous.
> Source on the company being fraudulent?
See [1]. If you sell a deposit-like product by saying "you will not lose your funds," and then lose the funds, you go to jail. (First you lose your money.)
[1] https://news.ycombinator.com/item?id=31462617
See [1]. If you sell a deposit-like product by saying "you will not lose your funds," and then lose the funds, you go to jail. (First you lose your money.)
[1] https://news.ycombinator.com/item?id=31462617
That's not an ad hominem.
The circular relationship between Terra and Luna is really fishy. It's probably not really a scam today, but similarly structured schemes should probably be classified as such and criminalized in the future.
The circular relationship between Terra and Luna is really fishy. It's probably not really a scam today, but similarly structured schemes should probably be classified as such and criminalized in the future.
The best explaination Ive seen (from HN I think) was that the Terra/Luna thing was an attempt to tranche the 'asset'. So Luna (junior tranche) has the risk and potential returns, whereas Terra is supposed to be less risky, less returns (Senior tranche). See MBS, CDO, CDO^2, etc.
And the Crypto Andys were all like "you just don't understand DeFi!" to which the retort is "No, you just don't understand finance".
Finance is the way it is for many reasons. There are thousands of years of lessons that have made the system the way it is. I get the innovator mentality of sweeping away the old but there seems to be a fine line between innovation and ignorance.
I'm just sitting on the sidelines watching people relearn all the lessons of finance the hard way, some because they think they understand finance because because they understand merkle trees and consensus protocols but really most just want to get rich quick.