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[Crypto and NFTs and associated garbage] "Stablecoin." PFFT BWAHAHAHAHA

cloudeaglecloudeagle Registered User regular
Well, as of this writing, crypto's in free-fall. Even the so-called "stablecoins," which were designed to always be worth a dollar each because of... reasons, now aren't.

If you're new here, yes, this crap is extremely confusing, and it seems like the more you learn, the dumber it gets. Here's possibly the best explainer on crypto and the associated NFT stuff. I know, it's long, but it's worth it.

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Posts

  • rahkeesh2000rahkeesh2000 Registered User regular
    The angle that article takes is that this is a specific response to inflation, not the inevitable doom of some stupid fad.

    I think we could see NFTs significantly fade into the background, but crypto itself is just too useful as a cash-alternative for transactions that most governments can't easily regulate. Especially the extra-legal variety.

  • Alistair HuttonAlistair Hutton Dr EdinburghRegistered User regular
    edited May 12
    Turns out the obvious Ponzi scheme was a Ponzi scheme all along.

    EDIT: I'm referencing Terra/Luna

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  • KaputaKaputa Registered User regular
    I was wondering how much the crypto crash is related to the rise in interest rates and/or the tech sector's losses.

  • RMS OceanicRMS Oceanic Registered User regular
    The tech sector losses feel more contributory than anything. Like the appetite for wild speculation is waning.

    maraji
  • cloudeaglecloudeagle Registered User regular
    Kaputa wrote: »
    I was wondering how much the crypto crash is related to the rise in interest rates and/or the tech sector's losses.

    I can't find a reliable link at the moment, but I've been hearing rising interest rates are a huge reason crypto's crashing. When interest rates are low, many traditional forms of investing aren't really attractive at all, and rich doofuses seek out other places to put their money. When interest rates are higher, most rich doofuses realize the traditional forms of investing will produce a decent rate of return, and wacky scams and semi-scams are less attractive.

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  • HevachHevach Registered User regular
    Kaputa wrote: »
    I was wondering how much the crypto crash is related to the rise in interest rates and/or the tech sector's losses.

    Because a growing investor sect is not involved in mining/using coins but trading them inside of exchanges like stocks without the figleaf of a corporate name attached, crypto trends have been loosely mirroring the larger market and tech stocks in particular.

  • Captain InertiaCaptain Inertia Registered User regular
    Turns out the obvious Ponzi scheme was a Ponzi scheme all along.

    EDIT: I'm referencing Terra/Luna

    The Ponzi part wasn’t the Terra/Luna coin part, per se, it was the Anchor Protocol, which was essentially a crypto bank that did personal loans and crypto savings accounts using Luna (backed by TerraUSD), and THAT was a very very obvious Ponzi- they advertised a 19.5% APY return on the “savings” equivalent and actually paid people a spiff of Luna for getting a loan, and the paperwork about “how can we do this” basically said “you, early adopter, will get paid because of all the exponential new fools clients this offer will generate”

    marajieMoanderButtersElldren
  • AegisAegis Not Quite TorontoRegistered User regular
    edited May 12
    So let me get this straight regarding Coinbase:

    If I purchase a standard share in a company, if the exchange/institution in which my stock is held goes bankrupt, I still own the underlying stock that I purchased. However, with Coinbase, they're apparently stating that if I own cryptocurrency through their standard wallet, what I actually own is an IOU to that particular cryptocurrency, and that the underlying "asset" is owned by Coinbase?

    It is fascinating the sheer number of "how is this not a red flag?" that continually creep up surrounding the whole enterprise of cryptocurrency.

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  • HevachHevach Registered User regular
    Aegis wrote: »
    So let me get this straight regarding Coinbase:

    If I purchase a standard share in a company, if the exchange/institution in which my stock is held goes bankrupt, I still own the underlying stock that I purchased. However, with Coinbase, they're apparently stating that if I own cryptocurrency through their standard wallet, what I actually own is an IOU to that particular cryptocurrency, and that the underlying "asset" is owned by Coinbase?

    It is fascinating the sheer number of "how is this not a red flag?" that continually creep up surrounding the whole enterprise of cryptcurrency.

    Basically, yes.

    Further, if the institution holding your stock goes bankrupt and OOPS they don't actually seem to *have* that stock listed in your portfolio for some reason*, they are required by law to have SIPC insurance (similar to FDIC or FCUA, it's deposit insurance for financial institutions) that will cover you.


    *-there are both legitimate and illegitimate reasons this can happen. Illegitimate is that they're doing shadow transactions and not actually buying all the stocks customers think they are, or they started raiding customer holdings to avoid the bankruptcy. Legitimate (but usually still shady) being things like temporary trades in progress that the broker now can't complete due to the bankruptcy, leaving a discrepancy between client portfolios and broker holdings.

    marajiMoridin889
  • MuzzmuzzMuzzmuzz Registered User regular
    The angle that article takes is that this is a specific response to inflation, not the inevitable doom of some stupid fad.

    I think we could see NFTs significantly fade into the background, but crypto itself is just too useful as a cash-alternative for transactions that most governments can't easily regulate. Especially the extra-legal variety.


    Yeah, it would… but no one is using any of them as a currency. Everyone is using them as an investment at the very best, a ponzi scheme most of the time. Even Bitcoin, the most famous cryptocurrency to the general population, isn’t used much to buy anything anymore.

    FencingsaxFiatil
  • eMoandereMoander Registered User regular
    To be overly fair to Coinbase, their CEO said that due to new SEC rules they aren't completely sure about how ownership will be handled in case of bankruptcy, so they put in the 'may be treated' language to the filing since they have to be transparent with potential risks to their customers and shareholders. The fact that they can't say for certain though is definitely damning it itself.

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  • eMoandereMoander Registered User regular
    A newsletter I subscribe to had a decent short article on the TerraLuna thing this morning:
    https://osboncapital.com/fed-actions-and-the-story-of-luna/
    Over the last few days, the TerraLuna ecosystem broke down dramatically, erasing $46 billion in value overnight. Last month Luna was in the top 5 market caps in crypto. For context, 12 years ago, the Lehman Brothers blowup erased $60 billion in market value. This is one of the largest overnight blowups in financial history. The failure of this system was not all that surprising, but the scope and speed are unmatched.

    TerraLuna offered users a guaranteed 19.5% annually to hold(stake) their tokens which attempt to stay at a 1:1 value to the US dollar. 85%+ users started using it just four months ago, so that was enough time to earn roughly 5% or less before the collapse. Forced currency pegs never last, and “guaranteed” rates as high as 19.5% will always be riskier than they lead you to believe. By comparison, junk bonds yield 6.5% currently. Higher yields will always come with higher credit risk. We’ve seen this play out a few times in crypto, including the collapse of the Ohm price in January from $1200+ to $15 today after promoting 4,500% yields. Always be suspicious of any yields higher than 10-12%. Nothing is guaranteed, and all yields are a function of time(duration) and risk.

    In January, TerraLuna raised $1B by selling Luna tokens in a private market sale to investors with a four-year lockup at $30 to help support their 1:1 USD peg should there ever be an issue. The Luna token then fell from $119 to below $1 for a greater than 99% loss. The $1.00 peg fell as low as $0.30 as people scrambled to get out. More than a few people and even a few crypto startups were using this system to store substantial amounts of their savings.

    There still seems to be a lot of misinformation floating around on exactly what triggered the crash, with some mysterious big wallets cashing out and some of the liquidity pool vanishing 'temporarily' due to dev actions behind the scenes. The bolded part above definitely feels like a massive red flag to me though; if I were a scammer looking to cash out in a big way that feels like a great way to do it.

    I am eagerly awaiting the Coffeezilla investigation to try and get some more details!

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  • Captain InertiaCaptain Inertia Registered User regular
    It seems like Luna Foundation Guard was going to use a floating asset as a reserve to buoy their algorithmically-pegged stable coin and that’s just obviously a bad idea

  • Anon the FelonAnon the Felon In bat country.Registered User regular
    Sentences like that make my brain sputter and fizzle. Then I wonder "Who heard even the 'buttered up' version of this and though it was a good idea?"

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  • Captain InertiaCaptain Inertia Registered User regular
    Fwiw I have absolutely no what what I typed means

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  • eMoandereMoander Registered User regular
    Here's an extremely well-aged video from a month ago that I just found that details all the ways that Terra is fragile and could enter a death spiral.

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  • DiannaoChongDiannaoChong Registered User regular
    Aegis wrote: »
    So let me get this straight regarding Coinbase:

    If I purchase a standard share in a company, if the exchange/institution in which my stock is held goes bankrupt, I still own the underlying stock that I purchased. However, with Coinbase, they're apparently stating that if I own cryptocurrency through their standard wallet, what I actually own is an IOU to that particular cryptocurrency, and that the underlying "asset" is owned by Coinbase?

    It is fascinating the sheer number of "how is this not a red flag?" that continually creep up surrounding the whole enterprise of cryptocurrency.

    Think of coinbase like paypal, who does the exact same thing but with real currency. They swear they arent a bank, and thats good enough. It's just that but with crypto.

    (I havent followed up on paypal in years since they were just the worst, but I dont assume they got any better or more regulated in a decade or more.)

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  • CouscousCouscous Registered User regular
    edited May 12
    The official Twitter account of Terra:
    The Terra blockchain was officially halted at a block height of 7603700.

    https://lcd.terra.dev/blocks/latest

    Terra validators have decided to halt the Terra chain to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack.
    I was told this could never happen?

    Couscous on
  • marajimaraji Registered User regular
    edited May 12
    eMoander wrote: »
    Here's an extremely well-aged video from a month ago that I just found that details all the ways that Terra is fragile and could enter a death spiral.

    That was a good watch, but it is still really credulous about the utility and function of this nonsense.
    Couscous wrote: »
    The official Twitter account of Terra:
    The Terra blockchain was officially halted at a block height of 7603700.

    https://lcd.terra.dev/blocks/latest

    Terra validators have decided to halt the Terra chain to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack.
    I was told this could never happen?

    You see, when I said “never” I mea…..

    OH MY GOD WHAT IS THAT OVER THERE??!??

    <sound of running footsteps, door slamming>

    maraji on
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  • Captain InertiaCaptain Inertia Registered User regular
    edited May 12
    That video helped a lot

    And just further cemented how insane it is that such fragile and broken systems are allowed to continue unregulated

    Edit: like here’s my summary-
    “Here are all the ways that this system will inevitably fail, which literally includes ‘Elon Musk tweeted something’ as one of the reasons”
    “But! Here are all the ways the system is set up to safeguard; demand! If people want Luna forever always there’s no problem!”

    Captain Inertia on
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  • cloudeaglecloudeagle Registered User regular
    A whole bunch of die-hard libertarians are suddenly realizing that maybe a few regulations would be okay.

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  • TetraNitroCubaneTetraNitroCubane The Djinnerator At the bottom of a bottleRegistered User regular
    Boy, I wouldn't want to be the one holding the Slurp Juice on this one.

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  • Captain InertiaCaptain Inertia Registered User regular
    edited May 12
    The best part is Luna Foundation Guard was filling a regulatory role here

    Captain Inertia on
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  • ArbitraryDescriptorArbitraryDescriptor Registered User regular
    cloudeagle wrote: »
    A whole bunch of die-hard libertarians are suddenly realizing that maybe a few regulations would be okay.
    "The invisible hand would never pick MY pocket!"

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  • MonwynMonwyn Apathy's a tragedy, and boredom is a crime. A little bit of everything, all of the time.Registered User regular
    Okay, so who got rich?

    Like, these are scams, obviously. Who profits because Luna crashed?

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  • CouscousCouscous Registered User regular
    It is possible enough people just realized that it was worthless and caused a cascade.

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  • ButtersButters A glass of some milks Registered User regular
    Boy, I wouldn't want to be the one holding the Slurp Juice on this one.

    Put that in your crazy helmet and smoke it!

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  • DarklyreDarklyre Registered User regular
    Monwyn wrote: »
    Okay, so who got rich?

    Like, these are scams, obviously. Who profits because Luna crashed?

    The ones who sold right before it crashed.

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  • Stabbity StyleStabbity Style He/Him | Warning: Mothership Reporting Kennewick, WARegistered User regular
    Monwyn wrote: »
    Okay, so who got rich?

    Like, these are scams, obviously. Who profits because Luna crashed?

    Rich people, like always.

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  • TarantioTarantio Registered User regular
    According to Dibbit's post from yesterday in the old thread, the founder, a Mr. Do Kwan, was somehow personally lent the 4 billion Luna that was a "federated reserve" intended to "correct things manually." Right before it crashed. Because that loan was denominated in Luna, he can pay it back for pocket change now that the value has catered, if he even bothers.

    Now, I'm basing this entirely on someone else's post on this forum. I've made no effort to independently confirm any of this.

    But it sounds to me like that "federated reserve" might well have been printed on a literal rug, with a handle labeled "Pull Me."

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  • Captain InertiaCaptain Inertia Registered User regular
    Tarantio wrote: »
    According to Dibbit's post from yesterday in the old thread, the founder, a Mr. Do Kwan, was somehow personally lent the 4 billion Luna that was a "federated reserve" intended to "correct things manually." Right before it crashed. Because that loan was denominated in Luna, he can pay it back for pocket change now that the value has catered, if he even bothers.

    Now, I'm basing this entirely on someone else's post on this forum. I've made no effort to independently confirm any of this.

    But it sounds to me like that "federated reserve" might well have been printed on a literal rug, with a handle labeled "Pull Me."

    If it’s not this, there really isn’t a winner, just people that got out “in time”

  • swaylowswaylow Registered User regular
    Right, and most people will be losers as that much "value" dissappears. The winners already won when the coins were created and they achieived whatever brief marketplace acceptance they had. Every proejct I've seen rewards the creators with outrageous numbers of their created coin as a form of compensation. If the value continues onwards after they cash out, great. If not, they already won. My cryptidiot friends always throw the 'market cap' numbers at me as if that's a sign of the market health and strength whereas I respond that it's a more accurate sign of the danger considering a tiny fraction of that market cap is actually realizable.

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  • DoodmannDoodmann Registered User regular
    Has the tower started collapsing on Tether?
    That's going to be the real death for the older bigger coins like Bitcoin.

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  • AiouaAioua Ora Occidens Ora OptimaRegistered User regular
    Yeah a lot of times it's basically that nobody ever had that money. The billion dollars didn't get stolen, it never existed.

    E.g., i create pumpcoin, hold a few million coins for myself, start spreading out the others through giveaways or whatever means, selling cheap on third rate exchanges. Basically everyone who's holding paid in little to nothing at this point.
    Though whatever luck and manipulation it gets into a major exchange. I use a bit of cash to trade my own coins to myself to inflate the value and make the trade volume look good, this basically just costs me the exchange fees.
    The value starts nominally rising, the early adopters are all holding because they've got the greed. You might get a bit of real cash injected here as the latercomers want to buy in but not many people are selling except for me and my wash sales, so i basically get to set the price.
    So now there's this billion dollar market cap but it's all coins that have never been legitimately sold.
    Eventually, i or enough of the early holders start to cash out at once, suddenly the supply far outstrips the demand, and the price goes back to fractions of a cent.
    "A billion dollars" disappeared but the only profit that was taken was whatever amount i was able to sell as we rode the crash to the floor.

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  • AiouaAioua Ora Occidens Ora OptimaRegistered User regular
    Doodmann wrote: »
    Has the tower started collapsing on Tether?
    That's going to be the real death for the older bigger coins like Bitcoin.

    Apparently it has a whoopsie today and briefly fell to 0.96.
    So that car might be running out of gas, too.

    life's a game that you're bound to lose / like using a hammer to pound in screws
    fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
    that's right we're on a fucked up cruise / God is dead but at least we have booze
    bad things happen, no one knows why / the sun burns out and everyone dies
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  • nexuscrawlernexuscrawler Registered User regular
    swaylow wrote: »
    Right, and most people will be losers as that much "value" dissappears. The winners already won when the coins were created and they achieived whatever brief marketplace acceptance they had. Every proejct I've seen rewards the creators with outrageous numbers of their created coin as a form of compensation. If the value continues onwards after they cash out, great. If not, they already won. My cryptidiot friends always throw the 'market cap' numbers at me as if that's a sign of the market health and strength whereas I respond that it's a more accurate sign of the danger considering a tiny fraction of that market cap is actually realizable.

    If you ask me the people who actually win in such scenarios are the miners scraping fees out of every step of the process.

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  • BurtletoyBurtletoy Registered User regular
    I think tether just writes themselves a new IOU on a sheet of paper whenever something starts to go wrong and calls it good

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  • AegisAegis Not Quite TorontoRegistered User regular
    edited May 12
    I like how that video on Luna spends some time explaining the risk of not enough sources of demand, buy-sell order sheets collapsing, but then also papering over this by effectively pointing to all the other uses that could happen, which...all are other cryptocurrencies or decentralized finance operations within the crypto-ecosystem.

    Which is just highlighting the issue that they've essentially created a technical solution to a social problem, which is to say, they have no ultimate use for these currencies. So of course they keep crashing when the underlying "economic model" runs into a problem of lack of demand for one aspect of it.

    Aegis on
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  • DibbitDibbit Registered User regular
    edited May 12
    Tarantio wrote: »
    According to Dibbit's post from yesterday in the old thread, the founder, a Mr. Do Kwan, was somehow personally lent the 4 billion Luna that was a "federated reserve" intended to "correct things manually." Right before it crashed. Because that loan was denominated in Luna, he can pay it back for pocket change now that the value has catered, if he even bothers.

    Now, I'm basing this entirely on someone else's post on this forum. I've made no effort to independently confirm any of this.

    But it sounds to me like that "federated reserve" might well have been printed on a literal rug, with a handle labeled "Pull Me."

    I'm also not an expert in Luna, and even got my numbers wrong, but it was based on an interpretation of this tweet:

    The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some more context on why and how:

    First, *LFG is not trying to exit its bitcoin position*.

    The goal is to have this capital in the hands of a professional market maker such that:

    1) Buy UST if price < peg
    2) Buy BTC if price >= peg

    thus significantly strengthening the liquidity around UST peg
    (Twitter is Do kwon, inventor and..euhmm..custodian? of a now defunct Terra-Luna ecosystem)


    where the foundation loaned out 1.5 billion in bitcoin to "A professional market maker" (unspecified) combined with posts from DeFi...random peeps, I guess... who claimed to have verified the transfer on the blockchain. (I don't know how to do that)

    There is a large percentage chance that I'm wrong, as there's confusion at the time of writing, and even now, I'm not quite sure how this all works. I totally blame Crypto for this, as we're like 3 ponzi scheme's deep and everyone has a love affair with techno-babble.

    Dibbit on
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