Have you heard the tale of the inductivist turkey and thanksgiving?

  This turkey found that, on his first morning at the turkey farm, he was fed at 9 a.m. However, being a good inductivist, he did not jump to conclusions. He waited until he had collected a large number of observations of the fact that he was fed at 9 a.m., and he made these observations under a wide variety of circumstances, on Wednesdays and Thursdays, on warm days and cold days, on rainy days and dry days. Each day, he added another observation statement to his list. Finally, his inductivist conscience was satisfied and he carried out an inductive inference to conclude, “I am always fed at 9 a.m.”. Alas, this conclusion was shown to be false in no uncertain manner when, on Christmas eve, instead of being fed, he had his throat cut. An inductive inference with true premises has led to a false conclusion. (via Alan Chalmers, What is this thing called Science, 2nd edition, University of Queensland Press, St. Lucia, 1982)

Have you heard of faster ways of conveying the insight that “turkeys seem safe until the day they get slaughtered” and less toxic ways of formatting quotes?

And was it a fully general argument against induction, or do you disagree with the conclusion you were promoting?

"The reaper didn't come today, so he won't tomorrow"

The thing is, you're right many times until you're wrong. Unfortunately when you're wrong, it can be catastrophic.

... is a pretty good approximation.

The problem is that you don't care if a stablecoin collapses tomorrow; you care if it collapses in the next 50 years and "the stablecoin hasn't collapsed in 50 years so it won't collapse in the next 50 years" obviously doesn't apply.

For technology, that assumption is more likely than not, in a general sense.

https://en.wikipedia.org/wiki/Lindy_effect

Value of an asset doesn't really count as technology though. The technology of UST/Luna still "works" even though the value crashed.

UST was intended to be a dollar-pegged stablecoin. The failure of its dollar peg was certainly a failure of technology, because a "dollar-pegged" coin that is not actually pegged to the dollar is not a "working" system.

Yes, you could say that sometimes past performance can indicate future behavior, but it doesn't hold for crypto the same reason it doesn't hold for perpetual motion machines.

Algorithmic and partially backed stablecoins (like Luna's TerraUSD) are perpetual motion machines.

Fully backed stablecoins (all other popular stablecoins with the arguable exception of Tether) are not perpetual motion machines.

What do you mean “fully backed”? The last time I checked on USDT (which was a while ago) I thought they admitted it was a fractional reserve, primarily denominated in undisclosed commercial paper. Additionally, they had not yet received an unqualified audit report from any of the big four. Has something changed in the last year or so?

As I said, Tether (USDT) is an arguable exception. You seem to be arguing that exception. I don't disagree with you.

Tether is the largest stablecoin in existence. If you are intent on arguing that the biggest example of your mentioned category is an exception, how do you propose the average person goes about find out what's an exception and what's following the norm?

Picking any regulated, US-based stablecoin is a great start.

https://news.ycombinator.com/item?id=31381864

Tether is large because it got a head start on network effect before the proper regulatory frameworks were put into place, in the USA at least. There's a massive amount of momentum there even though their product is inferior.

I’m genuinely curious, can you point me to credible information showing that some other stablecoin is actually fully backed?

USDC backing, audited by a large US accounting firm: https://www.centre.io/usdc-transparency

GUSD backing, also audited by a large US accounting firm, subject to New York State Department of Financial Services regulations: https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-do...

USDP backing, also audited by a large US accounting firm and subject to New York State Department of Financial Services regulations: https://paxos.com/usdp/

DAI backing, viewable transparently on-chain. Currently backed 168% by collateral: https://daistats.com/#/overview

LUSD backing, viewable transparently on-chain. Currently backed 189% by collateral: https://dune.com/dani/Liquity

UST (Terra/Luna) and USDT (Tether) have/had nothing like this.

Cool, thanks a lot! But why is it then that these currencies are not as attractive or hyped as Tether and UST? Could it be that the fact they are properly backed makes them less interesting for those who want a more adventurous kind of investment?

Tether is popular because it was the first stablecoin by several years (e.g. Tether launched in 2014, USDC launched in 2018). Much like Bitcoin, Tether isn't a particularly good product nowadays if you look at its fundamental properties - most of its usefulness comes from its extrinsic properties such as liquidity and demand. However, much like Bitcoin, due to its very early launch, Tether became an early schelling point that has gathered significant liquidity/usage due to network effect (liquidity begets liquidity).

TerraUSD (UST) was hyped up and became popular mainly because the network paid 20% APY interest on UST deposits, which is a way higher rate on a "stablecoin" than you can get anywhere else (rates in much safer protocols are about 5-8% right now). Obviously a 20% interest rate is unsustainable when it's supported by money printed from thin air. But people were either unaware of this (unsophisticated investors), chose to overlook it (calculated risk-takers, RIP), or positioned themselves to be able to find a chair right before the music stopped (institutional investors like Celsius).

Just wanted to thank you again for all the valuable information. It’s certainly food for thought during a couple of coffee breaks!