Re:We’re discontinuing the Stablegains service
by nikanj on Saturday May 21, 2022 @07:02PM
(#31462954)
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”
Re:We’re discontinuing the Stablegains service
by MichaelBurge on Sunday May 22, 2022 @12:53AM
(#31464983)
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.
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.