My Algorithmic Stablecoin Broke. Who Do I Call?

If you ever brave the cryptoverse or find occasion to go spelunking in the "decentralized web" (as MetaMask euphemistically describes a giant, unregulated casino), you'll find yourself dealing in stablecoins pretty much immediately. To the extent the general public knows anything about stablecoins, laypeople tend to think in terms of blockchain tokens pegged to the dollar and backed by USD assets, like short-dated US government paper. Circle's USD Coin (USDC), for example, is fully-backed and a
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4 thoughts on “My Algorithmic Stablecoin Broke. Who Do I Call?

  1. I think it is ultimately healthy for the crypto ecosystem to be stress tested in real time, if something like an algorithmic stable coin is really going to work and deliver on the promise of DeFi we need to know if it can survive an event like Luna suffered. It might be too early to tell but I think Luna’s failure may be existential to its protocol. The fact that Luna Foundation Guard is backing the UST coin with BTC which it had to sell to defend the peg contributed to the overall crypto sell off. This is a necessary step in the evolution of crypto if it is to survive, everything in between is progress.

  2. The pyramid scheme is running out of bag hodlers. I wouldn’t be surprised if this is just the tip of the iceberg. The smart investors staking for high interest rates everywhere will be pulling out their dollars as fast as the platforms allow them.

    The bottom will be in when a major player gets burned and gets called to testify in Congress. Messages unearthed in a criminal investigation will reveal they were praying on the poor and gullible right up to the collapse.

  3. I’m sorry, I got my doctorate 52 years ago and there have been some major changes since them. Keeping up with change is an interesting decision problem. So now there are stablecoins, apparently the “fix” for the volatility of baby bitcoin and its cousins. So help me out here, what the hell is the point of a stablecoin? It is pegged to the dollar (except when it isn’t); earns no return (though my other dollar proxies do throw off earnings); can’t actually be used to buy anything; and is mostly useless. Why would anyone want this junk? My dollars are pegged to useful stuff like bread, wine, Fillet Mignon, cheese, and duck pate in a much more convenient way than a Tether token, in spite of inflation.

    One of my daughter’s favorite books as a baby was about Arthur, the Anteater. Poor Arthur didn’t understand why he was called by what he ate (ants, of course) while other animals had their own identities apart from their food (cow, not grass-eater, etc.). Authur was a questioning creature who was constantly asking his mom to help him understand the seemingly irrational. (There is a plush version of Authur on my desk — kind of a spirit animal). Like Arthur, there are many things I don’t understand, virtual reality, for example — what’s wrong with actual reality? Wasn’t it Plato who wasn’t sure there may not actually be any reality, just ideal versions of it? Me, I just don’t understand the point of any of this non-money “money.” A more useless con game was never conceived. Remember, just by inventing Bitcoin, some clever soul, whose name we don’t actually know, created hundreds of millions in wealth for himself out of thin air and millions fell for it. Got to respect that guy for the ultimate get rich quick scheme. PT Barnum, who said, “Never underestimate the ignorance of the American people,” where were you when we really needed you?

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