No. The part I was objecting to was: " gives an unsecured, zero-interest loan to a company with unknown credit worthiness." That’s the part that’s incorrect. Some stabletokens don’t involve a company at all, it’s entirely on-chain controlled by smart contracts.
How is the smart contract updated with the current market prices?
The one I’m most familiar with is DAI, which is maintained by the MakerDAO smart contract. MakerDAO uses a collection of price oracles to determine prices, which are in turn managed by people who own governance tokens (MKR) for the MakerDAO smart contract itself. They vote on which oracles are used, and on other economic parameters used by MakerDAO to keep its peg table. If MKR holders do a good job then MKR tokens appreciate in value, “rewarding” them. If they do a poor job then MKR tokens lose value.
This is complicated, but it’s a necessary complication to ensure that MakerDAO can function in a decentralized and trustworthy fashion. There are a number of pages out there that go into more detail, this one seems pretty good at a glance.
I had hoped that my question would make you realize that a debt is not a separate currency.
Well, I’m not sure what you mean here. Tokens that represent a debt can certainly be used as a currency if everyone involved considers the debt to be sound and trusts that it will be repaid.
That’s the part that’s incorrect. Some stabletokens don’t involve a company at all, it’s entirely on-chain controlled by smart contracts.
I’m not sure I get the point. Company is a broad term. I don’t see how MakerDAO is not a company. So what kind of legal entity is MakerDAO, exactly? (I know next to nothing about the relevant laws here.)
The one I’m most familiar with is DAI, which is maintained by the MakerDAO smart contract. MakerDAO uses a collection of price oracles to determine prices, which are in turn managed by people who own governance tokens (MKR) for the MakerDAO smart contract itself. They vote on which oracles are used, and on other economic parameters used by MakerDAO to keep its peg table. If MKR holders do a good job then MKR tokens appreciate in value, “rewarding” them. If they do a poor job then MKR tokens lose value.
Okay, so it works like a stock company, except that share owners take a more immediate role in running the company than usual. They vote on the valuation of the collateral. That part makes sense; in isolation, anyway. There are some things which are obviously worrying, but I’ll have to punt, for now.
Tokens that represent a debt can certainly be used as a currency if everyone involved considers the debt to be sound and trusts that it will be repaid.
Yes, we mostly use debt as a currency. If your checking account is denominated in USD or EUR, then you are still using USD or EUR as currency. Using crypto-tokens is simply a technologically vastly inferior way of tracking debts, not a new currency. The apparent fraud is the only way this makes economic sense.
I’m not sure I get the point. Company is a broad term. I don’t see how MakerDAO is not a company.
Company is actually not a broad term, it’s a legal term with a specific meaning. MakerDAO is not a company, it’s a smart contract. If you want to use terms that loosely it’s going to be difficult talking about this stuff.
Using crypto-tokens is simply a technologically vastly inferior way of tracking debts, not a new currency.
But ultimately that’s the thing that you’re arguing here, so you can’t simply state it as a premise. That’s the classic meaning of begging the question.
The apparent fraud is the only way this makes economic sense.
That came out of nowhere, this is the first time an accusation of fraud has shown up in this discussion. What fraud?
Company is actually not a broad term, it’s a legal term with a specific meaning.
In what jurisdiction and what does it mean?
MakerDAO is not a company, it’s a smart contract.
Well, what kind of legal entity is it?
But ultimately that’s the thing that you’re arguing here, so you can’t simply state it as a premise. That’s the classic meaning of begging the question.
I’m sorry. I thought this was a well known fact. I don’t know what I should assume about your background knowledge. You don’t seem to want to be perceived as having none.
I don’t believe this is anything I have argued for here. I have mentioned certain facts, mainly about the economics. It’s perhaps best to stick to the matter at hand. But if you have questions, I will answer, of course.
That came out of nowhere, this is the first time an accusation of fraud has shown up in this discussion. What fraud?
Again, I’m sorry. I thought it was clear that I was referring to Tether. I see that one could think I was meaning MakerDAO, but I really don’t understand it well enough to say.
No. The part I was objecting to was: " gives an unsecured, zero-interest loan to a company with unknown credit worthiness." That’s the part that’s incorrect. Some stabletokens don’t involve a company at all, it’s entirely on-chain controlled by smart contracts.
The one I’m most familiar with is DAI, which is maintained by the MakerDAO smart contract. MakerDAO uses a collection of price oracles to determine prices, which are in turn managed by people who own governance tokens (MKR) for the MakerDAO smart contract itself. They vote on which oracles are used, and on other economic parameters used by MakerDAO to keep its peg table. If MKR holders do a good job then MKR tokens appreciate in value, “rewarding” them. If they do a poor job then MKR tokens lose value.
This is complicated, but it’s a necessary complication to ensure that MakerDAO can function in a decentralized and trustworthy fashion. There are a number of pages out there that go into more detail, this one seems pretty good at a glance.
Well, I’m not sure what you mean here. Tokens that represent a debt can certainly be used as a currency if everyone involved considers the debt to be sound and trusts that it will be repaid.
I’m not sure I get the point. Company is a broad term. I don’t see how MakerDAO is not a company. So what kind of legal entity is MakerDAO, exactly? (I know next to nothing about the relevant laws here.)
Okay, so it works like a stock company, except that share owners take a more immediate role in running the company than usual. They vote on the valuation of the collateral. That part makes sense; in isolation, anyway. There are some things which are obviously worrying, but I’ll have to punt, for now.
Yes, we mostly use debt as a currency. If your checking account is denominated in USD or EUR, then you are still using USD or EUR as currency. Using crypto-tokens is simply a technologically vastly inferior way of tracking debts, not a new currency. The apparent fraud is the only way this makes economic sense.
Company is actually not a broad term, it’s a legal term with a specific meaning. MakerDAO is not a company, it’s a smart contract. If you want to use terms that loosely it’s going to be difficult talking about this stuff.
But ultimately that’s the thing that you’re arguing here, so you can’t simply state it as a premise. That’s the classic meaning of begging the question.
That came out of nowhere, this is the first time an accusation of fraud has shown up in this discussion. What fraud?
In what jurisdiction and what does it mean?
Well, what kind of legal entity is it?
I’m sorry. I thought this was a well known fact. I don’t know what I should assume about your background knowledge. You don’t seem to want to be perceived as having none.
I don’t believe this is anything I have argued for here. I have mentioned certain facts, mainly about the economics. It’s perhaps best to stick to the matter at hand. But if you have questions, I will answer, of course.
Again, I’m sorry. I thought it was clear that I was referring to Tether. I see that one could think I was meaning MakerDAO, but I really don’t understand it well enough to say.