FaceDeer

Here’s DAI’s peg over time. Over the past year it’s had a high point of $1.0012 and a low of $0.9979, neither extreme lasting more than a brief spike. Seems like a pretty good peg to me. The mechanism by which it maintains its peg is complex, but fully transparent since it happens entirely on-chain.

Here’s LUSD, another similarly algorithmically-pegged stabletoken. It’s smaller than DAI so it’s a bit less stable, it had one spike this year where it went all the way up to $1.029. But the mechanism is much simpler so if you’re having trouble understanding DAI it might be an easier place to start.

No, I am rejecting the notion of stable coins, which are by their own definition literal scams.

By what definition is that?

So basically you only “believe in” off-chain assets? That’s fine, but it kind of removes you from any discussion of the details of blockchains. You’ve rejected their entire premise so why bother?

All you’re saying here is “nuh-uh! I don’t believe you!” Which isn’t particularly useful.

I could dig up the addresses of MakerDAO or Liquity vaults, you could examine them directly using Etherscan and see which tokens back them. But I somehow get the impression that that would be a waste of my time. Is there literally anything that could convince you, before I go running around doing any further work trying?

You can examine the MakerDAO contract, for example, and see all of the assets they claim to have sitting right there under its control on the blockchain. You can see the contract logic behind how those assets enter and exit its control.

They call it proof of stake, but it’s proof of ownership. It’s proving you own coins. That’s it. Edit: I think you thought I was talking about proof of authority?

No, there is a distinction here, and it’s a very important one.

If you’re using proof of ownership then there’s no way of penalizing the owners who are validating the chain if they misbehave. That’s somewhat more like what Bitcoin uses, actually - proof of ownership of mining rigs, in a sense. If a Bitcoin miner 51% attacks the chain then after the attack is done they still have their mining rigs and can continue to attempt to attack it if they want.

With proof of stake, the resource in question - the tokens, in Ethereum’s case - are put up as a stake. Ie, they are placed under the control of the blockchain’s validation system, so if the validator tries pulling some kind of funny business their stake can be slashed. Someone who attacks Ethereum has to burn their stake in the process, which would cost them tens of billions of dollars and prevent them from attempting future attacks.

You can own millions of Ether and that’s meaningless as far as validation goes. It’s only once you put them up as a stake do you get “skin in the game.”

You’re right, it was not designed to support an idea that didn’t exist when it was designed. But upgrades to improve lightning have been proposed and made it into protocol

You were earlier touting Bitcoin’s lack of protocol upgrades as a key feature. Now it’s performing upgrades?

The problem with Bitcoin’s upgrades is that they’ve made “no hard forks” into a religious tenant, so whenever they try to do anything new they have to squish it in as a soft fork somehow built on top of the existing foundations. The existing foundations aren’t well suited to this kind of thing, though, since they were designed 15 years ago. So it makes for some very labored and inefficient design, like in the case with Lightning.

Layer 2s on something like Ethereum, which was designed from the ground up to support them and which continues to add new features making them more efficient and feature-rich, are far easier and cheaper to work with.

I don’t know about Eth’s long-term future as a decentralized platform when centralization continues to increase and a conspiracy, hack, or government pressure on Hetzner and Amazon could impact over half the nodes on the network.

It’s important to call out that nodes in general are not important for validating the chain, it doesn’t matter who’s controlling them. You can run your own node and there’s nothing those other non-validating nodes can do to tamper with your view of the network, the worst they could do is stop sending you updates (which would be obvious and you could then go hunting for replacement feeds).

Indeed, let’s not make that confusion. Like possiblylinux127 did.

Anything of value is capable of losing its value under some circumstances, since value is assigned by humans. Obviously you pick and choose based on your use cases.

Some, maybe. And some fiat currencies are more stable than others too. There are stabletokens that are run using smart contracts where you can see the backing assets on-chain, those ones couldn’t scam you if they tried.

Bitcoin’s protocol has not meaningfully changed in 15 years.

Well, yes, exactly. That’s the problem. There have been innumerable innovations and improvements in the field over those 15 years, but Bitcoin ossified early and so it’s got none of them.

Ethereum is centralized AF. The majority of the supply was sold during the pre-mine, and now that “proof of ownership” runs the network, the risk of a 51% attack is significant.

You’ve got a very inaccurate and skewed view of this. Most significantly, it’s not “proof of ownership,” it’s “proof of stake.” Proof of ownership and proof of stake are distinct technologies that operate in different manners. Ethereum is not proof of ownership.

You’re clearly not very familiar with how Ethereum’s proof of stake system operates because “51% attack” is not meaningful. There’s nothing magical about the 51% threshold in Ethereum’s system of staking. There is a magical threshold at 66%, if you’ve got more than that you can prevent “finality” from happening which will in turn cause some disruption to the chain. But most significantly, it doesn’t prevent blocks from continuing to be processed and doesn’t allow stakers to forge blocks. It’s a highly theoretical attack since no stakers or staking pools are anywhere remotely close to that sort of dominance, and even if they did do that there’d still be mechanisms by which they could be slashed.

Now that Bitcoin lightning is out and mature, transaction speed and chain capacity is no longer the limiting factor.

Lightning has been an entirely predictable disappointment. The problem is that Bitcoin was not designed to support something like Lightning, and that very feature you touted above - Bitcoin’s complete ossification of protocol upgrades 15 years ago - means it can’t be made to support it. Lightning’s total capacity is $300 million. Ironically there’s thirty times more Bitcoin being transacted on the Ethereum network in the form of WBTC than there is Bitcoin being transacted in Lightning.

If you’re interested in layer-2 solutions then Ethereum’s recent updates have been all about providing better support for that kind of thing, using many cryptographic advances that came along in those 15 years. Some of them incorporate Monero-like privacy systems, even, such as Arbitrum.

Some stablecoins are centralized, but it’s not a fundamental requirement of how they operate. Stabletokens such as DAI or Liquity are run without a central company. They cannot “rug” you because they’re based on smart contracts.

They are often poorly regulated or unregulated entirely

Isn’t that kind of the point?

so you have no reason to trust their claims

Smart contract code can be audited by anyone and trusted to run exactly as it’s written.

They are, at best, pegging their value to a currency which is designed to lose 2-3% of its value per year due to inflation

Stablecoins aren’t required to peg to any specific measure of value (I assume you’re referring to US dollars?). There are stabletokens pegged to gold, for example, if you really want something like that.

Since US dollars work just fine for commerce, though, using a stabletoken that’s pegged to US dollars works fine for commerce too.

I frankly wouldn’t recommend Bitcoin either for stability or privacy, IMO it’s fallen by the wayside in terms of the technological development of cryptocurrency. Chains like Monero or Ethereum have privacy-enforcing cryptography built right into them.

There’s an entire category of cryptocurrency designed specifically for the use case you’re asking for, the stablecoins. They are pegged to reference values using a variety of techniques. US Dollars are a common denomination, since it’s already frequently seen as a global reserve currency, but if you really want there are stablecoins pegged to other things as well.

If you want a more specific example, I typically use DAI as a go-to example since it doesn’t depend on third party trust like some of the more commonly-used ones (such as Tether).

Which jurisdiction are you referring to? GNU Taler isn’t specific to any particular country or currency.

Only the correct kinds of privacy are allowed here, after all.

But then someone might misuse the privacy it would provide, potentially doing something that some people would consider wrong!

Taler uses flat currency so you don’t need to worry about it losing value overnight.

There are a number of stabletokens that you also wouldn’t need to worry about losing value overnight.

Ah yes, must keep that war on drugs going, it’s totally worth sacrificing everyones’ privacy to make sure the Devil’s Cabbage is kept off the streets. Reefer Madness is epidemic.

And human trafficking, yes, we can’t have people sending remittances to their families in destitute foreign countries so that they might be able to afford to immigrate too. So many poor foreigners trying to get in!

Or maybe this is actually too complicated an issue to dismiss with a simple “if people have done nothing wrong they have nothing to hide?”

Funny how we’re big into privacy here, and then money comes up and lots of people are “wait no, not that kind of privacy.”

The specific subject that Triton is telling Ariel about is where babies come from.