[arcticbull]

> The only purpose of this currency is to enrich those who invented it.

As is tradition in crypto. It's kind of implicit.

[edit] I mean, think about this rationally. You're creating a new token, that doesn't have revenue, a business model, or any way of generating income. And yet it is "100% asset backed, and funded by top Silicon Valley investors."

Those investors aren't in it for their health. They don't care about decentralization and trustless whatever. They want to make an ROI.

How can you make an honest ROI if you don't have income?

[pmorici]

I assume these stable coins are making interest off the assets they hold to back the stable coin. Isn’t that the obvious play here?

[rglullis]

Precisely. Provide stability in exchange of absorbing the risks from the underlying assets. It's what every bank could do, even without fractional reserve.

I've had my share of discussions with arcticbull, it's amazing how smart he can be when he wants and how clueless he makes himself to be when it comes to acknowledging the upside of crypto projects.

[arcticbull]

It's always a pleasure though! :) I certainly learn a lot from y'all.

I should say, I freely acknowledge I don't have all the answers - clueless in some cases even, to borrow a turn of phrase. I find crypto fascinating, like many folks, from a technical perspective. I remain unconvinced about it's practical real-world applications.

[rojeee]

To back you up somewhat with a personal anecdote... I've been working in the blockchain World for about 8 years across crypto and enterprise blockchain as an engineer, researcher and more recently a product manager, and and have come to the conclusion that there are not really very many practical applications for crypto or enterprise blockchain.

For crypto, other than censorship resistance - which most people don't actually care about because they are lucky enough not to need it - it doesn't really offer anything useful. Most crypto projects are Rube Goldberg machines whereby the operators of these companies are re-hashing all the same things our ancestors did with money. Of course they are doing well at the moment because it's morphed into a get rich quick scheme. If there was no easy money to be made there would be little interest in it, just like there was back in 2010 when I started looking at Bitcoin.

Enterprise blockchain struggles because there's no actual need for blockchain elements like chains of provenance and smart contracts if the participants are fully identified and already have business relationships. "Blockchain" is a direct substitute for trusted third parties and good legal agreements and should only ever be used in circumstances where all other options are exhausted because the technology comes with so many bad trade-offs. Doesn't scale, very complicated, difficult to manage upgrades and versions, customers find it hard to understand, etc...

[secfirstmd]

What's your view on stuff like Sia and Filecoin? I agree with you about the lack of actual use for stuff like Bitcoin etc but the storage cost aspect of those two is interesting for sure.

[rglullis]

Not the parent, but my view on Filecoin hasn't changed since this: https://news.ycombinator.com/item?id=23015249

Early adopters are maybe going to profit something because of the money they got from the ICO and some VC, but the economics don't add up.

[rglullis]

> I remain unconvinced about it's practical real-world applications.

When your idea of "real-world" is one where all people have access to stable, robust and functional institutions, it's no surprise that you don't see the necessity of alternatives.

Consider it a privilege. And I don't mean it in a derogatory way.

[arcticbull]

Hardly. I just don't see it solving any problems for anyone in a country without robust financial institutions either, certainly not at scale.

[rglullis]

qualifying it with "certainly not at scale" tells me how far from the mark you are.

"Scale" is not the point. Independence and resilience is.

[ac29]

The backing assets appear to be other stablecoins. I wonder what kind of interest they can make that 1) isnt incredibly risky, and 2) is legal in the US where they are based.

[rglullis]

Look at their website, they say clearly that holding stablecoins is just part of the first phase.

[riffraff]

> making interest off the assets

how? Money market funds have negative returns these days.

[pmorici]

Buy US treasuries? Those rates are still positive (0.09% - 1.66%). Since the capital is essentially free even if you get a blended rate of return of say 0.2% that is still real money. As an example USDC has $5.1 billion dollars in outstanding tokens issued that's $10 million a year at 0.2% just to sit on it.

[arcticbull]

Sort of; that has a risk you haven't accounted for: borrowing long-term and lending short-term (or rather, no fixed term). This is the same kind of risk that absolutely savaged WeWork.

For instance, if we take your 0.2% blended rate estimate for what you can get for your capital, that's still a real yield of -1.8% accounting for inflation. Luckily that 2% inflation loss is born by your token holders, not you, however that creates a real incentive to exit the tokens once interest rates rise.

Let's say interest rates rise to 5% due to a financial recovery - back to where they were in 2010. Now, not only have your token holders lost 2% value for each year you've carried the T-bills, you have to discount the notes by 3.375% (vs the current market 1.625%) to liquidate them should your token holders decide to redeem and move into bonds themselves.

To liquidate them you have to pay the difference in coupon rates, so a mark to market loss of $172M. If we take your 0.2% blended rate as an offset, even over a 5 year window, that still represents a net loss of $122M.

Borrowing long and lending short works until it doesn't, then you can ask Mr. Neumann what happens.

[vntok]

> How can you make an honest ROI if you don't have income?

This seems like a very curious view of the world to me. Do you believe that people who buy houses and sell them at a profit 20 years later are dishonest?

[WA]

House price appreciation is a side effect. You can still collect rent. Or have a roof over your head.

[yholio]

You are right, it's just like real estate investment, but using speculative tokens that have no intrinsic value.

It's like you take the housing part out of the housing bubble, and are left with the speculative aspect, the bubble.

[jdc]

At least with cryptocurrency speculation people aren't forced into slums or worse.

[arcticbull]

If you're an institutional investor in real estate, you can use real estate to generate a nice steady income, via rental. People who aren't parking capital or laundering money tend not to invest in houses to keep them empty.

[muratsu]

I think the OP meant speculative. Most jobs create value, some don't. Some people just have a hard time digesting and wrapping their heads around making money without creating actual value.

[pjc50]

It's certainly worth interrogating how a physical asset with real depreciation and maintenance costs goes up in value over time.

[arcticbull]

Indeed - in isolation home price increase tends to match inflation (as in, no real dollar returns). In areas where it goes up, it tends to be due to external influences such as city councils preventing new development.