[IAmEveryone]

I don't quite understand how these traders are "making matters worse" by using the defining characteristic of a "stablecoin". If anything is making matters worse, it would seem to be the "reaction" of halting the redemption process.

[sp332]

Yes, normally buying DEI would help drive demand and thus price back upward. The article mentions that arbitrage bots do this all the time and it helps maintain the peg. It's only a problem when it's too difficult to mint new DEI (putting collateral into the system).

[pas]

could you explain this in a bit more detail? why it's difficult to mint new DEI, or why it's difficult to put collateral into the system?

is the incentive that "currently it trades below 1.0, so I buy it, then redeem it for 1.0" which should drive the price up, right?

where does the money come from to finance this arbitrage? is there a redemption pool that shrinks every time someone executes this cycle?

[jbverschoor]

The same way we can do by organizing bank runs.

They’re illegal, but in reality the system is just broken

[logifail]

> The same way we can do by organizing bank runs. They’re illegal [..]

Source?

Imagine we're all back in early September 2008, and one of us were to post that Lehman Brothers was suffering unprecedented losses due to the subprime mortgage crisis.

Would you count that as organizing a bank run?

> in reality the system is just broken

Indeed. Yet another system which only reveals just how broken it is when you apply enough pressure.

[salawat]

Modern finance would argue it isn't broken and is working as designed. You're running perilously close to an Austrian school of thinking about currency for daring to suggest that everyone should in theory be able to get their money out at the same time!

Think of all the businesses you'd hamstring! All of the exec bonuses that wouldn't happen! Think of the traders, and speculators!

...I'll admit I do, and the ensuing chaos and having to come to terms and actually having to adjust the the economic vote of no confidence is a favorite pass time of mine.

[logifail]

> You're running perilously close to an Austrian school of thinking about currency for daring to suggest that everyone should in theory be able to get their money out at the same time!

With the amount of financial stimulus that governments have done in the last two years, in the event of a bank run there are possibly finance ministers who would simply print the required money and drop it from helicopters on the mobs waiting outside the banks.

[jbverschoor]

https://www.recht.nl/44735/oproep-tot-bank-run-strafbaar

4 years of jail

[logifail]

I'm sorry I don't think I can access that content.

Is it along the lines of jurisdictions that have laws on the books to try to prevent rumor or malicious speech from causing runs on the banking system?

What if you're telling the truth when you say a bank (or some other financial institution or vehicle) is bankrupt and that investors should withdraw their money?

A bit like shouting fire in a crowded theatre, when the theatre actually is on fire... not a crime, more of a public duty.

[Tenoke]

Presumably because it would be more likely to stabilize if they didn't take advantage but it's designed so they would so one can't really complain about that.