A fun theory from someone who has experimented more with DeFi than me ("Not the sort of #$*(#% crazy I need in my life"): a "flight to quality" in stablecoins would cause multiple stablecoins to break pegs to the upside, resulting in loans of them being undercollateralized.
This would cause automatic, substantially instantaneous liquidation of the collateral for the loans.
"Can you diagram this out for me?"
Suppose I am hodling Bitcoin. I would like even more Bitcoin exposure. I use various DeFi protocols to pledge my Bitcoin in return for a loan of USDC, the Coinbase-backed stablecoin, at some interest rate. I use the USDC to buy more Bitcoin.
Whether my loan is well-collateralized depends, and implementation of this is different for different protocols, on the relationship of the price of Bitcoin and USDC.
Now, suppose there is a run on Tethers, which I have not touched at all.
If the market thinks Tethers are less valuable than the face value of $1, they may be willing to trade more than one Tether to buy USDC. They might even be willing to pay a premium to the value of USDC (also $1) to get out while the getting is good.
If the value of USDC gets to, say, $1.20 as the much larger supply of Tethers pushes into the more limited supply of USDC, before people start realizing this and creating more supply, my BTC/USDC loan is now undercollateralized.
The protocol will default me and seize collateral.
Depending on the protocol it may then attempt to sell pledged Bitcoin for USDC to make good on promises to the original lender of the USDC.
"But isn't it a bad time to be buying USDC, which is trading above the peg."
Yeah what didn't you understand about Code Is The Only Law.
Cryptocurrency, as always, attempting to speedrun every crisis that traditional finance has ever had.
This one, though, this would (if it comes to pass) be such an elegant, beautiful bomb that I'm sort of in awe the system is robust enough to cause it to happen.
It's like someone just won a game of Nomic and the prize is billions of dollars of paper wealth evaporating.
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Bitfinex/Tether, who are one operation, are by far the largest customer of Deltec, and when their chief counsel was asked whether they are investors in the bank, they demurred with respect to Tether's investments specifically.
Bitfinex/Tether's last banking relationship was with a firm called Noble Markets. Noble's board had compliance concerns and was worried their custodian would terminate services if thy banked Tether.
Bitfinex lead round; got banked; used Noble like skin suit. No longer exists.
You could either do some sort of crowdsourcing or just say “Look, there’s a finite number of hospitals in San Francisco and they all have a phone number. I’m going to call them all at 9 AM and publish which ones say ‘Yes we could give a walk-in 65 year old a shot.’”
You can wait until the city of San Francisco holds a hearing to determine whether the committee in charge of transparency has... or you could implement this by 10 AM PST tomorrow.
This is a useful question, and the answer is that some people will *specialize* in being creators. They will be much, much, much better at it than the median creator. They will get most subscriptions.
Some people will *choose not to specialize* because e.g. better options.
Indeed, one of the risks for creator economy platforms is that you get "too good" at making creators successful, such that they can take the new indicia of market demand for their offering to places which have much more distribution muscle than you do.
That's not a new risk in publishing, incidentally; more traditional publishers have many, many decades of experience dealing with it. Some of their countermeasures are basically unconscionable and I'm glad the creator economy mostly doesn't go in for them.
As you’d expect for a book designed to argue for a change in standard practices in the cooridors of power, much of it is aimed at decisionmakers for whom these sort of things are novel insights, rather than something they’ve read since middle school on BBSes.
It's interesting how often cryptocurrency community says "You know what is hard? Moving money between financial institutions." and says "Ah, potential solution: let's all use the same financial institution."
Which has a lot to recommend it! Other than the centralization thing.
This is part of the sales pitch for Silvergate Bank ("Need to square up with a contra based in the US? Can't wait for a blockchain? Use our API! 24/7 access and about as fast as SQL, with no worldwide TPS limit") and for Tether / Deltec Bank.
I'm not being unfair here; that's what Tether says in interviews.
The easiest way to get Tether redemptions, and the reason they're available on weekends, is if you're serious about using Tether you get an account at the one bank in the world that did not run screaming.
It's always a bit of whiplash from me when I code switch between the speed at which replies/decisions/etc happen from senior people in high-performance institutions and the speed at which acknowledgements happen from other institutions.
T+6 weeks: We have received your application. We will tell you whether it was well-formatted within 12-18 weeks, depending on our processing backlog.
versus:
T+2 minutes: "Yes lets do it. CC: Alice and Bob, you're DRIs for this, make it happen."
"Patrick why do you keep throwing the government under the bus."
Oh believe me there are some for-profit firms I can name where 6 weeks would be a land speed record for them responding to me, including ones where I should be an obviously incentive-compatible client.