I simultaneously agree that algo stablecoins like UST are very risky and experimental and disagree that USDC and DAI (which is also USDC) are categorically safer. Just different kinds of risks they expose you to.
USDC (and now by proxy DAI) expose you to counterparty risk, censorship risk, classic info asymmetries, classic agency problems and certain regulatory risk (I think both are securities or securities swaps).
UST and RAI present different kinds of risks around game theory, the adequacy of the incentives people are expected to respond to, etc.
RAI is more 'safe' b/c it is collateralized by ETH and governance-minimized, but this adversely affects its scalability--e.g., hard to imagine it getting adopted in meatspace merchant networks.
Both UST and RAI are a similar play from a trust and regulatory perspective though--the idea is to achieve high assurances of censorship resistance, they just do this in different ways.
In theory, either one could be adversely affected if the corresponding governance token were held to be a security. But neither of those governance tokens present classic securities law risks (high possibility of fraud re: backing etc.) the way that USDC and DAI do.
In general, it's good that there are many types of assets available with different kinds of risk. People have different problems to solve and different priorities. It's silly to say any of these assets is inherently safer or riskier in all dimensions than any of the others.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
If you talk to lawyers in the space who are working on SEC defenses for DeFi projects, one of the biggest issues is that internal chats/communications (discoverable by SEC) lapse into talking about the project as if it were any tech start-up instead of a FOSS project
if you talk like you're running a business, there is a high risk that you will be regulated like you're running a business
people like to poke holes in how XRP has been treated vs. how ETH has been treated, but one of the biggest distinctions between them is that Vitalik and others are very disciplined--communicating that they basically research & develop network clients & designs for network clients
Had a chance to review this "Tractatus" by @judge_jowday this morning. . . very interesting.
It appears to be a sort of gnomic, Wittegenstein-style philosophy of cryptolaw, intended to reconcile the two paradigms of "law is law" and "code is law".
There is no 'color commentary' provided on what the 'Tractatus' is supposed to mean or do, who would use it, whether it's meant to be descriptive or prescriptive, etc.
@judge_jowday 's intentions are open to interpretation.
The first few sections (1-3) are pretty boring, and appear to just be setting the stage for how to talk about law. They define law as an enforceable and enforced governance system consisting of rules, rights, duties and canons. (Debatable definitions).
Well, today we got two very different statements on crypto/DeFi/tokens from two SEC commissioners, Hester Pierce and Caroline Crenshaw.
I will probably write something longer about this soon, but for moment what really strikes me--and that I hope everyone in crypto will understand--is that regardless of where they land on the issues, their respective takes are *extremely* well informed.
These two commissioners have, directly as well as through very informed advisors, taken a keen interest in studying DeFi & grappling with the issues it presents.
Simply collateralize or wrap your existing tokens with $NEUR and they will be converted from non-compliant overconfident securities into fully compliant self-hating insecurities.
$NEUR will be airdropped only to U.S. persons.
Some people are asking about other $NEUR features:
--> stagflationary
--> aleatory (1M $NEUR randomly re-distributed every block)
-->negative 100,000% APY (drains all other tokens in your wallet--even your other wallets (thanks to our amazing partnership with @chain_analysis))
a smart gov't wouldn't "regulate devs" but would offer devs who do agree to be regulated certain safe harbors--e.g., 'get this license and we'll keep SEC away from you; otherwise, go take your chances with them'
@stephendpalley his key point is this & one I fully agree with--DeFi lacks both the traditional separation between ownership and control and 'counterparty' risk that most regulatory regimes are premised on
it has other sources of risk, but they are not addressed by those regulations:
@stephendpalley -->game theory risk (the risk that incentives designed into the system are inadequate to produce the desired outcomes)
-->tech implementation risk (the game theory is sound but implemented incorrectly)
*adapt section 13 and section 16, and call it a day--they would give all and only the needed disclosure
*don't regulate the tokens themselves as securities (unless that comes with a special version of secondary rules that works)
*a business developing software a deployed instance of which has native tokens valued at $1B+ must have its "insiders" (execs and token whales) file section 16 insider trading reports regarding that token (like insiders of public companies)
*a 10% plus holder of the token must also file section 16 reports
*any 5%+ holder (even if not in the biz of developing the software) must file section 13 reports
no financials, no CD&A, no executive comp disclosures, etc.--none of these things matter