260 sats \ 0 replies \ @kr OP 3 Aug

This post explains exactly what Stablesats is and how it works.

142 sats \ 3 replies \ @om 3 Aug

The wallet pledges the user’s bitcoin as collateral to a centralized exchange –– OKX in Galoy’s case –– to purchase these derivatives contracts, which are used to hedge the BTC backboning the dollar account in the wallet.

There is nothing that could go wrong with using a centralized exchange /s

100 sats \ 2 replies \ @nb 3 Aug

yup. it's the same if you hold USD in a bank account or even a stablecoin. there is a counterparty risk.

27 sats \ 1 replies \ @om 3 Aug

Not the same at all, there are drastic differences in risk.

You hold USD in a bank account. The bank goes bankrupt. The government's insurance makes you whole. Admittedly that's not completely bulletproof as the government can also go bankrupt or even attack your account as Cyprus did.

Now you hold USD in your custodial Galoy wallet. The custodians can run away. Your USD is actually some derivative contraption which can depeg (can't it?). The exchange can get bankrupt (many already did!) and then the government will say that only your normal USD positions were insured (of which you have none), your derivative thingy wasn't insured. You can try to hedge by using multiple exchanges, but all of them experience "liquidity pressures" at the same time and so can all go bankrupt together. The bank used by the exchange to keep USD can go bankrupt too and I don't think companies are insured like physical persons.

441 sats \ 0 replies \ @nb 3 Aug

The government's insurance makes you whole.

"check your financial privileges" as Gladstein would put it. First I guess those insurances are only in the US, for some amount. and to some extend Europe on lower amount.

The type of product develop here are really tailored to developing countries/the global south.

Important to keep in mind also that this insurance is the perfect concept of "Socialism for the rich and capitalism for the poor". banks make profit by lending too much, ie: overextending their fractional reserve power, and when something goes wrong, the FED have to step in and create new money to make the consumers whole. which society pays by inflation.

Now you hold USD in your custodial Galoy wallet.

one comment on this: Galoy is a software company. we help banks/wallets to run software we develop. we are not aiming at being custodian of any funds (similarly FIS/FISV,Jack Henry develop software for fiat banks, they don't operate the bank themselves)

Your USD is actually some derivative contraption which can depeg (can't it?).

How would it depeg? it's really a fully collateralized solution. Maybe the main risk would be an extended negative funding period, as shared in the risks on stablesats.com

The exchange can get bankrupt (many already did!)

yes that is one of the risk. but if you hold USD or stablecoin, you have similar counter risk.

I don't think companies are insured like physical persons.

that's why companies don't keep a lot of USD on bank account. they typically buy treasuries, because the risk of government going down is lower than the risk of a bank going down.

199 sats \ 4 replies \ @moel 3 Aug

For now the dependency on OKX is troubling... But as a proof-of-concept it's interesting[1].

The missing piece here is a decentralized place to trade equal amounts of Long and Short positions (with 0% slippage, prefferably). Maybe, in time, the Kollider.xyz project will be liquid and stable enough to swap out with OKX?

Anyway, I am happy that this kind of very valuable experiments are undertaken !

[1] Isn't Fuji.Money (a project funded by Blockstream) doing something similar?

481 sats \ 0 replies \ @nb 3 Aug

Why did we choose okx as the first exchange?

because:

  • it has high volume (10,000x more than kollider), only second to binance
  • it has lightning integration (we've started with onchain, lightning integration will be next)

to be more robust and reduce risk, a multi-exchange hedging definitively needs to be developed.

we're currently rewriting the bot in rust (https://github.com/GaloyMoney/stablesats-rs/), so that it's easier to use with other wallets/banks, and when it's done we will work on adding multiple exchange.

304 sats \ 0 replies \ @nb 3 Aug

Fufi.Money is somewhat different.

AFAIU, Fuji.money, instead of relying on derivatives, relies on overcollateralization. ie: you need to put $2 in bitcoin value to create one fuji dollar, such that even if the price of bitcoin drop by 2, there is still some collateral. at this point the person creating the $1 would need to add more collateral to not be liquidated.

100 sats \ 0 replies \ @notgeld 3 Aug

Some info about mentioned Kollider exchange. In Standard Sats we replace them with different exchange however we will maintain FOSS hedge service for anybody who decided to run Fiat Channels infrastructure.

https://notgeld.medium.com/the-kollider-exchange-two-attacks-later-225d4e88e579

small nit: Fuji.Money is NOT funded by Blockstream by any means :)

22 sats \ 2 replies \ @sb 3 Aug

Yikes. This whole thing seems to be dependent on OKX staying solvent. Am I reading this correctly? 🤡

110 sats \ 1 replies \ @kevin 3 Aug

Should work with any derivatives market? Just looks like they picked OKX to build their PoC on.

110 sats \ 0 replies \ @nb 3 Aug

yup!

Galoy, repeating the Terra Luna UST mistake, but on lightning.

600 sats \ 0 replies \ @notgeld 3 Aug

Were already there with Standard Sats https://standardsats.github.io.

EUR as well. However, user's funds remain on service node. What service does provide is hedging capital from its funds on the exchange.

Not sure who would be excited about this. Stablecoins have existed forever and I trust USDC/USDT more than OkEx. I’m waiting for Taro on the LN for real stablecoin integration.

199 sats \ 1 replies \ @nb 3 Aug

the point is that it works with any derivatives exchanges that has an inverse BTC/USD pair.

and a way to limit the risk is to run the hedging on many exchanges at the same time.

0 sats \ 0 replies \ @v4v 3 Aug

Why is this its own post?

This is exciting for having a bitcoin/dollars wallet that can transact with other lightning wallets and doesnt rely on eth or tron

Bitcoin will be the real stablecoin when people will get rid of all fiat money and its derivatives. Sooner the better. Let's stop with all this bullshit of plethora of so called stablecoins, are just a way to keep alive a dying fiat money. You will not replace fiat money with these stablecoins, you just give another chance to fiat money to exist. Fiat money are the biggest disease in this world.

FUCK'EM'ALL

125 sats \ 0 replies \ @kr OP 3 Aug

How is this argument any different from the recent “green” movement to ban fossil fuels?

if i replace the word fiat with fossil fuels, and bitcoin with renewables, the arguments sound exactly the same.

fwiw, i don’t think either version of the argument is correct.

That’s nice.

Some people can’t afford to have their spending money exposed to bitcoins volatility.

There’s demand for stable value that moves over cryptocurrency rails. I’d rather they use lightning than eth or tron

garbage news, ignore

here is a stablecoin idea- buy one short bitcoin contact and one long bitcoin contract without leverage and you will be equally stable. trade that contract and you are assured no upside and no downside beyond the carry cost of the contract

Просто показывайте баланс на своем LN кошельке в долларах. А кто боится изменения курса, пусть идёт к LNMarket и берет контракт.

I thought of this idea too, but aren't the long and short things funky where you can get liquidated both ways?

collateralize the short with the long and the long with the short.

if short goes down 2x then long would be up proportionally and no liquidation

Yeah but, I mean a situation in which the price goes down quickly and liquidates your long, then goes up quickly to liquidate your short.

Very lame. Made for people who cannot understand the value of satoshis, need to be psychologically reassured that they nominally hold USD, in some capacity.

Kind of conceding defeat to the dollar a little bit, but I suppose that makes sense.

😑😑😑