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patio11's profile
Patrick McKenzie
Patrick McKenzie
Patrick McKenzie
@patio11

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Patrick McKenzie

@patio11

I work for the Internet, at @stripe, mostly on accelerating startups. Opinions here are my own.

東京都 Tokyo
kalzumeus.com
Joined February 2009

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    1. Patrick McKenzie‏ @patio11 7 Nov 2018
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      The Pokemon theory of stablecoins, which I think is approximately correct: https://medium.com/social-capital/tether-part-two-pokedex-november-4-2018-snippets-8f62e01e7772 … ("Explain it like I'm not five?" Speculative mania combined with a credit bubble; going to allocate billions of dollars in cash losses when it winds up.)

      5 replies 21 retweets 75 likes
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    2. Patrick McKenzie‏ @patio11 7 Nov 2018
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      “Who is going to take the loss?” Who doesn’t have cash in their hands? Ceteris paribus that is who takes the loss, because there are too many claims chasing not enough cash.

      1 reply 0 retweets 4 likes
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    3. Patrick McKenzie‏ @patio11 7 Nov 2018
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      Some of those claims are denominated in tethers and some it Bitcoin but all are ultimately backed by the circulating USD in the Bitcoin economy, which is crashing as some folks take chips off table and no new hodlers join to take sweet -70% losses.

      2 replies 1 retweet 8 likes
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    4. Eric/  🗝  🦕‏ @wheatpond 7 Nov 2018
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      Replying to @patio11

      This might be averted if Tether gracefully unwinds into transparently-backed fiatcoins like @TrustToken TUSD etc.

      1 reply 0 retweets 1 like
    5. Patrick McKenzie‏ @patio11 7 Nov 2018
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      Replying to @wheatpond @TrustToken

      Seems like stabilization efforts would probably require a bunch of the winners to take dollars out of their pockets, put them back on table, and use them (via stablecoins/etc) to satisfy capital outflow. That might avert a bank run? Low epistemic confidence in mechanism

      1 reply 0 retweets 0 likes
    6. Eric/  🗝  🦕‏ @wheatpond 7 Nov 2018
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      Replying to @patio11 @TrustToken

      Are we assuming in this scenario that tether is in fact not backed by $? That isn't entirely clear yet imo. If it is backed, it can be unwound at a profit even in a low confidence scenario.

      2 replies 0 retweets 1 like
      Patrick McKenzie‏ @patio11 7 Nov 2018
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      Replying to @wheatpond @TrustToken

      Matters less exact position of Tether and more how much liquid USD is in the ecosystem and how much demand for it there is. Given arbitrarily long amount of time, illiquidity is a solvable problem, but they may not have an arbitrary amount of time.

      10:13 PM - 7 Nov 2018
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        1. New conversation
        2. Patrick McKenzie‏ @patio11 7 Nov 2018
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          Replying to @patio11 @wheatpond @TrustToken

          Peanut gallery: my ~60% confident belief is that tether can at this exact moment in time find a USD on the books of an affiliated entity backed by a dollar of money-good cash-like things in a bank but that the overwhelming majority of them are not available to depositors.

          1 reply 0 retweets 0 likes
        3. Eric/  🗝  🦕‏ @wheatpond 7 Nov 2018
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          Replying to @patio11 @TrustToken

          that's true; but as long as multiple parties can redeem USDT for dollars it won't depeg too long because of a prisoners dilemma for arbitrageurs

          0 replies 0 retweets 1 like
        4. End of conversation

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