How risky are Stablesats? \ stacker news ~bitcoin

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1165 sats \ 49 comments \ @DcaSignals 7 Dec 2023 bitcoin

Stablesats are basically the first 'stablecoin' on Lightning. This is technically incorrect because stablesats aren't a token but "a USD account that people can use to hold “dollar equivalent” balances in their Lightning wallet.

Introduction Stablecoins are incredibly important for merchants and businesses who adopt bitcoin. Many bitcoin maxis believe stablecoins are totally useless. That's far from the truth and only reveals that those people are mere keyboard warriors but haven't visited places outside of their privileged 9-5 lifes. Like it or not, USDT has become critical infrastructure for millions of people. The privatization of currency is in full swing and we should celebrate that.

How Stablesats work The current Stablesats implementation uses the bitcoin derivatives market, specifically an instrument called perpetual inverse swap to create synthetic USD.

Trust/Risk comparison: Where is the Trust Dollar Bank Stablecoins Issuer Stablesats (Derivativs) Exchange DLCFD Oracle

Source: https://stablesats.com/#how-it-works If you haven't tried Stablesats, head over to blink.sv and play around with it. If you live in the US you're blacklisted (third world country) but you can get the APK or Testflight link if you ask in the galoy chat.

How risky is it? Probably a lot could go wrong. Stablesats require an exchange. This exchange is either regulated or unregulated. If it is regulated, the regulator will eventually step in to close accounts of stablesats 'issuers' because they hate competition. Then there are unregulated exchanges. They might not close the account but they could lack liquidity and could run with the money at any point.

This means that while stablesats are very useful, they also come with significant risk. As long as it works, it's great. But if shit hits the fan there is little legal protection and you can only hope to get your money out.

It would be great to discuss this and compare benefits and downsides, and potentially come up with suggestions for improvement.

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112 sats \ 28 replies \ @DarthCoin 7 Dec 2023

I will never use such a thing. Only Bitcoin. Stablesats is a monstrosity created for those people that still want to live in a fiat world, where their mind is stuck in the past...

And is wrong to say that are stable... when they are linked to a fiat currency that goes to zero value.

214 sats \ 27 replies \ @DcaSignals OP 7 Dec 2023

You've never operated a business. You're entire life depends on other people who operate a business. You get paid from a business which is using dollars. Grow up m8.

23 sats \ 26 replies \ @DarthCoin 7 Dec 2023

Then stay in fiat if your life depends on fiat. Why use such a thing? I operate a business, and I am paid in BTC. That's all.

0 sats \ 0 replies \ @vindard 2 Apr

Are the bills you pay all denominated in BTC natively?

And are your goods/services priced in fixed sats amounts that never change regardless of the fiat price?

0 sats \ 24 replies \ @DcaSignals OP 7 Dec 2023

Your business doesn't have employees or cost, you're self employed. Great for you. But any 'normal' business does not want to take the risk of a 10-80% drawback after getting paid.

"Why use such a thing" spot on my friend. Why do you think stablesats were created in the first place? It wasn't created for privileged AMERICANS that can open as many corporate accounts with JP MORGAN CHASE as they wish.

Just like USDT, they are used by people who are EXCLUDED from financial tools.

22 sats \ 23 replies \ @DarthCoin 7 Dec 2023

Have Fun Being REKT

0 sats \ 22 replies \ @DcaSignals OP 7 Dec 2023

How do you not get rekt when you work for a year getting paid in bitcoin and the price drops 50%?

67 sats \ 21 replies \ @DarthCoin 7 Dec 2023

Because I am not a fiat maxi mindset like you and I do not give a shit about BTC price. I earn in BTC, I spend in BTC, I hold BTC. No more fiat here and I closed all bank accounts. Simple as that.

The first step into Bitcoin adoption will be when people will move away from fiat mindset. Otherwise is just a mess, we will never have bitcoin adoption if we always go back to fiat.

0 sats \ 20 replies \ @DcaSignals OP 7 Dec 2023

Say you earn 50,000 and have cost of 30,000 and the value of your bitcoin decreases 20%. You are paying a 20% 'tax' for market volatility and your profits are cut in half. Why would you want your profits be cut in half? For many that risk is impossible to take because they have to feed their familiy and take the risk of not being able to purchase new stock to run their shop. Again, you're speaking from your privileged but limited perspective and you've never had responsibility for employees or feeding a family.

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121 sats \ 1 reply \ @0xIlmari 7 Dec 2023

You're wasting your keyboard here, OP. The likes of Darth and Onions are blessed to live in the future, a Bitcoin only world, and do not care to understand the woes of running a businnes in a transition period.

0 sats \ 0 replies \ @DcaSignals OP 7 Dec 2023

Exactly, gotta love the bitcoin hippies, they're leading the way!

21 sats \ 4 replies \ @bzzzt 8 Dec 2023

What is the argument to use this derivative product over using cash ? Is it because you have a business that does not have USD exposure and you want it? There are far easier ways to do that then a perpetual bitcoin short / long trade with a custodian. I dont get what this solves for.

50 sats \ 3 replies \ @DcaSignals OP 8 Dec 2023

It was originally designed to allow merchants in El Salvador to accept bitcoin payments and easily swap into USD. If a customer asks to pay in bitcoin over the lightning network, the merchant can present the invoice and receive stablesats without having to do anything. To exchange bitcoin into cash would mean the merchant has to drive 2h to the next ATM machine and spend half an hour there to wait for a confirmation. Since the ATM doesn't have Lightning, for small transactions it isn't worth it considering onchain transaction fees.

0 sats \ 2 replies \ @bzzzt 8 Dec 2023

Ya, i see its not a terrible product i see what is being solved for, but i really worry about something like this actually getting successful and collapsing for any number of reasons, leaving people even more angry and confused than if they simply had btc that was down in value. I would personally feel tricked, btc and its price are at least transparent. Like i said im open to solutions but this sounds pretty scary as an option for adoption.

🤙

50 sats \ 1 reply \ @DcaSignals OP 8 Dec 2023

Yeah absolutely, especially since it would hurt a lot of people who don't deserve it. If you get rekt on FTX ok... but imagine all the small merchants on blink wallet losing their $500 monthly income, would be a disaster.

0 sats \ 0 replies \ @bzzzt 8 Dec 2023

😔

21 sats \ 0 replies \ @piecover 7 Dec 2023

Well I wouldn't suggest you to put your life savings in them, they are custodial money that means you need to trust someone with it and also some of them use centralized exchanges to short bitcoin when you convert to stablesats and again only bitcoin(sat) is stable everything else is unstable imo. But I can see a usecase for it in emergent markets just like stablecoins you have it until the issuer got take down.

21 sats \ 0 replies \ @joyepzion 7 Dec 2023

Sats is only stable which is why SN has the tagline --> 1 sat = 1 sat

21 sats \ 0 replies \ @hasherstacker 7 Dec 2023

Stablesats? Another joke!

21 sats \ 0 replies \ @wassersnaus 7 Dec 2023

cool idea! will be good for warming up normies to full custody… also useful for trader degens maybe. How do you envision its full potential?

21 sats \ 1 reply \ @TheBTCManual 7 Dec 2023

Indeed a lot can go wrong, custodian goes bust, contract goes haywire and doesn't rebalance properly, the size of positions one could take are also limited, which is a good thing I guess since you can't get to the size of USDT with a product like this

I don't really think there's an improvement on this idea just a different trade off, one is balanced channels, where the channel rebalances based on the fiat amount locked and another is something like fuji money where you collateralize your L-BTC to get a synthetic coin which has its own liquidity issues.

There are also stability pools proposed by Fedimint, again this is a custodian it is just a federated one that would function in the same way as stablesats, all about how you want to deal with the risk but there will always be risk

I see why people want these services, getting access to dollars, when your local currency is going tits up faster than you can decide where to put it is important and when you have very little you are more concerned with downside than any potential upside.

The issued stablecoin for all its problems is still the best option for many people that these stablesats kinda projects are targetting, sure it can be censored and all that but it doesn't pretend to be anything special just iou's with a hash on-chain, it USDT comes to taproot assets or RGB that could also eat into the value prop of stablesats

The only other option other than accepting the risks of these products is to keep a balance in Bitcoin where you can manage the vol or stay out of it until the vol is within a range you can stomach.

0 sats \ 0 replies \ @DcaSignals OP 7 Dec 2023

Many fantastic insights, thanks.

One could also argue that your money is better protected with USDT and stablesats than with the normal banks and real USD accounts.

Seems like stablesats were created because USD on taproot assets or RGB don't exist yet.

Stablesats are basically a service to the users of blink wallet so that they don't have to swap into USDT or other alternatives based on scoin chains.

This type of service is very usefull for small merchants and individuals who want to keep a portion of their income in a USD account. Lots of benefits such as no fees for sending and holding an account, very minimal KYC, and reasonable exchange rates.

0 sats \ 0 replies \ @bzzzt 8 Dec 2023

This is a gimmick that is destined to be rugged.

26 sats \ 5 replies \ @Zepasta 7 Dec 2023 freebie

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3 sats \ 4 replies \ @DcaSignals OP 7 Dec 2023

Do you see use for people who cannot go 100% bitcoin because you just take a huge risk on top of all the other business risks any business is already is exposed to?

USDT are stable sats could also become regulated but more accessible than normal bank accounts because they are more lightweight. USD accounts add value to society because they 'work'. Yes it would be great to move the whole world on a bitcoin standard tomorrow. But how realistic is that? For most people USD substitutes are a dream come true. Go to Argentina to learn more.

Maybe stablesats could be run with decentralized exchanges where you cannot close the accounts, hence reducing these risks?

0 sats \ 3 replies \ @Zepasta 7 Dec 2023

huge risk

You mean holding fiat?

stable sats could also become regulated

have fun having your sats regulated.

USD accounts add value to society

Why is USD trending to zero then?

Maybe stablesats could be run with decentralized exchanges where you cannot close the accounts, hence reducing these risks

And they could even be pink and have shiny sparkles! 🩷

Bruh. It doesn't change the fact that it's still fiat.

Personally, I wouldn't choose to use it. Even if I had a business, I would not use any of that stablesats crap, for all the reasons you mentioned in your post.

0 sats \ 1 reply \ @DcaSignals OP 7 Dec 2023

It would be great if you can expand a bit how you are growing a business with this form of accounting. How are you explaining your employees that they get paid less in a period of drawback? What do you do when ALL your cost suddenly increases 20%?

Do you pay your rent in bitcoin? Does your landlord accept getting 20% less rent next month?

Or do you own a house you inherited or paid off with your bitcoin gains?

If you own a house then why, if you could buy bitcoin instead?

21 sats \ 0 replies \ @Zepasta 7 Dec 2023 freebie

Does your landlord accept getting 20% less rent next month?

It's up to him to decide. He may prefer to receive the same amount of sats every month regardless of market value, it could be beneficial for both parties involved if my stack is big enough and he is confident the value of bitcoin will keep increasing in the future.

Another option could be for him to request the original rent amount in euros, but paid in sats at the current market value.

Either options are fine.

0 sats \ 0 replies \ @Zepasta 7 Dec 2023

hence reducing these risks

It's not about how many risks can be reduced. If it has a single risk, i won't use it.