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5 sats \ 3 replies \ @tomlaies 31 Jan \ parent \ on: The fuse was lit. USDT IN BITCOIN bitcoin
Why are shitstablecoins on shitcoin chains anyway? Aren't they centralized/custodial no matter what? They could just keep the offchain in the first place.
This is actually a great and under appreciated point. Why don't stable coin companies just run their own, internal database instead of using centralized shitcoins? It would be more efficient.
I suspect the answer has something to do with "holding customer funds". Using "decentralized" coins gives them legal refuge. Except, as you point out, those shitcoins have incorrectly been labeled "decentralized" and "commodities" by the US, when they're actually very centralized and security-like in nature.
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I also just noticed that them being onchain allows for atomic swapping i.e. buying and selling shitcoins for stablecoins in one single onchain transaction. It also allows for stablecoins chaning hands without the centralized issuer interacting.
They're still shitcoins tho. When the centralized reserve holder (i.e. Thether) rugpulls them they will hopefully learn.
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Indeed they could run things client side and just have an API that plugins into wallets but I think there was so much money in "blockchain" funding and bringing a product like stablecoins to your blockchain made it more attractive and generated transaction volume and fees that they kinda just ended up there.
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