De-Fi Protocol/Governance Failures Questions

[very_452001]

For example lets look at a stable coin Dai:

Its suppose to be a decentralized stable coin from MakerDao that totally relies on Ethereum smart contracts to keeps its value stable and pegged to $1 each.

Questions are:

- If Eth screws up on Eth 2.0 launch or doesn't release Eth 2.0 or gets flipped by BSC or whatever causing Eth price and erc20 coins to crash to 0 then can that cause a protocol failure that can cause Dai to crash to 0 too or corrupt or breach existing running smart contracts at the time?

- Does smart contracts have a programmed algorithm in there that automatically protects users from losses if the above happens or can smart contracts detect Eth market collapse like mentioned above? Its called 'Smart' contract for a reason right?

- Can buggy code in a running live smart contract be patched up on the fly?

- If MakerDao coin crashes to 0 then will this drag down Dai to 0 too?

- Decentralized Governance, what is this? When we think of Governments we think centralized point of power and control that sets out rules. How does decentralized governance work and where does this type of governance gets it data inputted from to set rules? Can decentralized governance be managed by Ai where independent smart Ai is smart enough to make its own rules & program algorithms without requiring external data input to make it work?

- When you guys think this whole De-Fi ecosystem will mature that runs near 100% uptime with no probs on the network that will replace the traditional existing centralized old banking system were on now?

[jackg]

All th stablecoins seem to keep changing value. Atm I think dai was 99 cents when I last checked it (in comparison with usdt). I'm not sure what caused the divergence though since it was over a cent ahead for a while.

Smart contracts are dependent on the ethereum network also at the moment. There are plans to build converters and projects working on it that may allow for currencies to be converted if a chain dies.

[TryNinja]

You should go read what happened with DAI on the Black Thursday (a.k.a March 12) where the entire market crashed.

Here is a start: https://blog.makerdao.com/the-market-collapse-of-march-12-2020-how-it-impacted-makerdao/

- If Eth screws up on Eth 2.0 launch or doesn't release Eth 2.0 or gets flipped by BSC or whatever causing Eth price and erc20 coins to crash to 0 then can that cause a protocol failure that can cause Dai to crash to 0 too or corrupt or breach existing running smart contracts at the time?

- If MakerDao coin crashes to 0 then will this drag down Dai to 0 too?

It also uses other crypto as collateral. Most people would need to repay their DAI or add to their loan. If everything crashes to 0, DAI is pretty much gone.

- Does smart contracts have a programmed algorithm in there that automatically protects users from losses if the above happens or can smart contracts detect Eth market collapse like mentioned above? Its called 'Smart' contract for a reason right?

Read the article I linked above. But yes, they do have systems ready to liquidate loans that are underwater or auction them.

- Can buggy code in a running live smart contract be patched up on the fly?

It depends. There are proxy contracts that use the implementation of another contracs and can pointed to another one on the fly. Others that are imutable would require a full migration (so everyone moving to the new contract).

[very_452001]

All th stablecoins seem to keep changing value. Atm I think dai was 99 cents when I last checked it (in comparison with usdt). I'm not sure what caused the divergence though since it was over a cent ahead for a while.

Smart contracts are dependent on the ethereum network also at the moment. There are plans to build converters and projects working on it that may allow for currencies to be converted if a chain dies.

When you say plans to build converters and projects that allows currencies to be converted if a chain dies.... Do you mean fiat currencies be converted or stable coins?

You should go read what happened with DAI on the Black Thursday (a.k.a March 12) where the entire market crashed.

Here is a start: https://blog.makerdao.com/the-market-collapse-of-march-12-2020-how-it-impacted-makerdao/

- If Eth screws up on Eth 2.0 launch or doesn't release Eth 2.0 or gets flipped by BSC or whatever causing Eth price and erc20 coins to crash to 0 then can that cause a protocol failure that can cause Dai to crash to 0 too or corrupt or breach existing running smart contracts at the time?

- If MakerDao coin crashes to 0 then will this drag down Dai to 0 too?

It also uses other crypto as collateral. Most people would need to repay their DAI or add to their loan. If everything crashes to 0, DAI is pretty much gone.

- Does smart contracts have a programmed algorithm in there that automatically protects users from losses if the above happens or can smart contracts detect Eth market collapse like mentioned above? Its called 'Smart' contract for a reason right?

Read the article I linked above. But yes, they do have systems ready to liquidate loans that are underwater or auction them.

- Can buggy code in a running live smart contract be patched up on the fly?

It depends. There are proxy contracts that use the implementation of another contracs and can pointed to another one on the fly. Others that are imutable would require a full migration (so everyone moving to the new contract).

In the last year march 2020 Corona dump I see Dai reaching high as $1.06 however I see Dai going low as 0.92 cents back in late november 2019.

So Dai goes up in price when market crashes however what caused Dai to dump back in Nov 2019?




Hi coming back here.

If the SEC in the upcoming weeks rules out and say MakerDao is a illegal unregistered security then will this collapse Dai to $0 even though its decentralized? The project team that created MakerDao, where are they based?

[moderator's note: consecutive posts merged]

[Ucy]

It boils down on how decentralized things are on Ethereum. I do believe it should be built in such a way that all decentralized applications are not too dependent on Ethereum to the extent of not able to exist without it if the network cease to exists. They could exist in modules, detached from the main network and still able to flourish independently.

In regards to governance, it should be set on solid foundation that are based on Bitcoin/Blockchain principles. A decentralized governance can only work without discord if it's based on set of fair/right rules that do not compromise on the principles. Everyone is welcome to contribute or solve problems as long as their contributions do not violate the rules. Useful Contributions that solve important problems can be implemented by the community

[very_452001]

It boils down on how decentralized things are on Ethereum. I do believe it should be built in such a way that all decentralized applications are not too dependent on Ethereum to the extent of not able to exist without it if the network cease to exists. They could exist in modules, detached from the main network and still able to flourish independently.

In regards to governance, it should be set on solid foundation that are based on Bitcoin/Blockchain principles. A decentralized governance can only work without discord if it's based on set of fair/right rules that do not compromise on the principles. Everyone is welcome to contribute or solve problems as long as their contributions do not violate the rules. Useful Contributions that solve important problems can be implemented by the community

Will Eth 2.0 PoS be more decentralized than the current Eth PoW?

When you say exist in modules do you mean sidechains?

Both sidechains and parallel chains means they are the same correct?