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Why would you expect the price on a DEX to differ from the price on a CEX? Any substantial price difference would immediately be closed by arbitrage.

jqpabc123 4y ago
Exactly my point. There is nothing really "decentralized" about DEXs --- in reality, they follow CEXs more or less in lockstep. CEXs exercise control over them in the same way they control the rest of the marketplace.
- halpmeh 4y ago
  That doesn't prove your point at all. The CEX isn't setting the price. The price is set by people trading. If the price on an exchange, centralized or otherwise, is too high, no one will buy. If the price is too low, no one will sell. That has nothing to do with whether or not the exchange is centralized or decentralized.
  - jqpabc123 4y ago
    The price is set by people trading. That's the idea but follow along with me now --- what if one of these "people" trading is the CEX itself. And unlike most "people", what if they have an unlimited supply of money (stable coins they can just mint at will) to trade with. This would be like combining the NY Stock Exchange with the Federal Reserve --- no real conflict of interest there, right? As you still convinced the CEXs aren't setting or manipulating or influencing the price that you pay?
    - halpmeh 4y ago
      I'm not saying no one has ever tried to manipulate the price of a cryptocurrency before. But the scheme you describe is not sustainable for a long period of time.
      - jqpabc123 4y ago
        not sustainable for a long period of time. Really? What will stop it? Regulation maybe? Remember --- they have an *unlimited* supply of money --- they just print/mint the stuff at will. Nothing currently in place to stop them. Over the course of 8 years, Tether has gone from $0 to over $65 trillion --- all minted out of recycled electrons. $65 trillion is a lot of marketplace influence --- and there is plenty more where that came from.
        halpmeh 4y ago
        For starters, I believe the number is 75 billion in USDT, not 65 trillion. And Tether doesn't have an unlimited supply of money. Tether allows USDT to be redeemed for USD. If Tether was minting unbacked USDT, then Tether would eventually be shown to be insolvent. Second, if you're manipulating the price upward, it becomes more and more expensive to maintain the price. Like let's say Tether issued USDT to pump the price of BTC. If they wanted to maintain that long-term, they'd need to print more and more USDT to maintain the price, which gets us back to insolvency. Third, the CEX would need a reason to pump the price. Usually, people pump prices to execute a "pump and dump" where low-value assets are dumped on unsuspecting consumers at a high price. It's possible, of course, but executing a pump and dump scheme is a lot of work and very risky for very little reward with such expensive, highly traded asset like BTC.
        Zanfa 4y ago
        > If Tether was minting unbacked USDT, then Tether would eventually be shown to be insolvent. Tether's has been shown to be technically insolvent every time they've been forced to open their books. > Second, if you're manipulating the price upward, it becomes more and more expensive to maintain the price. Like let's say Tether issued USDT to pump the price of BTC. If they wanted to maintain that long-term, they'd need to print more and more USDT to maintain the price, which gets us back to insolvency. This is literally what they seemed to have done though. Tether's market cap hovered around a few billion for a few years and then suddenly shot up to almost 80B.
        jqpabc123 4y ago
    - andruby 4y ago
      The different CEXs would have to coordinate such price swinging. When the price swings in a direction on one exchange, arbitrage bots will put a pressure on the price to converge back with the other exchanges. It'll get really expensive, and you'll be paying a lot to the arbitragers
      - jqpabc123 4y ago
        The different CEXs would have to coordinate such price swinging. No they wouldn't. All they would have to do is "loan" tethers to their "whale" friends with the understanding that they will invest it in bitcoin and hold until they are told to sell. See article from wsj referenced below. It's easy to time the market when you're manipulating the timing. you'll be paying a lot to the arbitragers Exchanges don't pay arbitragers anything. People who sell their crypto too cheap do.

jqpabc123 4y ago

Exactly my point. There is nothing really "decentralized" about DEXs --- in reality, they follow CEXs more or less in lockstep. CEXs exercise control over them in the same way they control the rest of the marketplace.

halpmeh 4y ago
That doesn't prove your point at all. The CEX isn't setting the price. The price is set by people trading. If the price on an exchange, centralized or otherwise, is too high, no one will buy. If the price is too low, no one will sell. That has nothing to do with whether or not the exchange is centralized or decentralized.
- jqpabc123 4y ago
  The price is set by people trading. That's the idea but follow along with me now --- what if one of these "people" trading is the CEX itself. And unlike most "people", what if they have an unlimited supply of money (stable coins they can just mint at will) to trade with. This would be like combining the NY Stock Exchange with the Federal Reserve --- no real conflict of interest there, right? As you still convinced the CEXs aren't setting or manipulating or influencing the price that you pay?
  - halpmeh 4y ago
    I'm not saying no one has ever tried to manipulate the price of a cryptocurrency before. But the scheme you describe is not sustainable for a long period of time.
    - jqpabc123 4y ago
      not sustainable for a long period of time. Really? What will stop it? Regulation maybe? Remember --- they have an *unlimited* supply of money --- they just print/mint the stuff at will. Nothing currently in place to stop them. Over the course of 8 years, Tether has gone from $0 to over $65 trillion --- all minted out of recycled electrons. $65 trillion is a lot of marketplace influence --- and there is plenty more where that came from.
      - halpmeh 4y ago
        For starters, I believe the number is 75 billion in USDT, not 65 trillion. And Tether doesn't have an unlimited supply of money. Tether allows USDT to be redeemed for USD. If Tether was minting unbacked USDT, then Tether would eventually be shown to be insolvent. Second, if you're manipulating the price upward, it becomes more and more expensive to maintain the price. Like let's say Tether issued USDT to pump the price of BTC. If they wanted to maintain that long-term, they'd need to print more and more USDT to maintain the price, which gets us back to insolvency. Third, the CEX would need a reason to pump the price. Usually, people pump prices to execute a "pump and dump" where low-value assets are dumped on unsuspecting consumers at a high price. It's possible, of course, but executing a pump and dump scheme is a lot of work and very risky for very little reward with such expensive, highly traded asset like BTC.
        Zanfa 4y ago
        > If Tether was minting unbacked USDT, then Tether would eventually be shown to be insolvent. Tether's has been shown to be technically insolvent every time they've been forced to open their books. > Second, if you're manipulating the price upward, it becomes more and more expensive to maintain the price. Like let's say Tether issued USDT to pump the price of BTC. If they wanted to maintain that long-term, they'd need to print more and more USDT to maintain the price, which gets us back to insolvency. This is literally what they seemed to have done though. Tether's market cap hovered around a few billion for a few years and then suddenly shot up to almost 80B.
        jqpabc123 4y ago
  - andruby 4y ago
    The different CEXs would have to coordinate such price swinging. When the price swings in a direction on one exchange, arbitrage bots will put a pressure on the price to converge back with the other exchanges. It'll get really expensive, and you'll be paying a lot to the arbitragers
    - jqpabc123 4y ago
      The different CEXs would have to coordinate such price swinging. No they wouldn't. All they would have to do is "loan" tethers to their "whale" friends with the understanding that they will invest it in bitcoin and hold until they are told to sell. See article from wsj referenced below. It's easy to time the market when you're manipulating the timing. you'll be paying a lot to the arbitragers Exchanges don't pay arbitragers anything. People who sell their crypto too cheap do.