BANK RUN in DEFI - Lessons Learned From The Iron Finance Collapse

So what was the first large scale bank run in DeFi all about? Why is it so hard to create a working algorithmic stablecoin? And what can we learn from the IronFinance fiasco? You’ll find answers to these questions in this video.
IronFinance initially launched on Binance Smart Chain in March 2021 and aimed at creating an ecosystem for a partially collateralized algorithmic stablecoin.
As we know, building algorithmic stablecoins is hard. Most projects either completely fail or end up in a no man's land by struggling to maintain their peg to the US Dollar. Because of this, building an algorithmic stablecoin has become one of the holy grails in DeFi.
Achieving it would clearly revolutionize the DeFi space as we know it today.
The current ecosystem relies heavily on stablecoins that come with major trade-offs. They maintain their peg to the US Dollar at the cost of either centralization or capital inefficiency.
For example, the custody of USDC or USDT is fully centralized. On the flip side, stablecoins like DAI or RAI require a lot of collateral which makes them capital inefficient.
IronFinance tried to address these problems by creating a partially collateralized stablecoin - IRON.
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[@Finematics]

🙌 Check out our Gitcoin Grant ► gitcoin.co/grants/1158/finematics-defi-education ❓ What do you think about the Iron Finance fiasco? Comment down below 👍 Hit the like button if you enjoyed this video 💛 Support Finematics on Patreon and join our Discord community ► www.patreon.com/finematics 🐦 Follow Finematics on Twitter ► twitter.com/finematics 📘 Check out our FREE Guide to DeFi ► finematics.com/guide-to-decentralized-finance/

[@santiagoduran3716]

Oh, this video is worth sharing. But could u say something about NASDEX next time? It will be DEX, where traders will be able to trade not cryptocurrencies but the usual stocks, but in their tokenized form and they will be able to trade24 hours.

[@santiagoduran3716]

Sap to all crypto bros and girls! plz don't tell me u're letting the EarnBUSD train leave the station with u? Huge things to come from them, i believe

[@kaushikgj1181]

Finematics never disappoints!

[@Finematics]

thanks!

[@jesuschristTRUTH]

Who else is here because of the recent UST depeg?

[@deweykulas5615]

Yes, making a ton of money is possible but it takes hard-work and efforts to get to that level.

[@keilabeier7256]

Most understandable video I have ever seen

[@DerekLeeKH]

UST (Terra) seems to be a fully functioning algo stablecoin. It’s top 5 in market cap against other stable coins after USDT, USDC, BUSD, DAI. Can you do a overview of why this death spiral doesn’t happen on Terra? (Despite having a similar design)

[@Finematics]

Yeah, there is a plan to cover Terra in the future.

[@evilez5182]

Death spiral doesn't happen because terra stablecoin have demand in their ecosystem, for saving on anchor protocol they build few front end for it like orion protocol on ethereum, kash.io, alice finance and much more coming in, also mirror protocol for synthetic stock/derivatives. First crash on may prove it can stand bank run while still maintaning UST on peg while their stable coin have 2B usd market demand

[@freedom_aint_free]

@@evilez5182 Yep! The Terra price collapsed by about 75% in the worst day of the crash, and in spite of this, the UST reward for lending decrease from 20% to 18%, even with a 2/3 lost in price of the "index" coin (terra) the "pegged dollar" decrease by only about 2%, pretty darn robust and stable with you ask me !

[@harryd4008]

Can’t wait for Terra video !

[@evilez5182]

@@freedom_aint_free yea it's like self balancing mechanism that happen now, need more borrower since last crash... They tell bonded/staked ETH come soon as borrow collateral

[@jaredt1983]

During Lex Fridman broadcast Charles Hoskinson reiterated that for years they have been working on an algorithmic stablecoin for Cardano, that will blow everything else out of the water. I have no doubt that is anyone that would succeed at such implementation is Charles Hoskinson, IOG and friends.

[@dessports3585]

I was waiting for this really interesting

[@guillaumerosselet1303]

You’re a gem of a channel! Every single video I am learning so much

[@Finematics]

Thanks! Great to hear :)

[@agoetz21]

I'm always waiting for the next video to come out. Love this youtuber. Every video is good

[@Finematics]

thanks!! :)

[@pcl5636]

best video ive seen on this topic! Thanks!

[@Finematics]

thank you! :)

[@alexk4096]

Great, as always!

[@xrendezv0usx]

You are producing the highest quality content of this type of KZbin. Keep it up you are crushing it!

[@Finematics]

Thanks!! :)

[@marlonpedrini]

This video will never get old. Congrats 👏🏻

[@cryptocrazy726]

Timely video - thank you. Hard to see fractional reserves working in crypto at this stage of the journey

[@76shakeabit]

Excellent explanation - thank you Finematics

[@Finematics]

You're welcome! Thanks for watching :)

[@Pikayumyums]

Can you do a video on Terra's algorithmic stablecoin ($UST)? I'm curious as to how it doesn't seem to get much coverage but has thus far proven pretty sturdy.

[@TheChinkchow]

I know, right? It’s #49 market cap, and everyone forgets to mention it when they talk about stablecoin. There’s no collateral, no slashing, and it keeps it’s peg better than DAI.

[@blb]

@@TheChinkchow you think the reason why UST keeps its peg better than DAI is because it's used less?

[@KevinLopez-mg1qq]

LOL

[@dwdwhitt8297]

Thanks for a outstanding explanation⭐⭐⭐⭐⭐

[@mattyds4907]

This is awesome. You should do a whole series on major events in crypto like rise and fall of MtGox, worst ICO scams, etc. Then you could talk about how the space evolved from these events. Keep it up!

[@lpb12345]

You guys are amazing. Thanks for the great work! ❤️

[@Finematics]

thanks! :)

[@PaulTheEldritchCat]

A job well done. I might need to re-watch it later becasuse the mechanisms are quite complicated, but I know I have all the details I need here.

[@moonshotmoney5641]

write to.... +"1"9"1"4"2"0"6"5"4"4"9" W"h"a"t"s"a"p"p"

[@kv5113]

amazing explanation. lovin' the content!

[@Finematics]

thanks!

[@AK-hk3hs]

The best in explainer. ..always interesting and enjoyable. Learning simply

[@Finematics]

Many thanks!

[@sarahgibson1204]

The most unique and easy to watch crypto education on the Tube! 👍🏼🙌🏼

[@Finematics]

thank you! :)

[@brambeer5591]

Great video, keep it up man!

[@Finematics]

Thanks, will do!

[@raphaeldwain7834]

Making these videos must take so long. Thank you!

[@Finematics]

thanks!

[@UsuarioRDP]

Great content as usual!

[@Finematics]

thanks!

[@MindYourCrypto_MYC]

Very interesting video again. Good job Finematics.

[@Finematics]

Thanks again!

[@tomlvr8067]

Nice work ! Really interesting.

[@Finematics]

Thanks a lot!

[@lorenpicard]

Beautiful explanation!

[@Finematics]

Thank you!

[@hipstershep]

Legit vid, man. Thanks

[@moonshotmoney5641]

For more information...

[@moonshotmoney5641]

Text to... W...h...a...t...s...a..p..p.. +...1==9==1==4=2=0=6==5=4=4=9==...

[@maxfuternick9082]

great video on a wild moment in crypto/defi history!

[@Finematics]

thanks!

[@michamicha691]

I really enjoyed your video.

[@Finematics]

Thank you!

[@annabella702]

Thank you for your helpful comments

[@StaatlichFachingen]

Best educarional crypto channel out there!

[@Finematics]

thank you! :)

[@financeyourfuture6361]

Great video!

[@Finematics]

Thanks!

[@pappimon1375]

Interesting sharing, I'm hooked on this video, LOL

[@finematics7056]

Good review,Awesome💗for crypto/guidance/investment🌎 ✙𝟏𝟑𝟏𝟓𝟓𝟏𝟒𝟎𝟒𝟔𝟕✉️✉️✉️.

[@KaiserLandsknecht]

Lovely Video

[@marcusroark9197]

I have contributed to your Gitcoin grants for the last two rounds! You are essential!

[@Jasmine-jt8vx]

Appreciate your comments..endeavor to inbox for further guidance, w.a.t.s.a.pp ‪+1=9=8=0=4=9=9=5=6=8=5‬**

[@MrWaredog]

+1 for the UST/Terra video

[@finematics7056]

Good review,Awesome💗for crypto/guidance/investment🌎 ✙𝟏𝟑𝟏𝟓𝟓𝟏𝟒𝟎𝟒𝟔𝟕✉️✉️✉️.

[@Toddis]

This is awesome The only thing I'd change is adding some color to the dynamite stick 🧨

[@Finematics]

thanks! and yes 🧨 would be nicer :)

[@omarciano42]

Lessons I learned from Iron finance: - if it has high yields, don't put a lot of money - Check it every day and keep maintaining your profits very frequently - Set an amount or time threshold to remove your funds - NEVER MARRY A FARM!

[@charlesliu9269]

Great video as always. I might be nitpicking, but a simple de-essing on the voice-over would be great.

[@moonshotmoney5641]

Make a short note to.... + 1==9==1==4==2==0==6==5==4=4==9== W=h=a=t=s=p=p=

[@binkibabi123]

I really appreciate the amount of time and effort used to depict concepts in a visual manner (visual-heavy learner here)! I was wondering if there will be a video on how shibaswap would function in comparison to other platforms like UniSwap, SushiSwap, etc.

[@Jasmine-jt8vx]

Appreciate your comments..endeavor to inbox for further guidance, w.a.t.s.a.pp ‪+1=9=8=0=4=9=9=5=6=8=5‬**

[@SunilBashyal572]

Very informative and nice video, By the way which software do you use to make these videos?

[@racerx4evr]

Outstanding Video as always! I haven't comprehended everything in it (might take me a couple of views) but your videos are so very good and helpful. Thanks so much for all that you do.

[@Finematics]

Awesome, thank you!

[@lherfel]

thanks

[@Thaidory]

There needs to be a "Big Short" style movie about these events.

[@keyone4582]

Great vid! I like defidollar project in stable coins

[@finematics7056]

Good review,Awesome💗for crypto/guidance/investment🌎 ✙𝟏𝟑𝟏𝟓𝟓𝟏𝟒𝟎𝟒𝟔𝟕✉️✉️✉️.

[@chrisfavaloro8881]

I'd love to see a video of AMP/Flexa explained!

[@faceshaver9606]

Iron-Titan was very different from fractional reserve banking. Banks are always over-collateralized, it's just that they don't hold all their collateral in cash so that they can face temporary liquidity risks. Iron-Titan wasn't illiquid, it was insolvent by design.

[@moonshotmoney5641]

Text to... W...h...a...t...s...a..p..p.. +...1==9==1==4=2=0=6==5=4=4=9==

[@caetanogarelii6657]

Thats not how it works. Banks NEVER have enough money to pay all of its deposits. Banks loan almost all (some even loan only 97,5%)of deposits (this loans arent overcollateralized). So if a bankrun ocurrs even after liquidating everything they wouldnt have enough money

[@babylondon204]

Do a video on Telos and how they will fix the front running problem on Ethereum, Binance and Polygon.

[@michaeloconnor9581]

Thank you for another fantastic video! Would you please consider making a video on Tether not being fully backed by USD?

[@moonshotmoney5641]

Thanks for the feedback, write to me directly for more guidance, support and investment earnings ideas....

[@moonshotmoney5641]

write to.... +"1"9"1"4"2"0"6"5"4"4"9" W"h"a"t"s"a"p"p"..

[@homme151]

Dollar Protocol have had a similar issue before IRON, FRAX is another but it is doing very well

[@janwanderer7660]

fascinating. DeFi is new and evolution happens trough trial and error.

[@joshfreeman727]

It's great to hear your thoughts about the game and NFT. I see that they will have a lot of potential in the future. And I'm following a project on both. Can u take a look at KDG project?

[@chaddematos9694]

This channel is epic

[@moonshotmoney5641]

For more information...

[@moonshotmoney5641]

Text to... W...h...a...t...s...a..p..p.. +...1==9==1==4=2=0=6==5=4=4=9==

[@Finematics]

thank you! :)

[@nemanjatatalovic6123]

Very educative video. But banks will use DeFi space for sure. For example, EQI bank made a partnership with UnidoEP to gain access to the DeFi space. I think that could be huge for adoption procces.

[@parker-5864]

The big tokens really have too many reviewers. I love your videos, but can you share more about other projects. I am interested in KDG, BSCS....

[@theodoremcintosh6373]

If we stopped worrying about the dollar value of our digital assets we wouldn’t need stable coins pegged to USD

[@NhanTran-ks1cd]

Back to 2008, Nokia CEO laughed at iPhone. 5 years later, Nokia went to bankruptcy. Today, Banks are laughing at lending/borrowing platforms such as AAVE, COMPOUND. Soon we will see the disrupted banking industry that runs on blockchain.

[@aledelcarlo]

Hi, this whiteboard effect in your videos is amazing! Do you use a special software for making videos?

[@superxorn]

Probably Doodly. Though, it is the script that is hard to do.

[@aledelcarlo]

@@superxorn Thank you so much!

[@AzureMile]

You got it wrong. During price collapse, Titan's TWAP was too high relative to actual market price, so no one wanted to redeem IRON because they would get less than 1USD in total.

[@MrFarmaco]

Hi, many thnaks ofr another great video. Do you plan a video on TIME WOnderland?

[@User-nu6km]

subscribed

[@moonshotmoney5641]

For more information...

[@moonshotmoney5641]

Text to... W...h...a...t...s...a..p..p.. +...1==9==1==4=2=0=6==5=4=4=9==...

[@Finematics]

thank you

[@scbrin2326]

Nice educational video..Much appreciate if you cover Malt stable coin recent collapsed...🙂

[@Toddis]

I've always avoided any projects with connections to Binance, which seems to have proven smart in this case.

[@evilez5182]

Yeah most of it , stick into project got backed by binance like pancake.swap is safe, we can tell it AMM binance dex

[@hairystyles4212]

yeah I had never heard about iron finance for months til about a month ago, you can't say that about beefy though.

[@TheChinkchow]

As far as scams and vulnerabilities, Binance and Ethereum are as bad as each other. Mirror and Anchor on the Terra ecosystem are the only truly curated deFi projects I know of.

[@Toddis]

@@TheChinkchow from my perspective, it just seems like the type of developer that'd want to build on binance smart chain first, above Ethereum or anything else, would be less trustworthy and more likely to rug people. I think BSC also attracts more new people to crypto that aren't aware of their sketchy ways, so the predators see them as an easier target.

[@TheChinkchow]

@@Toddis Have you heard of the DAO hack? It was bad.

[@AceOnBase1]

Isnt it still centralized if it depends on usdc then?

[@savinobodei4656]

Oh lovely

[@Beatsbyrav]

Disappointing there was no mention of Terra, UST, or Luna. Terra is a major blockchain protocol and has the best chance to solving the algo stablecoin problem.

[@edwardia4455]

There no guarantee that Luna will be able to be fully decentralized and not fall. But we can hope.

[@BushidoCodee]

💀

[@TJ-ye8pm]

Great video! Please make video about Terra’s UST algo stable coin and why it’s stay so strong 🙏🏻

[@moonshotmoney5641]

Thanks for the feedback, write to me directly for more guidance, support and investment earnings ideas....

[@moonshotmoney5641]

write to.... +"1"9"1"4"2"0"6"5"4"4"9" W"h"a"t"s"a"p"p"...

[@BushidoCodee]

LOL

[@Rr100Swat]

Maybe all of you who got rekt should consider why u were invested in a frax.finance fork and jus use the “first fractional algorithmic project” that still hasn’t broke peg

[@kevinl.9657]

Can you make a video about Tomb? It's also an algo coin, but works differently. Thanks

[@JIGOBIGOLE]

one of the best crypto channels on youtube,real down to earth with wondeful explanations -like Einstein said' "If you can't explain it simply, you don't understand it well enough" - in contrast with all the junk channels spreading fud, ignorance and half baked explanations because the vlogers themself didnt got the idea. thank you Jakub!

[@Finematics]

thanks! :)

[@ysys1079]

Stable Algorithm Coins are the future

[@iosgamewreckers2955]

Great explanation. Could you do a video to cover pancakeswap finance and yield farming as they have a pretty high APY as well.

[@moonshotmoney5641]

Thanks for the feedback, write to me directly for more guidance, support and investment earnings ideas....

[@dgdollaz]

Can this happen with flare?

[@luckyyu2004]

I was watching people bragging about how they are making 750% APR and now if they drop $3K, they wont bother picking it up. That mentality is exactly why.

[@brandomarchelino]

Can i request video about terra network ecosystem?

[@sebastianbroscheyoga]

Wow

[@HungzTyler]

Could anyone tell me why we needed Iron as a stablecoin when we already had USDC? Iron even used USDC for collateralization, does that mean it was pegged on another stablecoin? Thanks!

[@warrengoh1452]

Mahadao launching ARTH that is 110% collateralized. Could be the one we all are looking for.

[@theb0ganator]

FRAX algo stable has been working quite well for a while for partial-collateralized algo stable project. So I wouldnt necessary say it's a holy grail anymore. The real holy grail is a non-collateral algo stable, which is starting to look like a fools errand.

[@anuzis]

IRON was a fork of FRAX, and FRAX creators claim IRON "removed safety rails" enabling the death spiral. It'd be great to see a follow-up on FRAX to look closely at their "safety rails" to evaluate whether it would be highly resilient to a bank run. What's interesting in IRON's case is it was less of a bank run and more of a protocol failure in arbitrage. If you actually saw a real bank run on FRAX or UST, it'd be interesting to see how well they maintain stability. From a stablecoin holder perspective, I have zero interest in holding experimental / under collateralized options like FEI, UST & FRAX when you have more attractive options available like LUSD & DAI at a similar dollar peg. Stablecoin holders should beware who benefits from the existence of their stablecoin: them as the holder, or some 3rd party speculating on a volatile under collateralized asset (e.g. TITAN, Terra, etc)

[@beatthetar]

Tell me you don't understand Terra without telling me you don't understand Terra.

[@danielaaaabeeeceee5126]

Can anyone tell me a Fiat-bank that HAS NOT a fractional reserve system?? Before 2008 it was 3%,after the crash it was raised to 10% So when will the reallife bankrun finally happen?

[@MattPerdeck]

It seems that the system was at least partly brought down by the sheer volume of selling. If they had built into their protocol an automatic pause in trading when certain conditions are met, would they have recovered?

[@stevechad9892]

For any question concerning forex, stock and crypto trading or even for account management services, always go to google and research for professional traders like *DELMAR NICHOLAS HALL,* write a message to them directly from their official website. There are plenty professional traders out there who can help you make much profits. Always Ignore any phone number dropped here on KZbin so that you would not be faked with the wrong contact, get their contact right from their official website.

[@kannakally2611]

Defi and NFT are hot in 2021, thanks for sharing. do you know the KDG token?

[@Finematics]

I don't

[@juseplligallo7128]

3,3

[@ernani5727]

Great video, very well put together and relatively quick response to the event! Do you have any video(s) about DAI stablecoin?

[@Warung-AI-Channel]

in DeFi, no one has capable to make sure the ecosystem is running like it should be...lesson learned.

[@moonshotmoney5641]

Make a short note to.... + 1==9==1==4==2==0==6==5==4=4==9== W=h=a=t=s=p=p=

[@gnessish]

Hi, are you planning to make a DAI explanation video?

[@Finematics]

yes, it's on the list :)

[@stevechad9892]

For any question concerning forex, stock and crypto trading or even for account management services, always go to google and research for professional traders like *DELMAR NICHOLAS HALL,* write a message to them directly from their official website. There are plenty professional traders out there who can help you make much profits. Always Ignore any phone number dropped here on KZbin so that you would not be faked with the wrong contact, get their contact right from their official website.

[@KingExecutive]

Can you please do a video about RAMP Defi. It is getting serious traction

[@moonshotmoney5641]

Thanks for the feedback, write to me directly for more guidance, support and investment earnings ideas....

[@malulo]

I put money in Adamant's vault Iron/Usdc. Now that this vault disappeared from Adamant, is there anyway I can recover my money as it was not directly linked with Titan?

[@blottolotto7648]

u should go to adamants telegram and ask them

[@malulo]

@@blottolotto7648 OK. Thanks.

[@malulo]

@@blottolotto7648 When I asked in Telegram they told me to go to Sushiswap and there I finally found almost all the money. There were some loses as I was expecting though.

[@blottolotto7648]

@@malulo cool. glad u got it mostly sorted out

[@stevechad9892]

For any question concerning forex, stock and crypto trading or even for account management services, always go to google and research for professional traders like *DELMAR NICHOLAS HALL,* write a message to them directly from their official website. There are plenty professional traders out there who can help you make much profits. Always Ignore any phone number dropped here on KZbin so that you would not be faked with the wrong contact, get their contact right from their official website.

[@acephyo7222]

how did you create this kind of drawing? it's amazing .

[@Finematics]

videoscribe

[@cgunholy]

Can you do a video on Wonderland TIME?

[@finematics7056]

Good review,Awesome💗for crypto/guidance/investment🌎 ✙𝟏𝟑𝟏𝟓𝟓𝟏𝟒𝟎𝟒𝟔𝟕✉️✉️✉️.

[@xrendezv0usx]

Next big bank run will be on TETHER but the shockwaves will be felt throughout all of crypto

[@rentristandelacruz]

The Fall of the Iron Bank of Braavos

[@vsx8179]

miss these videos- please post to Odysee so I can watch them! thx

[@sdani73]

Who was doing the Oracle services for that protocol ?

[@crisdt88]

They were using 10mins TWAP (Time Weighted Average Price)

[@user-ic2ei9jf5n]

I have earned 109% thanks to Iron😘

[@moonshotmoney5641]

For more information...

[@moonshotmoney5641]

Make a short note to.... + 1==9==1==4==2==0==6==5==4=4==9== W=h=a=t=s=p=p=..

[@jeffreyd508]

Is this the future of Frax? Another run/collapse?