Something peculiar happened in Montelibero recently. Someone appeared who wanted to enter our tokenomics with a large sum. Most likely, he read the instructions and began to follow them. He obtained dollar stablecoins from some external exchange and went to exchange them for our euro ones. Meanwhile, the order book usually looks something like this:

What do we see here? There is a certain number of tokens trading in both directions with a more or less reasonable spread, and then orders begin at completely absurd prices; for example, 5 EURMTL are offered for sale at a price of 1000 USDC each. For such an order to be triggered, someone would first have to buy more than four thousand EURMTL at a price of around 1.12, and under normal conditions, this of course never happens. But when someone, without looking and with a broad gesture, throws, for example, 40,000 USDC into the market, they will buy up all the cheap euros, and with the remaining amount, they will stock up on overpriced ones. That is exactly what happened.

According to libertarian principles, this deal, like any other voluntary transaction, is completely legitimate. A person has every right to sell a glass of water for a diamond in the heart of a desert or a kilogram of flour for an antique icon in besieged Leningrad. Likewise in our case—there were no more favorable offers on the market, and the buyer agreed to what was available.

What is the difference between our case and the aforementioned cases of buying under conditions of extreme scarcity? In our case, there was no real scarcity in the market. It would have been enough to buy as many tokens as were listed for sale at an acceptable price, then wait a bit and make sure that other traders arrived and placed new orders at prices not much worse. One could also have written in the chat: “I want to buy euros for forty kilobucks, but there aren’t that many on the exchange, who is ready to sell more?” Finally, one could have contacted the MTL fund directly, saying, “Guys, you’re emitting a stablecoin here, how about you issue more coins against my dollars.”

But to do this, one must understand the specifics of the acquired asset and the specifics of the trading tools. And this leads us to a discussion of paternalism under ancap.

What is paternalism? It is a demand for a social arrangement that reduces the cost of a mistake. Is there such a demand under ancap? Of course, yes. Even looking only at tokenomics, it exists, firstly, from the side of beginners who do not yet fully understand the principles of how it works and therefore risk losing a lot through carelessness. Secondly, there is a demand from the developers of tokenomics tools: if a tool is dangerous to use, people will use alternative solutions. Thirdly, there is a demand from community activists: it is important to them that people come and stay, rather than fleeing in horror after hitting such pitfalls.

How was the case described above handled?

Firstly, additional checks were added to the MTL-Wallet. If a user wants to exchange a large amount at market price, the bot compares the effective exchange rate for the proposed amount and for an amount a hundred times smaller. If they differ by more than 10%, the bot issues a warning.

Secondly, the trader who made a fortune on their order was found and persuaded to return the earnings (I am not aware of the details; perhaps they kept some for themselves, but the victim, nevertheless, remained completely delighted). This was the hardest part, as the ancap community has no tools for forced coercion to return funds, nor should it have any.

Thirdly, the fund plans to place protective orders for all main trading pairs so that it would be extremely difficult for a careless buyer to break through them.

What conclusions can I draw from what happened?

Firstly, paternalism is natural, and there is no need to fight it.

Secondly, under ancap, paternalism is limited by libertarian principles, namely self-ownership and the non-aggression principle.

Thirdly, even with such limitations, fully functioning paternalistic tools can be created in society.

So here is another argument for your collection of debates with statists, proving that ancap is not cannibalism, and that private paternalism is more effective than state paternalism.