[deleted]
Tether minted most USDT to just 2 firms – Alameda and Cumberland
21–30 of 211 posts
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#22There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
Matt Levine's Money Stuff column yesterday [1] had a pretty thorough take on stablecoins and their uses - and their potential pitfalls, with a bit of Tether history thrown in. It's the second chunk of the column under the heading "Speaking of Stablecoins".
[1] https://www.bloomberg.com/opinion/articles/2021-08-11/crypto...
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#23There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
Yield farming with stablecoin pairs (ie USDC/USDT liquidity pool shares) has no impermanent loss and high returns, and you are liquid to buy any dips in the crypto market because you can unbundle your liquidity pool share at any time and you just have a bunch of stablecoins and dont even have to wait for custodial exchange withdrawals confirmations
So you are better positioned and can act faster on a broader universe of assets, than a large portion of the crypto space.
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#24Earlier quoted context omitted.
Luckily their TOS says: > "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money." Edit: Oops this has been updated to: > Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves th…
It amazes me that more people don't read the Tether ToS and run away.
Maybe people are trying to run away from their own country's currency even more urgently? Is it really risky to get some tether for a short time to buy some other cryptocurrency?
Maybe the question is why do some big exchanges still work with tether? Must be worth it to them!
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#25There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
Pretty straightforward: You can currently get 8.88% APY return on lending stablecoins on Celsius[0]. It's also much easier to borrow and use in incredibly risky contracts, yield farming, etc Stablecoins let you engage in much more risk than USD without the volatility of crypto prices. [0] https://celsius.network/earn-rewards-on-your-crypto
If a bank offered me 8.88% APY for depositing USD, I'd be pretty suspicious of a catch.
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#26There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
You don't need to pay taxes.
Example: You earn $1000/month. Cost of living is $500/month, labour tax is $500/month. By using cryptocurrency you can skip tax and save up $500/month, in legit employment (labour law, worker rights protection) you save up $0/month, you work for free, hand to mouth.
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#27There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
As an individual trader running an algorithmic arbitrage operation at > 40 exchanges, I have to. You can count me in for USDT 56k. I am small fish.
My algorithms constantly watch USDT/USD price at 3 exchanges which are independent from Tether Inc, and if USDT drops below $0.95 at one of them, they stop issuing orders selling to USDT.
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#28If the Commercial Paper that Tether holds to show they have enough cash on hand is issued from Alameda & Cumberland then we've closed the loop on this scam.
e.g.
Alameda offers to buy 20B USDT in exchange for commerical paper offered by them. It's rated as A or B in part because before the sale they have net positive assets.
Tether's sheets look good at a very high level pass (https://tether.to/wp-content/uploads/2021/08/tether_assuranc...) Notably they have 14B in Commerical Paper rated at A-1 and 13.9B in Commerical Paper rated at A-2.
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#29I often find the headlines, and even stories about, crypto to be inscrutable to those looking in from the outside. The stories also seem to come from an ecosystem of sites I don't recognize so it's hard to even judge if it's reputable site (or at least guess at the biases it might have).
None of this is inherently bad, but there seems to be a growing divide between "mainstream" tech and the crypto world that is harder and harder to understand if you aren't already steeping in the ecosystem.
Another challenging aspect is how much of crypto (particularly non-mainstream) has somewhat shady origins. Maybe the shadiness is just subverting expected norms, but there seems also to be sufficient evidence the shadiness also often is around illicit activity.
I'm curious if others have found ways to build and keep an understanding of the crypto ecosystem without fully going down the rabbit hole?
Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland
#30There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
Stablecoins have instant transfers between exchanges because they're not dependent on the legacy banking system. Their primary purpose is moving money around. There are also algorithmic stablecoins which maintain their price by adjusting supply rather than being backed by reserves.
[deleted]