Anyone Seen Tether’s Billions?

Certainly -- I agree OP (arcticbull) was replying to a comment about DeFI by explaining the dangers of a centralized exchange! That makes it a confused, unhelpful response, not one that "obviously" meant something coherent if you squint hard enough and practice sufficiently strained exegesis.

>As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which are coming to DEXs).

Margin has "come to" DEX the moment smartcontracts offer collateralized DeFi lending, which they have, so I'm not sure what you mean here.

>DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation.

The reason (I'm claiming) centralized exchanges are more vulnerable is that

a) they own the platform and are the word of god on it -- whence the stories of people getting margin called at flash-crash prices that don't exist on other platforms. If they say prices are trading at some level, you just have to deal with it. That's not possible when you have to trade how the algorithm says.

b) If someone "stupidly" buys in one direction on a DEX, "for manipulation", they've vulnerable to the entire universe of arbitrageurs who can exploit the resultant price differences. Inter-[centralized] exchange arbitrage is much harder.

I brought up the point simply to emphasize that, to the extent that there's manipulation, it does not look like the manipulation you'd see on CEX, which was how OP was basing his argument.

Furthermore, even the issue of more expensive liquidity from transaction fees wouldn't be true for the far-cheaper L2 sidechains.

(Btw, you might want to use the terms in their unabbreviated forms at least once just to make it easy on people who aren't up to speed.)

> As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

I've been swayed by the MMT videos on youtube which I know are controversial, but it seems to me that when a bank makes a loan, its deposits on-the-books increase, they do not have to have deposits equal to liabilities, and in fact a loan is not a liability to the bank, it is a liability to the borrower. Am I wrong?

[0] https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Ok, I get it. You’ve not actually looked at what other investments are like. 20% return over 10 years? The S&P 500 is on track to do that this year, after one of the biggest rallies in history last year. $5k invested just before the covid collapse would still be worth far more than $6k, and that’s 18 months through a global pandemic.

That said, your answered your own issue: homes are unaffordable. I’m with you on that: we turned housing into retirement plans for boomers. And now we don’t know what to do about it.

There’s an old adage in commodities trading: the best cure for high prices is high prices. The meaning behind this is that when prices are too high and people can’t or won’t buy, then prices can only go down. Over the next few decades, young people will either earn substantially more, or housing will become substantially cheaper.

You can’t sell anyone a home for $485k if they can only get a $166k mortgage. So these things will converge.

This architecture doesn't exist AFAIK - certainly no trustworthy parties are offering it (since why would they want Tethers?).

Ok, fair. What I mean is high leverage, which is the fuel for the type of manipulation I’m referring to.

To your point about CEX lying about price, that’s a very risky proposition for the arbitrage reasons you mention (CEX arbitrage actually easier for a number of reasons, but I understand why you’d think DEX is easier).

If I run a CEX, unless I collude with every other venue I risk all the arbitrageurs buying/selling my fake prices which means it’s not fake, I’ve just traded against them.

> Furthermore, even the issue of more expensive liquidity from transaction fees wouldn't be true for the far-cheaper L2 sidechains.

No, I said capital efficiency, not execution cost. DEX costs are crazy, but that’s by choice, whereas the capital efficiency is a structural issue. If I want to provide liquidity on 100 CEX markets, I only need enough capital to wear the orders I actually get filled on at any given point in time. As an AMM I’d have have enough capital to be in a 100 different LPs.

To illustrate: let’s say I want to provide $1m of resting liquidity in 100 CEX markets. Let’s say that in doing this, I end up having positions at any point in time that require $10m of capital. If I want to provide the same $1m of liquidity in 100 DEX markets, I need $100m.

So a CEX ends up being 10x more efficient from a capital use perspective.