Approx. 24 hours ago, Tether printed 1B $USDT out of thin air • Hacker News Board

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#221

Post by gruez » Mon, Dec 06, 2021, 3:25 AM UTC

zhoujianfu wrote: post #213

gruez wrote: post #123

Earlier quoted context omitted.

>When people sell other crypto for tether/USDC, they are essentially “buying” tether/USDC. Which tether and circle “print” out of thin air… but ostensibly back by selling the other crypto they just received for real dollars. You're missing the previous links in the chain. When you sell your crypto at an exchange, your counterparty isn't the exchange, it's another person who wants to buy crypto. Therefore you making t…

If I were tether themselves, I know I’d be personally market making every usdt trading pair on every major exchange myself. And when people bought my tethers for crypto I’d turn around and sell the crypto for usd and issue more usdt.

That sounds like a lot of work for nothing? Suppose 1 BTC = $50k

>And when people bought my tethers for crypto

now you have 1 BTC, and $49,995 (assuming $10 spread and you were a maker) USDT (aka IOUs) outstanding

>I’d turn around and sell the crypto for usd

now you have 0 BTC, $49,995 USDT outstanding, and $50,005 (assuming $10 spread and you were a maker)

From a balance sheet point of view that looks like a pretty standard market making operation. You don't need to be issuing unbacked IOUs for it to work. The only advantage that tether has is access to the initial $50k capital for market making, but you don't need to be a stablecoin issuer to pull this off. You could just as well embezzle an exchange's funds directly.

Actually come to think of it, if you wanted to market make and you were ifinex/tether, the biggest advantage you can get isn't the free funds you can issue/embezzle, it's the differentiated order flow you can get as an exchange operator. You can categorize order flows as toxic/non-toxic[1] (maybe based on account trading history?), and keep them for yourself to internalize.

[1] https://www.ceedtrading.com/glossary/toxic-order-flow/

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#222

Post by helen___keller » Mon, Dec 06, 2021, 3:25 AM UTC

notjesse wrote: post #155

bb88 wrote: post #127

Earlier quoted context omitted.

Right now I think a good analogy is it's like musical chairs. The game is fine as long as the music is playing. When the music stops, someone's gonna lose big. The problem is when the music stops and there's a run on crypto. People are trying to get out of $USDT and convert it into cash. Exchanges have to have buyers of $USDT so they can exchange $USDT back into cash for anyone that wants to. But they can't just crea…

This makes me think; what if you shorted USDT? There seems to be almost no scenario where USDT becomes more valuable than the USD, and the worst case is it continues to be worth the same. But there is a fair probability it becomes worthless, meaning that you gain from it. While you need to pay premiums in the interim, for something with an indefinite timeframe, that risk seems fairly minor for the potential reward.

For a while I had a 5x leveraged tether short (with a USDC long deposit reserve) on a decentralized exchange. I was briefly making money through this on arbitrage but it fluctuates rapidly.

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#223

Post by weare138 » Mon, Dec 06, 2021, 3:31 AM UTC

tzone wrote: post #142

People who have no idea how crypto markets work always get riled up by these tweets. Contrary to popular belief, there is generally huge demand spike for USDT when crypto market has flash crashes, not other way around. More USDT got issued because there was opportunity to make 0.1-0.2% on each new USDT since demand for it was that high (i.e. people were paying real USD to buy USDT at a premium, imagine that). USDT (a…

What does any of that have to do with the discussion? That doesn't in any way address the issue with Tether's lack of transparency. The issue is whether Tether actually has the capital to back up it's stablecoin.

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#224

Post by gruez » Mon, Dec 06, 2021, 3:42 AM UTC

astrange wrote: post #212

gruez wrote: post #151

Earlier quoted context omitted.

>it’s just the most efficient / progressive wealth tax! no, it's not a wealth tax. it's a cash tax. if you printed money and caused 100% inflation, that'll just cause every scarce asset (eg. houses, stocks, gold) to double in price. Since the rich hold most of their wealth in assets, not cash, I doubt it will be fair or progressive.

Stocks aren't scarce assets. They're infinitely dividable, so the price per share going up doesn't cause them to be harder to buy. This used to be true before we had computers and free fractional share purchases of course. Houses aren't really either, it's the land that is. Thanks Henry George.

> Stocks aren't scarce assets. They're infinitely dividable, so the price per share going up doesn't cause them to be harder to buy.

That doesn't make any sense. Stocks ultimately represent ownership in an enterprise that consists of people, equipment, and intellectual property. Those are scarce. Just because the ownership units is infinitely divisible, doesn't mean they aren't scarce. If people only bought stocks so they could hang a fancy certificate on their wall, you'd be right. But people don't do that, they buy stocks to get dibs on a certain fraction of future production. That's the scarce part.

>Houses aren't really either, it's the land that is. Thanks Henry George.

1. seems like a nitpick? When people talk buying "houses", they generally talk about buying the combo of house + land it sits on.

2. houses are still scarce[1]. we can't will infinite houses into existence. they're more plentiful than original picasso paintings, but that doesn't make them not scarce (at least according to the economic definition).

[1] https://en.wikipedia.org/wiki/Scarcity

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#225

Post by throwoutway » Mon, Dec 06, 2021, 3:52 AM UTC

tinco wrote: post #61

superjan wrote: post #31

Earlier quoted context omitted.

Beyond the fraud allegations, the idea that an organisation can just print extra money as they see fit, doesn’t that go against the principles of crypto finance? I am genuinely curious why people think that is a sustainable idea.

The principles of crypto finance? Cryptocurrencies are not built on principles, they are built on technologies. The only unifying principle across all cryptocurrencies that I've noticed is that you access your assets through a cryptographic hash. You could launch USD+SEPA+your banks online banking interface today and call it a cryptocurrency, it's as much a cryptocurrency as for example Ripple is. edit: ok the other…

The Ethereum Classic chain would disagree. I get your point though, but the original bitcoin paper isn’t apolitical. It was very principled

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#226

Post by chrismcb » Mon, Dec 06, 2021, 3:55 AM UTC

What is $USDT?

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#227

Post by astrange » Mon, Dec 06, 2021, 3:58 AM UTC

gruez wrote: post #224

astrange wrote: post #212

Earlier quoted context omitted.

Stocks aren't scarce assets. They're infinitely dividable, so the price per share going up doesn't cause them to be harder to buy. This used to be true before we had computers and free fractional share purchases of course. Houses aren't really either, it's the land that is. Thanks Henry George.

> Stocks aren't scarce assets. They're infinitely dividable, so the price per share going up doesn't cause them to be harder to buy. That doesn't make any sense. Stocks ultimately represent ownership in an enterprise that consists of people, equipment, and intellectual property. Those are scarce. Just because the ownership units is infinitely divisible, doesn't mean they aren't scarce. If people only bought stocks so…

Well, the other reason stocks aren't scarce is that the company can print new ones. You'd expect this to reduce valuation and therefore have shareholders oppose it, but in practice that doesn't seem to happen lately.

> If people only bought stocks so they could hang a fancy certificate on their wall, you'd be right.

This is highly underrated as a reason. What's the fundamental improvement in Gamestop and Tesla causing their stock price to go up this year?

See

https://www.bloomberg.com/opinion/articles/2021-10-25/elon-m...

https://en.wikipedia.org/wiki/Meme_stock

> 1. seems like a nitpick? When people talk buying "houses", they generally talk about buying the combo of house + land it sits on.

Many people don't seem to understand how to separate them, leading to beliefs like "luxury apartments cost more because they have granite countertops" and "gentrification can be prevented by not building new buildings". You can't build houses forever, but you sure can build many more of them than the US does right now.

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#228

Post by webinvest » Mon, Dec 06, 2021, 4:13 AM UTC

notjesse wrote: post #155

bb88 wrote: post #127

Earlier quoted context omitted.

Right now I think a good analogy is it's like musical chairs. The game is fine as long as the music is playing. When the music stops, someone's gonna lose big. The problem is when the music stops and there's a run on crypto. People are trying to get out of $USDT and convert it into cash. Exchanges have to have buyers of $USDT so they can exchange $USDT back into cash for anyone that wants to. But they can't just crea…

This makes me think; what if you shorted USDT? There seems to be almost no scenario where USDT becomes more valuable than the USD, and the worst case is it continues to be worth the same. But there is a fair probability it becomes worthless, meaning that you gain from it. While you need to pay premiums in the interim, for something with an indefinite timeframe, that risk seems fairly minor for the potential reward.

It costs about 9% per year to short it on most exchanges but about 4-5% on many DeFi platforms. Since most fractional banks live off of a 10% reserve ratio, you could very well be keeping Tether alive and prevent it from ever going under by shorting it.

They are profiting from all of the tether FUD nonsense by being able to lend their coins at a higher rate.

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#229

Post by javert » Mon, Dec 06, 2021, 4:41 AM UTC

beaconstudios wrote: post #133

javert wrote: post #96

Earlier quoted context omitted.

You can't keep traders from trading bitcoin. That doesn't mean bitcoin is unprincipled. It's in the whitepaper and the design of bitcoin. For example, the 21M btc supply limit. Bitcoin's design reflects a certain ideology about money.

Technologies don't have principles, people who use them have principles; the people who buy and sell bitcoin are mostly the same as the other cryptocoins. Satoshi intended certain principles with the creation of bitcoin, but these are not the predominant driver of its use in actuality.

Bitcoin really is defined by its principles. A fork that violates its principles (say, changing the 21M cap or violating the transaction history which hashes back to the genesis block) wouldn't be bitcoin, just like no amount of people believing the earth is flat would make it flat.

Re: Approx. 24 hours ago, Tether printed 1B $USDT out of thin air

#230

Post by gruez » Mon, Dec 06, 2021, 4:46 AM UTC

astrange wrote: post #227

gruez wrote: post #224

Earlier quoted context omitted.

> Stocks aren't scarce assets. They're infinitely dividable, so the price per share going up doesn't cause them to be harder to buy. That doesn't make any sense. Stocks ultimately represent ownership in an enterprise that consists of people, equipment, and intellectual property. Those are scarce. Just because the ownership units is infinitely divisible, doesn't mean they aren't scarce. If people only bought stocks so…

Well, the other reason stocks aren't scarce is that the company can print new ones. You'd expect this to reduce valuation and therefore have shareholders oppose it, but in practice that doesn't seem to happen lately. > If people only bought stocks so they could hang a fancy certificate on their wall, you'd be right. This is highly underrated as a reason. What's the fundamental improvement in Gamestop and Tesla causin…

> Well, the other reason stocks aren't scarce is that the company can print new ones. You'd expect this to reduce valuation and therefore have shareholders oppose it, but in practice that doesn't seem to happen lately.

If you're doing this in an above-board way, it's still scarce, because the whole reason why companies even issue new shares is to raise capital. When you're doing that, you're trading one scarce resource (capital) for shares, which means that the shares are also scarce. You can make an infinite amount of TVs given infinite raw materials, but TVs are still scarce.

>This is highly underrated as a reason. What's the fundamental improvement in Gamestop and Tesla causing their stock price to go up this year?

Any evidence that people bought exactly one share TSLA/GME just so they could hang on their wall and/or feel smug about it? In both cases it's far more likely they bought into it because of expectation of future profits (from greater fools or actual operating profits).

>Many people don't seem to understand how to separate them, leading to beliefs like "luxury apartments cost more because they have granite countertops" and "gentrification can be prevented by not building new buildings". You can't build houses forever, but you sure can build many more of them than the US does right now.

While there might certainly be people who think the housing crisis is caused by "developers only building luxury condos" or whatever, I doubt this is a popular view on HN. Any time a housing-related thread shows up on HN, that explanation almost never shows up, and the NIMBY/zoning explanation almost always does. I'm sure a decade+ member like yourself can see this. Therefore I don't really see much point in arguing this distinction, because you'd be preaching to the choir.