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Tether starting to lose its peg too, after Terra did

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Re: Tether starting to lose its peg too, after Terra did

#81

Post by adhesive_wombat »

frozenport wrote: post #66
adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

How are VCs making money? They invested $$$ and the company became insolvent? Don't the investors loose?

Only if they're drinking their own koolaid and not constantly cashing out the fresh, real money that new marks bring to them as their stake in the market.

Re: Tether starting to lose its peg too, after Terra did

#83

Post by fastball »

turtledove wrote: post #59
rtpg wrote: post #32

Earlier quoted context omitted.

You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!

So wait, assuming I had a hundred k, and they were willing and able to pay out, I could buy 97k of tether and redeem it for 100k? Just an instant 3% return? This seems like there's no way they are opening themselves up to arbitrage like this.

Well the whole point of a "backed" stablecoin is that you can do this, and arbitrage should never be an issue because the currency is supposed to be pegged to the dollar. And if the mechanism for this peg is 1-to-1 backing then it's a non-issue.

Contrast this with UST which was an "algorithmic" stablecoin, where the peg is maintained by much more complex mechanisms.

The issue in this case is (of course) that USDT are not actually backed 1-to-1 with actual dollars in actual reserves but rather backed mostly by hopes and dreams.

Re: Tether starting to lose its peg too, after Terra did

#85

Post by NavinF »

artdigital wrote: post #37

Anything on any market can shift its price to the red or green. Tether and USDC are just tokens, so if there is enough sell pressure and not enough liquidity, the price on an exchange can jump to something else than $1. They are not fixed at a static $1. It's actually almost never exactly at $1 and the reason why it's immediately pegging back to $1 is because there is an arbitrage opportunity, assuming there is enoug…

> Seeing USDT at 0.97 temporarily doesn't mean much more than there is an insane amount of money exiting right now

Eh you might be right, but there are orders executing at 0.95 now.

Will you buy in for a “free” 6% ROI?

I was planning on buying a couple of GPUs, but now I think I should wait a bit just in case ETH crashes lol

Edit: Yeah you should have put your money where your mouth is. It’s back up to 0.988.

Re: Tether starting to lose its peg too, after Terra did

#86

Post by eterm »

EGreg wrote: post #73
adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

A year ago I advocated this “riskless” strategy on HN… if anyone actually listened to me, would you be up 1,000,000% right now? https://news.ycombinator.com/item?id=26106281

Did you listen to yourself and do that?

Re: Tether starting to lose its peg too, after Terra did

#87

Post by gassit »

fastball wrote: post #47
NhanH wrote: post #5

Earlier quoted context omitted.

If Tether massively breaks the peg, there is a non-trivial chance of sub $2k BTC tomorrow

To me that math doesn't add up very well. Let's assume that 5 minutes from now, Tether drops to zero. Turns out Tethers were approximately 100% unbacked. There are currently ~$80B USDT in circulation. Even if you also assume 100% of USDT holders were also Bitcoin maxis who were using USDT as a "stable store of value" when they periodically want to exit their BTC position, the market cap of Bitcoin is still ~$500B, so…

This isn't how it works. You need to look at how much of the flows into BTC (supporting the price) are coming from Tether. You will find this is a whole lot more than 16%. So if it drops to zero 5 minutes from now (not going to happen, but just to use the same scenario), then all those flows which supported the price drop to zero. A comparison between the relative market caps doesn't tell you much, it's the buying volume it supplies.

The 24 hour trading volume for Tether is $175B. The 24 hour trading volume for BTC is $80B (as I write this). Tether is the money in the system.

Re: Tether starting to lose its peg too, after Terra did

#88

Post by nrp »

rtpg wrote: post #32
JohnJamesRambo wrote: post #16

Earlier quoted context omitted.

They are actually redeeming them on their website for anyone that wants to. > @paoloardoino GM Reminder that tether is honouring USDt redemptions at 1$ via http://tether.to . >300M redeemed in last 24h without a sweat drop. 12:38 AM · May 12, 2022·

You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!

USDT is now <$0.95, so the arbitrage opportunity is getting more exciting by the minute. It will be very interesting to see how long they can hold out against that.

Re: Tether starting to lose its peg too, after Terra did

#89

Post by cycrutchfield »

fastball wrote: post #47
NhanH wrote: post #5

Earlier quoted context omitted.

If Tether massively breaks the peg, there is a non-trivial chance of sub $2k BTC tomorrow

To me that math doesn't add up very well. Let's assume that 5 minutes from now, Tether drops to zero. Turns out Tethers were approximately 100% unbacked. There are currently ~$80B USDT in circulation. Even if you also assume 100% of USDT holders were also Bitcoin maxis who were using USDT as a "stable store of value" when they periodically want to exit their BTC position, the market cap of Bitcoin is still ~$500B, so…

You can’t just use market cap in that way. USDT collapsing would send BTC back to the Stone Age

Re: Tether starting to lose its peg too, after Terra did

#90

Post by mateuszf »

EGreg wrote: post #73
adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

A year ago I advocated this “riskless” strategy on HN… if anyone actually listened to me, would you be up 1,000,000% right now? https://news.ycombinator.com/item?id=26106281

Did you listen?
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