Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tether starting to lose its peg too, after Terra did

community.intercoin.org

Post reply on HN
Print view View original

131–140 of 976 posts

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

#131

Post by can16358p »

xmprt wrote: post #125
thematrixturtle wrote: post #76

It's hard to overemphasize how big a deal the Tether peg breaking would be (is?). At $78B, it dwarfs UST/Terra, and it's supposed to be an asset-backed stablecoin, not a risky algorithmic boondoggle like UST. If Tether plunges, it will take the broader crypto markets with it. Emphasis on the "supposed to be", since many, many, many unanswered questions have been raised about Tether's reserves and they've previously b…

Can someone explain stablecoins to me? Most online explanations talk about how the currencies are "pegged" to various assets/real world currencies/physical objects/algorithms/cryptocurrencies, however they never explain how the pegging is done. What is happening right now that is causing the price to fall, what prevented it from falling over the last few years, and why isn't that thing preventing it from falling now?

They are backed by real dollars that they have in cash reserve in a bank. At least in theory.

What is currently happening is because of too much volume they have hard time putting more money back into the ecosystem (which is the good scenario, it means they have money but things are going just a bit slow), or they are running out of money (which is a bad scenario that would cause many things to go down with it).

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

#132

Post by bspammer »

xmprt wrote: post #125
thematrixturtle wrote: post #76

It's hard to overemphasize how big a deal the Tether peg breaking would be (is?). At $78B, it dwarfs UST/Terra, and it's supposed to be an asset-backed stablecoin, not a risky algorithmic boondoggle like UST. If Tether plunges, it will take the broader crypto markets with it. Emphasis on the "supposed to be", since many, many, many unanswered questions have been raised about Tether's reserves and they've previously b…

Can someone explain stablecoins to me? Most online explanations talk about how the currencies are "pegged" to various assets/real world currencies/physical objects/algorithms/cryptocurrencies, however they never explain how the pegging is done. What is happening right now that is causing the price to fall, what prevented it from falling over the last few years, and why isn't that thing preventing it from falling now?

Tether the company guarantees it will buy all tether for $1 each. The drop in price reflects people suddenly realizing they can’t do that if everyone tries to turn in their tether at once.

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

#133

Post by TheAlchemist »

bagels wrote: post #123

If I expect it to go to 0, what is the play? I asked how to short tether years ago and didn't find any answers to act on.

There is none. The play was to short companies linked to crypto on real exchanges - a bit late for that right now.

If Tether goes to 0, probabilities are, your winning bet on a crypto exchange is worthless anyway.

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

#134

Post by semi-extrinsic »

gzer0 wrote: post #107
nrp wrote: post #88

Earlier quoted context omitted.

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.

Where are you seeing this? It's above $0.97 07:31:58 UTC Thursday, May 12, 2022

There was a dip down to about $0.95 at 07:15 UTC but there seems to be generally quite a lot of "support" at around $0.975.

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

#135

Post by outside1234 »

sshine wrote: post #71
shafyy wrote: post #55

Earlier quoted context omitted.

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere. The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters into this with billions of dollars spent in advertising. So, no, they don't deserve to lose their money to these assholes. These assholes need to be prosecu…

> many poorer and financially illeterate people have been tricked I’m sorry, but it’s worse than that. Whenever I’ve said “Tether is a scam waiting to blow up, and the evidence is obvious”, none of my smart peers had anything to say, either. The BTC price is hells high by this fake USD money printer. At least people are collectively waking up. Brrrr.

We have been saying it - but have been dismissed as being "anti-crypto"

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

#136

Post by outside1234 »

someotherperson wrote: post #62
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…

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere This is victim blaming. Nobody deserves to be exploited, robbed or otherwise for any reason.

People have been shouting to the rafters that crypto was all a grift for months, years.

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

#138

Post by hluska »

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

If that is meant to be a joke, it’s actually quite funny. Good job.

If you meant that seriously, it’s extremely poor quality advice. Leverage is neither free nor cheap. And taking 100% leverage is obscenely risky. Your characterization of it as ‘risk free’ is the most dangerous part. At 100% leverage, small swings could lead to calls you simply cannot afford.

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

#139

Post by junofan »

closewith wrote: post #110
jabbany wrote: post #67

Earlier quoted context omitted.

To be fair a lot of those are specialty tokens for specific services/uses. Overall, the crypto situation can be thought of as more similar to, say, "gift cards" issued by companies. You could say the same thing about a $5 Starbucks gift card --- you'd be hard pressed to spend it directly against any other merchant, but you could feasibly try to sell it for < $5 real dollars and if Starbucks went under, it would be wo…

> To be fair a lot of those are specialty tokens for specific services/uses. Is that true, or were they created as speculative instruments and are doomed to failure in the long run?

Some of them give you discounts and perks and stuff. There’s real value. Many of the legit ones are created more as a way to bootstrap network effects by giving out free stuff to early adopters.

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

#140

Post by tcharlton »

xmprt wrote: post #125
thematrixturtle wrote: post #76

It's hard to overemphasize how big a deal the Tether peg breaking would be (is?). At $78B, it dwarfs UST/Terra, and it's supposed to be an asset-backed stablecoin, not a risky algorithmic boondoggle like UST. If Tether plunges, it will take the broader crypto markets with it. Emphasis on the "supposed to be", since many, many, many unanswered questions have been raised about Tether's reserves and they've previously b…

Can someone explain stablecoins to me? Most online explanations talk about how the currencies are "pegged" to various assets/real world currencies/physical objects/algorithms/cryptocurrencies, however they never explain how the pegging is done. What is happening right now that is causing the price to fall, what prevented it from falling over the last few years, and why isn't that thing preventing it from falling now?

Matt Levine did a great write up of algorithmic stablecoins here: https://www.bloomberg.com/opinion/articles/2022-05-11/terra-...

"1. You wake up one morning and invent two crypto tokens.

2. One of them is the stablecoin, which I will call “Terra,” for reasons that will become apparent.

3. The other one is not the stablecoin. I will call it “Luna.”

4. To be clear, they are both just things you made up, just numbers on a ledger. (Probably the ledger is maintained on a decentralized blockchain, though in theory you could do this on your computer in Excel.)

5. You try to find people to buy them.

6. Luna will trade at some price determined by supply and demand. If you make it up on your computer and keep the list in Excel and smirk when you tell people about this, that price will be zero, and none of this will work.

7. But if you do a good job of marketing Luna, that price will not be zero. If the price is not zero then you’re in business.

8. You promise that people can always exchange one Terra for $1 worth of Luna. If Luna trades at $0.10, then one Terra will get you 10 Luna. If Luna trades at $20, then one Terra will get you 0.05 Luna. Doesn’t matter. The price of Luna is arbitrary, but one Terra always gets you $1 worth of Luna. (And vice versa: People can always exchange $1 worth of Luna for one Terra.)

9. You set up an automated smart contract — the “algorithm” in “algorithmic stablecoin” — to let people exchange their Terras for Lunas and Lunas for Terras.

10. Terra should trade at $1. If it trades above $1, people — arbitrageurs — can buy $1 worth of Luna for $1 and exchange them for one Terra worth more than a dollar, for an instant profit. If it trades below $1, people can buy one Terra for less than a dollar and exchange it for $1 worth of Luna, for an instant profit. These arbitrage trades push the price of Terra back to $1 if it ever goes higher or lower.

11. The price of Luna will fluctuate. Over time, as trust in this ecosystem grows, it will probably mostly go up. But that is not essential to the stablecoin concept. As long as Luna robustly has a non-zero value, you can exchange one Terra for some quantity of Luna that is worth $1, which means Terra should be worth $1, which means that its value should be stable.

All of this is, I think, quite straightforward and correct, except for Point 7, which is insane. If you overcome that — if you can find a way to make Luna worth some nonzero amount of money — then everything works fine. "

Post reply on HN