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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

#191

Post by mwill »

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…

Do people in crypto sincerely believe Tether is backed? I'm not being sarcastic here, I'm genuinely asking. I'm a bit of a skeptic of how the crypto market has developed overall, and the intentions of the major players, so I keep reminding myself that I'm biased, but I haven't believed Tether is even remotely close to being fully backed for a long while, and I've just sort of assumed everyone who's 'bought in' to the crypto space also knows and just doesn't care, or they think it's 'too big to fail'.

Is that the case or is there genuine belief it is fully/mostly/partly backed?

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

#192

Post by gadnuk »

ryanSrich wrote: post #169
xmprt wrote: post #125

Earlier quoted context omitted.

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?

You give me a dollar, I give you a digital currency equivalent. When you need your real USD back, you tell me and I give it to you. That means in an ideal world, you have your stable coins backed 1:1 with real USD. Of course, this isn’t always the case, and with Tether, there has been much scrutiny over the years that they do not have the USD collateral to back their stablecoin. Ok, but let’s assume Tether has the US…

This is an amazing explanation. Thank you!

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

#193

Post by Geee »

xmprt wrote: post #97
qbasic_forever wrote: post #38

Earlier quoted context omitted.

There's probably still some value in it for darknet activities like sales of illicit goods, ransom payments, etc.

I think what the poster is asking, is why wouldn't communities/darknet activites deal with other cryptocurrencies which are objectively better than Bitcoin in terms of functionality although they have a smaller community and network at the moment.

You guys are funny. Bitcoin is one of the largest currencies in the world with over 100 million users. Read the Bitcoin Standard to understand why.

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

#194

Post by 22c »

Animats wrote: post #180

Tether is back up to around $0.98, but volume is high. Somebody is pouring cash into Tether to support the price. Similar over at UST. Price is back up to $0.60, but volume is far above normal. Remember, with a stablecoin, there is no upside to holding . Any indication of risk means it's time to get out. Even if Tether has enough reserves to get the price back to $1, there will be substantial cashing out. That's why…

https://twitter.com/tether_to/status/1524652531170881537

Surely this is related

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

#195

Post by darawk »

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…

They do have collateral. There has never been any evidence that they don't. The peg is already re-converged.

Just as it has quickly every other time this has happened. It reconverges, unlike UST, because they actually redeem your Tether for dollars when you ask.

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

#196

Post by CryptoPunk »

shafyy wrote: post #55
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. 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…

>>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.

I'm a consumer of tether. I know the risks, and I take a calculated risk in using it for some applications. I perceive almost everything in the space as an experiment, and I'm willing to run that experiment. I personally believe that my sentiment is common among those who use and hold crypto assets. Cryptocurrencies are widely perceived as experimental and subject to large unexpected rice declines, hacks and other risks. That goes for stablecoins too.

I don't want you to forcibly prevent people from making any offer they want to me. By doing so, you are violating my right to free association, and assuming you know better than me what's best for me. I am not a child.

Maybe we can give people an option to suspend their rights as free citizens, and subject themselves to your political camp's centralized control, and leave every one else alone to decide for themselves, in accordance with the basic principles of liberal democracy. Is that a fair compromise, or are you going to presume large sections of your fellow citizens are not only financially illiterate, but also are too poor in judgment to realize they are better off under the control of people like you?

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

#197

Post by randomsearch »

bspammer wrote: post #132
xmprt wrote: post #125

Earlier quoted context omitted.

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.

Surely it is very difficult for a company to "guarantee" anything about the price of a commodity sold in a large open market. There are all sorts of reasons prices go up and down, it seems hubris to imagine you can tether anything.

Even national governments struggle to do this. https://en.wikipedia.org/wiki/Black_Wednesday

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

#198

Post by myle »

davidweatherall wrote: post #189
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…

I don't understand how you bodge a stable coin startup. Surely you just mint the tokens in exchange for dollars, and then put ~50% of the dollars in zero risk investments (some form of treasury bonds), and then take the 0.5-1% interest per year as your revenue. Tether currently has $81b marketcap so you could be making $400-800m per year doing basically nothing?

Greediness.

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

#199

Post by nmfisher »

22c wrote: post #194
Animats wrote: post #180

Tether is back up to around $0.98, but volume is high. Somebody is pouring cash into Tether to support the price. Similar over at UST. Price is back up to $0.60, but volume is far above normal. Remember, with a stablecoin, there is no upside to holding . Any indication of risk means it's time to get out. Even if Tether has enough reserves to get the price back to $1, there will be substantial cashing out. That's why…

https://twitter.com/tether_to/status/1524652531170881537 Surely this is related

I just saw that on Twitter and have absolutely no idea what it means. Can anyone explain it?

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

#200

Post by oarabbus_ »

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

No, it's back to 99c
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