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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

#211

Post by leodriesch »

prox wrote: post #173
tcharlton wrote: post #140

Earlier quoted context omitted.

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 o…

So why would one want to have Luna when you got Terra? I know Terra is backed, I know Luna is speculation, not any different from doing a roulette game.

Terra does not move in value. It’s like owning cash vs owning stocks.

The cash is less risky but it’s value does not change (apart from inflation).

Stocks are more risky but may give you profit over time.

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

#212

Post by bspammer »

prox wrote: post #173
tcharlton wrote: post #140

Earlier quoted context omitted.

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 o…

So why would one want to have Luna when you got Terra? I know Terra is backed, I know Luna is speculation, not any different from doing a roulette game.

More accurately why would you want either when the whole thing is propped up by marketing hype.

To properly answer your question, Terra has no upside: no way to 10x. So yes, gambling.

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

#213

Post by mcintyre1994 »

randomsearch wrote: post #197
bspammer wrote: post #132

Earlier quoted context omitted.

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

In theory you should be able to do it if you always have reserves worth more than the total number of outstanding tether. If you distribute 40b tether and have $50b in liquid cash, you can guarantee that you will pay exactly $1 for each tether. Obviously everyone holding your coin is exposed to changes to the value of your dollars, but you can always give them $1 for 1 tether. The problem is of course that you can make a great deal more money for yourself if you invest in riskier ways than holding liquid cash.

I don't think the Black Wednesday situation is similar, because the UK was never going to be able to hold enough of the currencies it was supposedly pegged to to make that same promise. Definitely not my expertise there though!

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

#214

Post by Rexxar »

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…

They deserve to lose and those who have 'tricked' them should be prosecuted. We can have both. Culpability of one side doesn't make the other side innocent victims. It's not bad people against good people, it's bad people everywhere in this situation.

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

#215

Post by arinlen »

spupe wrote: post #152
tluyben2 wrote: post #112

Earlier quoted context omitted.

The religious (for a lack of better word as it is a religion to believe that cryptocurrencies are inherently better than other assets (outside NFTs) but they do believe that if you read twitter/reddit) people are hodling but all the 'saner' people I know went out in december. There was enough writing on the wall to know that 2022 would not be a good year for some assets (and it's just beginning). Only the real believ…

Yeah, this is the dark side of all this "diamond hands", "to the moon" bullshit. A handful of winners, a majority of losers, and some people going complete bankrupt because they are foolish.

> Yeah, this is the dark side of all this "diamond hands", "to the moon" bullshit.

Also known as "please continue holding the bag".

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

#216

Post by Slartie »

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…

There is an upside of holding USDT (although not a monetary one): it serves as a "stable" store of value on non-USD-banked exchanges when trading other cryptos.

Especially right now, with the market going down rapidly, a lot of people probably sold coins on the way down with the intention of buying back into the market at a later point in time. A substantial number of these traders temporarily hold their value in USDT in the meantime, because that's easy to transfer between crypto exchanges.

Volume on USDT/USD is going down right now btw, while it stabilizes at around 0.986. I wouldn't bet on this drop having been the last one in the current market disturbance, but I'd bet on USDT not collapsing the same way UST did, at least not within the coming days.

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

#217

Post by usednet »

mwill wrote: post #191
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…

No, but when many major exchanges only have USDT pairs people are forced to use it.

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

#218

Post by arcticbull »

tluyben2 wrote: post #112
sshine wrote: post #71

Earlier quoted context omitted.

> 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.

The religious (for a lack of better word as it is a religion to believe that cryptocurrencies are inherently better than other assets (outside NFTs) but they do believe that if you read twitter/reddit) people are hodling but all the 'saner' people I know went out in december. There was enough writing on the wall to know that 2022 would not be a good year for some assets (and it's just beginning). Only the real believ…

> The religious (for a lack of better word as it is a religion to believe that cryptocurrencies are inherently better than other assets (outside NFTs) ...

Outside NFTs? C'mon. Signed JSON blobs with a URL you pay for? All equally worthless.

Let's not "my god is better than your god" this.

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

#219

Post by NicoJuicy »

dragontamer wrote: post #15
jallen_dot_dev wrote: post #4

If Tether is backed, then Bitfinex could buy currently-discounted tethers off the market and redeem them for face value, pocketing the difference. The fact this is not happening means they really don't have the money, do they?

In the short term, they have the reserves for sure. In the short term, this is more of a classic bank-run. The Terra-coin + Luna scared a lot of cryptocoin holders, and now they're running away from another stablecoin. Even if Bitfinex had the money, the amount of traders leaving USDT has to be a colossal amount. The amount of money Bitfinex can transfer at any given time is limited, so the peg will bend and buckle.…

> In the short term, they have the reserves for sure.

They aren't even audited by a credible firm.

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

#220

Post by 22c »

nmfisher wrote: post #199
22c wrote: post #194

Earlier quoted context omitted.

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?

It essentially means they were moving large amounts of USDT supply around. Presumably there was not enough liquidity on Ethereum and Avalanche mainnets.

Imagine you have multiple games of monopoly in progress but all the monopoly money is managed by a single monopoly money bank.

Two monopoly games (Ethereum and Avalanche) both needed more monopoly money for the game to go on smoothly, so the banker transferred some money from their main bank (Tron Network) to these other games that are in progress. The total amount of monopoly money in circulation did not change, but the amount of money available in each in-progress game has changed.

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