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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

#251

Post by WJW »

hnbad wrote: post #170
namdnay wrote: post #109

Earlier quoted context omitted.

it's much easier to con a greedy person. And you had to be very greedy indeed to convince yourself that 20% interest is a safe investment

> convince yourself that 20% interest is a safe investment So what you're saying is people shouldn't expect to be able to massively multiply their wealth, but that directly contradicts the narrative that "anyone can make it" instead of the wealth and opportunities you're born into determining the likely upper limit of what you can hope for. I'm not disagreeing, but it's absurd to condemn people for falling for "get r…

> when the entire society is built around maintaining the lie

Maybe the part of society that contains the crypto enthusiasts. Every part of society with a shred of financial experience has been pointing out that 20% is really really high compared to the risk free interest rate. Of course, pointing out that something is unsafe will not make you popular with the people dreaming of getting rich.

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

#252

Post by eudoxus »

hhmc wrote: post #233
eudoxus wrote: post #187

Earlier quoted context omitted.

"when exiting positions in the market" this statement applies only if you exit using tether.io. You can always (if they have the cash on hand) swap 1 USDT for 1 USD. They can't make that guarantee for . The reason it stays "mostly" at $1 on exchanges is because arbitragers are incentivized to do so. But again, 1USDT is ALWAYS 1USD on tether.io. So yes, the statement you quoted is accurate.

> But again, 1USDT is ALWAYS 1USD on tether.io. Until you can't redeem and 1USDT is 0USD on tether.io. The price on a 'random orderbook' is reflecting this risk.

> You can always (if they have the cash on hand) swap 1 USDT for 1 USD

Exactly, until you can't as I outlined.

The price on a randombook is a function of many things, including "percieved" risk. Its also a function of liquidity/depth and the willingness to exit fast, ignoring the 1-3% fee.

Everyone and their grandfather knows tether doesn't have 1:1 asset reserves for their $80B market cap. But noone knows how much they do have and how long they can keep up the charade.

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

#253

Post by pyinstallwoes »

zelag wrote: post #235
22c wrote: post #220

Earlier quoted context omitted.

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 m…

I'm curious: why does the banker use Tron as their main bank?

Probably because it’s not used by many so it’s fast enough for situations like this where ethereum is overwhelmed and slow/pricey.

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

#254

Post by thematrixturtle »

usednet wrote: post #225
gadnuk wrote: post #192

Earlier quoted context omitted.

This is an amazing explanation. Thank you!

That explanation is not correct. Algorithmic stablecoins rely on a pairing with another crypto, in UST’s case LUNA. 1 UST can always be swapped to $1 US dollar of LUNA. It is interchangable, so $1 US dollar’s worth of LUNA can also be swapped for 1 UST. Hence, the “algorithmic” in the name. This way traders are always incentivized to keep the price of UST at $1. There is no collateral requirement. In UST/LUNA’s case…

That's all irrelevant, since Tether is not an algorithmic stablecoin, and they claim to have 1:1 reserves for every USDT.

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

#255

Post by ThePhysicist »

fastball wrote: post #35

Watch the sell orders rack up in real time: https://ftx.com/trade/USDT/USD

Interesting, from watching the feed it seems most BUY orders are in the range of 100-1000 USD (i.e. small investors) whereas there are some really large SELL orders in the range of 100.000-1.000.000 USD. My naive take would be that crypto enthusiasts still believe in Tether whereas larger investors leave the ship.

I mean it makes sense, if you have many millions invested in Tether you're probably better off selling now at a 2 % loss than hoping it will go back to 1 USD. Downside risk is much larger than upside potential as Tether will never go above 1 USD, so rationally it makes sense to withdraw all your fund from the coin as soon as even a small instability occurs. On the other hand it's mostly exchanges that hold Tether if I understand correctly, and those have a strong incentive to keep the system afloat so they shouldn't sell, though not selling will increase their risk as more and more of their customers offload their Tethers. Hard to say who will win in the end, but I guess we might find out how many USD reserves Tether actually holds.

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

#256

Post by md_ »

moritonal wrote: post #157
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…

My issue is that these people are smart, but not "I work at Blackrock as a day-trader smart". In Finance, there are laws against a lot of the easy wins, and now the professionals are entering the Crypto space they're going to run circles around the amateurs. As in, it's easy to be the best in your local club, but it's a real wake-up call when you try out at a regional.

I'm not sure about that--or at least, the reality seems more complicated.

Terra certainly has an element of complicated financial dynamics behind it such that people who know a little--but not a not--may think it's the greatest idea since sliced bread, and get eaten by the professionals. I agree with you there.

But a lot of the crypto ecosystem seems to be much more mundane than that. As far as I can tell, there isn't any financial wizardry behind NFTs; they're just a sort of weird social phenomena (is it a game? is it a market? is it sports betting?) where you can buy a thing at a price that has no basis in reality except insofar as someone else might buy the thing at an even higher price. I think that many--most?--people "investing" in NFTs realize and embrace the greater fool theory.

But, importantly, it seems to me that a random yahoo might actually be better able to predict when the gravy train will stop than an elite trader. So in some sense, it's quite egalitarian (if also stupid)!

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

#257

Post by cinntaile »

FeepingCreature wrote: post #203
stevekemp wrote: post #186

Earlier quoted context omitted.

Yeah it's a tricky one. It seems obvious that "digital money" is going to be very useful in a lot of ways, and in the future is almost certain to appear. There was a very brief period when bitcoin might have been the start of such a thing. When companies were adding support for it, and people were spending 200+ bitcoin on pizza, actually doing useful things like transferring money internationally, etc. But these days…

A deflationary currency was never going to be viable as money.

There are many cryptocurrency experiments, not all are deflationary to be clear.

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

#258

Post by iso1210 »

Cthulhu_ wrote: post #144
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.

> none of my smart peers had anything to say, either. It's because they know. I think everybody knows that crypto is a bubble. I think everybody believes everyone else that buys into it is dumb, financially illiterate, whatever. The crypto market has been propped up and boosted by an influx of people like that, each one knowing it's a bubble, believing everyone else is an idiot... but still wanting a slice of the pie…

It's the greater fool theory.

I lauched at friends of my fatherinlaw back in 2018 when they were buying bitcoin at 15k. Obviously it popped.

Today it's down 50% on ATH, but it's still more than double it's 2018 bubble level.

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

#259

Post by thkim »

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 think Tether can get away with less than 100% collateralization. At the current market cap of 82bn, even if they are only 20% collateralized, it takes 16.4bn one way movement to deplete their reserve. Is that likely event? Guess it depends, but I think market makers would be more willing to backstop them than UST shitshow. UST has "death spiral" structure that makes MMs less willing to backstop them once it goes on a path, which is exactly what hedge funds attacked against these past few days.

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

#260

Post by usednet »

benjaminwootton wrote: post #240
ryanSrich wrote: post #169

Earlier quoted context omitted.

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…

How does the sell pressure play out? Is this other people willing to sell for 99 cents, 98 cents on exchanges because Tether can’t fulfil orders fast enough? I assume they are always willing to buy at $1 else it all collapses?

AFAIK, Tether will not convert to USD for you unless you register and have >100k Tether. Therefore, most holders only ability to “cashout” is on exchanges. Obviously, this is problematic.
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