My prediction: Tether is not losing peg.
Tether starting to lose its peg too, after Terra did
261–270 of 976 posts
Re: Tether starting to lose its peg too, after Terra did
#262Earlier quoted context omitted.
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.
The parent comment was edited to remove the section on UST after my comment.
Re: Tether starting to lose its peg too, after Terra did
#263Tether 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 USD…
That’s instant 0.024 profit…
Easily crash by loading 10,000,000 arbitrage for free $200k grab sums.
This is a domino effect.
Re: Tether starting to lose its peg too, after Terra did
#264Earlier 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…
I don't understand. How do you ensure you have enough Luna to maintain the exchange? If you hold enough Luna but then the price of Luna goes down, where do you get your extra Luna from? A run on your promise kills you.
You print luna and 'burn' terra. Or when people get terra you print terra and burn luna. The luna tokens supposedly have value because they get a share of the transaction fees.
The printing of luna when people sell terra should be offset by luna having been burned when the terra was printed. Ideally (when the price of luna is growing) then you print less luna at sale time than you burned earlier when the terra was printed. This decreases supply of luna, making luna worth more.
Re: Tether starting to lose its peg too, after Terra did
#265Earlier 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?
Tron has huge backing and is essentially one of the "defacto" standards when centralised exchanges want to transfer huge amounts of USDT between one another.
Presumably it is due to cost efficency of TRON but I suspect it's also to do with highly effective marketing or strong industry contacts etc.
Re: Tether starting to lose its peg too, after Terra did
#266Re: Tether starting to lose its peg too, after Terra did
#267It'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…
there are some markets you can't participate in without holding usdt, so for some, it's a calculated risk
why anyone would keep usdt if not actively trading is beyond me
Re: Tether starting to lose its peg too, after Terra did
#268Watch 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 n…
Given that markets are ripe with bots and aggregators, it's hard to say. The big money could be small investors, and the small money could be big one. It's impossible to tell without insider knowledge.
Re: Tether starting to lose its peg too, after Terra did
#269 Unsurprising. [0][1]
Re: Tether starting to lose its peg too, after Terra did
#270I'm not sure the situation is comparable to Terra. If you can't read the Y-axis on a graph, and you only look at the last 7 days, then it looks like Tether has gone off a cliff. If you read the Y-axis you'll see it's barely moved, and if you zoom the graph out, it's barely a blip compared to previous deviations in price. Now it may well be that Tether is also heading to zero, but it's very different from the Terra fl…
if crypto groups were holding ust and adjusted to usdt, they could be in an uniquely vulnerable spot. not all dips are created equal