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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

#281

Post by epolanski »

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…

> billions of dollars spent in advertising

Sunday I was watching Formula 1.

Crypto.com Miami GP was the name of the event, starting straight full of crypto.com ads.

Watching Inter vs Juventus Italian Cup final: crypto.com event sponsor, with Inter sponsoring Inter fan tokens.

It's interesting how desperately crypto space needs $ and euros.

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

#282

Post by LudwigNagasena »

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

No, it is not very difficult if your currency is completely covered by an asset it’s pegged to. Many modern currencies work that way.

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

#283

Post by lolegreg »

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

Exhibit A, and the cryptocurrency skeptics rest our case.

Welcome back buddy how’s it feel

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

#284

Post by FatalLogic »

Jarmsy wrote: post #224
FatalLogic wrote: post #79

That looks bad. The worst previous fall of Tether/USDT was down to about $0.90 in mid-2017, during which it was substantially below $1.00 for over a month

Isn't the difference now though that Tether is much more entwined with the whole crypto system than it was 5 years ago? So as one falls each pulls the other down with it.

>Tether is much more entwined with the whole crypto system than it was 5 years ago?

That is uncertain, because the degree of entwining has always been unclear. News reports 5 years ago also contained a lot of worry about Tether's risks, maybe even more than today.

What was obvious 5 years ago, and remains unchanged today, is that Tether claims to represent an enormous amount of money, which is a difficult hole to fill if Tether turned out to be far from fully-backed, as many suspect

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

#285

Post by usednet »

qbasic_forever wrote: post #38
unsupp0rted wrote: post #17

Earlier quoted context omitted.

Would BTC be worth buying at sub-$2k? I never saw the use-case for it. I’d sooner use a faster, cheaper, more energy-efficient, more centralized crypto like XLM or XRP. But even then: for payments it’s hard to compete with Visa/Mastercard for speed and safety. And as a store of value all crypto is crazy volatile. If BTC goes sub $2k, would anybody reasonably want it anymore or would the emperor have no clothes?

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

Pretty much all under the table crypto transactions are in Monero, Zcash, or other privacy coins. Bitcoin’s utility is horrible compared to most other cryptos, its purely a store of value.

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

#286

Post by BbzzbB »

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?

Market pricing and arbitrage pegs it, is how I understand it.

It's "worth" whatever price the bid-ask spread meets at.

It's exchangeable for USD to the company. As long as there isn't a bank run where they'd stop fulfilling exchanges, when the price drops below $1 anyone can arbitrage it. It reached like 95 cents earlier, anyone could've bought millions of it and got USD for it at like 6% profit. It creates buy pressure/price support as the price falls.

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

#287

Post by irjustin »

cheeseface wrote: post #172
irjustin wrote: post #166

Earlier quoted context omitted.

genuine question - why does the asset need to be backed? more specifically - who would you need to give the physical currency to?

The promise of a stablecoin, in this case Tether, is that you can always change 1 USDT into $1. When people buy Tether, they pay then $1 and believe the promise that they will get $1 when they want to.

Right but how... where does physical money come into play?

How can I or anyone get 1 physical dollar from selling USDT? All I've ever done is exchange some coin => USDT and vice versa.

So if no one is actually asking for a physical dollar, why does it need to be backed by a physical dollar?

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

#288

Post by randomsearch »

FeepingCreature wrote: post #210
randomsearch wrote: post #205

Earlier quoted context omitted.

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 just mint Luna at will. The problem occurs when the amount of Luna that trades for $1 becomes undefined because nobody is willing to do the trade anymore.

Eh, but minting Luna increases the supply of Luna and thus devalues it, therefore a run means that the price of Luna increasingly drops as you mint more, meaning you have to mint more Luna, it heads to zero, you're dead. It's the opposite of stable, because a run actually accelerates itself. What am I missing here?

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

#289

Post by Dagonfly »

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.

Because it's an intentionally obtuse Ponzi scheme. You can stake Terra on Anchor protocol which was advertised as up to 20% yoy return for lending your Terra. This creates demand for Terra, which in turn creates demand for Luna, as you can only mint new Terra by burning Luna. As long as there are newcomers buying into the ecosystem, Luna will increase in value.

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

#290

Post by danjac »

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…

Matt Damon at least should never get work again. Except maybe shilling jewellery on PVC.
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