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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

#311

Post by overtonwhy »

csomar wrote: post #244
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…

One upside: 0.5-1% interest per day at Bitfinex. > Remember, with a stablecoin, there is no upside to holding. The people running Tether has a stake in the upside. It's this moment where they need to convert their supposed holdings to sustain the price. It's not going to be expensive (maybe even profitable) given the high yield of USDT right now.

oh yeah 180% interest per year definitely isn't a scam

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

#312

Post by Dagonfly »

t_mann wrote: post #272

The one thing that I can't wrap my head around with Tether is: where did it all go? Tether must have been paid tens of billions in fiat dollars, and not even their bankers can say where those are. There's only so many hundred millions you can put into villas, cars, yachts and parties before it's inconceivable that it wouldn't get noticed. When it comes to crypto overall, my impression is that it needs to get bad befo…

> Tether must have been paid tens of billions in fiat dollars

Do they? That's an honest question. They only provide attestations and no audits. And those only showed a lot of Commercial paper. If they sell an exchange $1B for Commercial paper related to that exchange. It costs the exchange a lot less than buying $1B in fiat dollars.

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

#313

Post by alexdbird »

lode wrote: post #188
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…

> it is a religion to believe that cryptocurrencies are inherently better than other assets (outside NFTs) Why would NFTs be worth anything more than the digital tulip bulbs of cryptocurrencies? NFTs are just as worthless IMHO.

I believe they're saying that cryptocurrencies aren't inherently better than most assets - but NFTs are such inane garbage that you could argue cryptocurrencies are 'better'. Very much damning with faint praise.

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

#314

Post by overtonwhy »

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…

https://www.coindesk.com/markets/2021/08/09/tether-reveals-m...

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

#315

Post by meigwilym »

tcharlton wrote: post #140
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?

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…

> If you make it up on your computer and keep the list in Excel and smirk when you tell people about this, that price will be zero, and none of this will work.

This made me genuinely laugh out loud! But not just because it's funny, but it's also the essence of all digital coinage.

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

#316

Post by Khoth »

randomsearch wrote: post #288
FeepingCreature wrote: post #210

Earlier quoted context omitted.

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?

When the price drops, people on reddit start saying "buy the dip it's going to the moon!" to lure in some new marks.

In the long run you're right though. Eventually you run out of people who believe them and you get the events of the last few days.

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

#317

Post by pjc50 »

amelius wrote: post #304
shafyy wrote: post #55

Earlier quoted context omitted.

> 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…

There should be a law that currencies are used for legitimate payments for more than X% and otherwise the currencies should be marked as gambling money. How to measure? I don't know, but I'm sure the IRS can come up with something.

A law where?

To the extent that Tether is anywhere, it's in notorious financial law evasion island Grand Cayman.

It's already illegal to supply overseas gambling services to Americans (Pokerstars). Quite a lot of the crypto world would arguably be ruled illegal under existing law if it was prosecuted before an American court - or a British one, or many other jurisdictions. It's just that there's so much of it, it moves so fast, and has enough legitimate-looking political cover that it's escaped so far.

Here's former UK minister Matt Hancock, for example: https://www.cityam.com/my-mission-is-to-make-the-uk-love-cry...

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

#318

Post by pyinstallwoes »

Slartie wrote: post #276
pyinstallwoes wrote: post #263

Earlier quoted context omitted.

That’s instant 0.024 profit… Easily crash by loading 10,000,000 arbitrage for free $200k grab sums. This is a domino effect.

There is nothing "instant" in the process of buying millions of USDT, then sending them over to Tether for redemption against USD. The redemption process of such sums is a manual process which takes at least some days, even if it works out in the end (assuming Tether is liquid).

It’s instant given it’s guaranteed. If that doesn’t follow then it topples under its own promise.

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

#319

Post by FabHK »

stevekemp wrote: post #186
outside1234 wrote: post #135

Earlier quoted context omitted.

We have been saying it - but have been dismissed as being "anti-crypto"

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…

> It seems obvious that "digital money" is going to be very useful in a lot of ways

And indeed, digital fiat is used in production all the time and very useful.

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

#320

Post by pjc50 »

someotherperson wrote: post #62
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 This is victim blaming. Nobody deserves to be exploited, robbed or otherwise for any reason.

If you say "don't go there, you'll be robbed" to someone, they insult you in return, and then get robbed, you're entitled to a bit of schadenfreude.
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