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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

#831

Post by unyttigfjelltol »

eru wrote: post #621
unyttigfjelltol wrote: post #392

Earlier quoted context omitted.

No, pegs are nonsense. If you want something USD-denominated, buy USD. The cardinal sin committed was pegging in the first place, which always was doomed to failure because the scale of the effort would attract either a bank run or raid, guarantied. Let's say you're a hedge fund looking for a one-way bet that will profit massively in a crypto crash (that stablecoins can't survive) and has no downside except carrying…

There are only two ways to hold USD: physical cash and database entries at the Fed. The former is really inconvenient, especially if you want to transfer money. The latter is only available to a select few companies. Everything is else at most assets denominated in (= pegged to) USD. Does your critique apply to all these other categories as well? Why or why not?

Pegs fail at the worst possible time. You can transfer or store value via oak tokens flown by trained pigeons, because that might be convenient (to you) and doesn't involve the Fed. But if someone tells you the token/pigeon method has the same attributes as a bank-to-bank USD wire, that person would be mistaken. The methods would be no closer to equivalence if one were to stamp "USD" on the oaken rounds and train the birds to collect a receipt.

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

#832

Post by vmception »

shkkmo wrote: post #828
vmception wrote: post #801

Earlier quoted context omitted.

CFTC, DOJ, and NY OAG Yes, I was referring to the NY one, and I'm referring to how they were like "okay you went unbacked in 2018 and didn't disclose that to our standard, but at least disclose that its not USD". So now they paid a fine and disclose that. So at one point they were 1:1 USD, which is actually a major revelation because from 2014-2018 the same Tether FUD existed the same as now. In any case, now they ar…

> So at one point they were 1:1 USD, which is actually a major revelation Is it a revelation or something you made up? NY OAG was confident they were able to prove that that Tether lied about backing in 2017, 2018, and 2019. Just because they don't have sufficient proof that Tether lied prior to 2017, doesn't make it a revelation that Tether was telling the truth. Indeed, given the trend, it seems quite reasonable to…

ah okay, thats a perspective.

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

#833

Post by whimsicalism »

xmprt wrote: post #824
whimsicalism wrote: post #746

Earlier quoted context omitted.

It's multi-collateralized, so backed by crypto, but also backed by crypto that is backed by actual paper (ie. USDC counterparty risk) and is overcollateralized (so the backing is more than how much $ DAI there is by a substantial margin - ~166%). It has a number of additional clever tricks to keep the peg (burning MKR, etc.), but unlike Terra is not only clever tricks.

How is it overcollateralized? If someone buys on Dai token for $1 then where do the backers of Dai get the extra $0.66?

I encourage you to do your own research, there is more than enough information out there.

The basic jist is that there are two ways of getting Dai, either

1. buying it from someone else with Dai (no extra $0.66)

2. minting it as a loan collateralized by your holdings in some other crypto (which requires $1 + X% backing) where X varies depending on the crypto. I believe you also get paid some "stability" fees for doing this, but I don't remember the detail. Because your vault gets liquidated if your collateral value goes below $1 + X%, people usually go considerably above $1 + X% in their collateral so there is no chance of that happening.

Some DAI is also minted by corporations that the DAO has voted to form a relationship with (so it's secured by actual loans into real-estate), but I believe that as of now this is a very small percentage of the whole.

All dai that you would buy from someone else is minted by #2 . You can see the backing here: https://daistats.com/#/

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

#834

Post by whatever1 »

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 mean Madoffs ponzi scheme at least survived the dot com crash.

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

#835

Post by GreenPlastic »

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…

Attorney General of NY looked at their books and found most of the collateral was there, although in the form of commercial paper. The risk is really in which companies debt they hold. If we see a perfect storm of something like 2008 where correlations go to 1 resulting in massive defaults AND a significant number of redemptions then I'd be worried.

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

#836

Post by yreg »

bootlooped wrote: post #601
mcintyre1994 wrote: post #583

Earlier quoted context omitted.

The difference between Tether and DollarCoin is that you can (if nobody is lying) exchange a tether for a USD. If each USD that bought a tether was burned as in DollarCoin, then it wouldn't have that property. You're not supposed to "burn any money" when you mint tether, you're supposed to put aside $1 that can be exchanged for that tether at a later date. I think what you're missing is that backed stablecoins don't…

Did that ever come out of the pool of money that went into minting the tether? Or was it just more consumers getting in while others got out?

Tether itself is shady and I have my doubts about them, but the concept is simple.

You mint some coins and sell them for $1 each.

Then watch the exchanges and any time the price is above $1 you mint some coins and sell them. Any time the price is below $1 you buy some coins and burn them. Doing this and only this you should always have more dollars in hand than the amount of coins in circulation.

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

#837

Post by dragontamer »

whimsicalism wrote: post #704
dragontamer wrote: post #15

Earlier quoted context omitted.

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.…

> UST / Luna had substantial reserves. This alone suggests you don't know what you are talking about. Compare to reserves backing Dai, or the reserves USDC claims to have. UST/Luna had nothing and they were also highly correlated. It was a stupid stablecoin to hold in, which is why I never did - despite having holdings in Dai & USDC.

"Substantial reserves" meaning that UST / Luna was able to keep the peg for 1.5 years.

That's a reserve for sure. Is it enough for this current storm that the cryptocoin community is having? Obviously not, it all collapsed. But it was substantial enough to perpetuate its own myth for over a year.

That's the thing. You have to admit that these things can last months, or years even if you want to be honest about discussing the nature of these cryptocoins.

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

#838

Post by skybrian »

dikaio wrote: post #820
Mvandenbergh wrote: post #472

Earlier quoted context omitted.

The reasons this is nonsense are twofold: First, I have never actually seen any comments here disavowing themselves of responsibility. It is always aimed at protecting others and this is rooted in the obvious fact that a very large number of people are not (and we do not expect them to be) experts in investment. That assets can go up or down is one thing, and nobody can be protected from that, but there is an extensi…

You also didn’t mention his idiotic statement of equating the “American Dream” to getting lucky and getting rich when in fact the American dream is about having the opportunity to work hard, buy a home and have a decent life for you and your family.

They are not that different. The "exit plan" for the American dream is retirement and trying to save a lot of money for retirement is perfectly normal. It's very sound, conventional, boring financial advice to save and invest for retirement.

The "get rich quick" folks are doing basically the same thing but faster and sometimes with less sense. But hopefully with only a small portion of their savings.

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

#839

Post by whimsicalism »

dragontamer wrote: post #837
whimsicalism wrote: post #704

Earlier quoted context omitted.

> UST / Luna had substantial reserves. This alone suggests you don't know what you are talking about. Compare to reserves backing Dai, or the reserves USDC claims to have. UST/Luna had nothing and they were also highly correlated. It was a stupid stablecoin to hold in, which is why I never did - despite having holdings in Dai & USDC.

"Substantial reserves" meaning that UST / Luna was able to keep the peg for 1.5 years. That's a reserve for sure. Is it enough for this current storm that the cryptocoin community is having? Obviously not, it all collapsed. But it was substantial enough to perpetuate its own myth for over a year. That's the thing. You have to admit that these things can last months, or years even if you want to be honest about discus…

You can't just string along two unrelated concepts with the phrase "meaning that." Not going to keep replying.

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

#840

Post by danans »

dikaio wrote: post #820
Mvandenbergh wrote: post #472

Earlier quoted context omitted.

The reasons this is nonsense are twofold: First, I have never actually seen any comments here disavowing themselves of responsibility. It is always aimed at protecting others and this is rooted in the obvious fact that a very large number of people are not (and we do not expect them to be) experts in investment. That assets can go up or down is one thing, and nobody can be protected from that, but there is an extensi…

You also didn’t mention his idiotic statement of equating the “American Dream” to getting lucky and getting rich when in fact the American dream is about having the opportunity to work hard, buy a home and have a decent life for you and your family.

There is room for many versions of the American dream, America being a big place and all. America has a rich history of both hard-working middle class aspiration and con-artistry and get rich quick schemes. They are both pretty resounding cultural themes here.
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