Earlier quoted context omitted.
USDC is legit: https://www.centre.io/usdc-transparency
Current market cap is 52 billion. Just where is that money?
With treasuries paying 1.6% x $50B, that’s $66M per month of interest.
Tether Required Recapitalization in May 2022
121–130 of 336 posts
Re: Tether Required Recapitalization in May 2022
#122The most important point in this article is that whether Tether is fully collateralized ultimately doesn't matter. As long as there are well-capitalized parties (Bitfinex, other exchanges) that want to prop up Tether, it will be fine. Nobody should be under the illusion that Tether is decentralized or anything other than a bet on Bitfinex.
> whether Tether is fully collateralized ultimately doesn't matter. As long as there are well-capitalized parties (Bitfinex, other exchanges) that want to prop up Tether, it will be fine This is true for every pile of toxic crap that's ever been financially engineered. The problem is the entangled financial health of the backer (in this case, Bitfinex and other crypto exchanges) with the backee (Tether). If creditors…
>This is true for every pile of toxic crap that's ever been financially engineered.
I have a radical idea that I'm fairly sure would get me killed if I ever stood a chance of implementing it: A complete ban on all non-productive financial schemes. We have an entire parasite class that grown unfathomably wealthy while providing no real value to the rest of society.
The "futures trader" extracting value from the system buying/selling futures has done no "real" work, their profit comes exclusively from making others pay more. The financial world is full of middle-men parasites like this.
They love to use the "making the market more efficient" and "price discovery" BS, but I believe they know what they're doing is solely about enriching themselves.
Re: Tether Required Recapitalization in May 2022
#123No post body was provided.
Re: Tether Required Recapitalization in May 2022
#124> As of this writing, on May 20th, it has yet to regain the peg This is misleading. Tether has consistently traded between $0.998 and $0.999 between May 13th and May 20th. See https://coinmarketcap.com/currencies/tether/ Is it trading at 0.1% lower than it was before the Terra USD collapse? Yes. Has it "lost its peg"? No.
It's remarkable that a stablecoin which was able to mostly maintain the peg for years at a time now needs to redefine what being pegged means, and that this state of affairs has continued for more than a week. That's why I mentioned it.
On the other hand DAI fluctuates between 0.999 and 1.001 all the time. Is it not "stable".
I am no fan of tether, but small fluctuations like this have always been normal for "stable coins".
Re: Tether Required Recapitalization in May 2022
#125Earlier quoted context omitted.
As an outsider this reads like someone in 2006 saying that these risky looking mortgage based products are fine because they'll be propped up by Fannie Mae and Freddie Mac.
And they were pretty much correct. So probably not the same as that.
We had an international financial crisis over it. That seems less than fine.
Re: Tether Required Recapitalization in May 2022
#126Earlier quoted context omitted.
It's remarkable that a stablecoin which was able to mostly maintain the peg for years at a time now needs to redefine what being pegged means, and that this state of affairs has continued for more than a week. That's why I mentioned it.
Quoted post unavailable.
I'll take that bet. But you need to put up the $5,000 first.
So you don't think you're just losing money, I'll issue you $5,000 worth of my personal stablecoin that you can redeem 1:1.
If you win, I'll give you another $5,000 of my personal stablecoin to pay the bet.
You can redeem them whenever you want, I'll be good for it. /s
Re: Tether Required Recapitalization in May 2022
#127Earlier quoted context omitted.
It's such a weird "bet", though. Pay $1, get back $1 if you win, get back $0 if you lose.
If you just sit in Tether sure, but the ecosystem of stablecoins gives you access to DeFi yield opportunities with much better "passive" interest than bank deposits or treasuries, so the bet is a little more sophisticated than dollar for dollar.
Terra Luna offered some great DeFi yield opportunities.
Unrealistic yield is one of the hallmarks of a ponzi scheme. The DeFi yield opportunities require more money to flow in than to flow out.
Apple stock, for example, pays a dividend that is not dependent on more people buying Apple stock but on the company profits for the next quarter.
Re: Tether Required Recapitalization in May 2022
#128> As of this writing, on May 20th, it has yet to regain the peg This is misleading. Tether has consistently traded between $0.998 and $0.999 between May 13th and May 20th. See https://coinmarketcap.com/currencies/tether/ Is it trading at 0.1% lower than it was before the Terra USD collapse? Yes. Has it "lost its peg"? No.
It's remarkable that a stablecoin which was able to mostly maintain the peg for years at a time now needs to redefine what being pegged means, and that this state of affairs has continued for more than a week. That's why I mentioned it.
Peeking at the long term chart[1], I don't think 0.1% is notable. In Oct 2018, it bounced around ~1% under the peg for most of 2 months. Then in Dec 2018, it bounced around 1-2% over the peg for 2 months. A similar swing happened in Apr-Jun 2017. I'm actually surprised, I've never looked at this chart before and I didn't expect to see swings of several percentage points. But at any rate the current 0.1% is pretty tame in comparison and I'm sure it's just the cost of moving money to arbitrage.
Re: Tether Required Recapitalization in May 2022
#129Earlier quoted context omitted.
> whether Tether is fully collateralized ultimately doesn't matter. As long as there are well-capitalized parties (Bitfinex, other exchanges) that want to prop up Tether, it will be fine This is true for every pile of toxic crap that's ever been financially engineered. The problem is the entangled financial health of the backer (in this case, Bitfinex and other crypto exchanges) with the backee (Tether). If creditors…
>This is true for every pile of toxic crap that's ever been financially engineered. I have a radical idea that I'm fairly sure would get me killed if I ever stood a chance of implementing it: A complete ban on all non-productive financial schemes. We have an entire parasite class that grown unfathomably wealthy while providing no real value to the rest of society. The "futures trader" extracting value from the system…
> complete ban on all non-productive financial schemes
I surprised myself by how sympathetic I am to this proposal, given I've made a career in finance. The problem, however, is separating productive from unproductive schemes ex ante.
> "futures trader" extracting value from the system buying/selling futures has done no "real" work, their profit comes exclusively from making others pay more
Great example. In 1958, the Congress banned "the trading of futures contracts on onions" [1]. By the 2000s, increased price volatility--which had to be borne solely by farmers and distributors--prompted "the son of a farmer who initially lobbied for the ban to advocate a return to onion futures trading" [2].
There is a middle ground between banning and a free for all. In the former, useful financial products and innovation is suppressed. Finance is about allocating real resources in our economy. Bad finance is bad. But on the other end, everyone steals everything, and investor self-interest gives way to the animal spirits we saw leading up to the Panic of 1907, the Great Depression, the S&L crisis, the Financial Crisis and whatever we'll call crypto.
[1] https://en.wikipedia.org/wiki/Onion_Futures_Act#cite_note-fo...
[2] https://archive.fortune.com/2008/06/27/news/economy/The_onio...
Re: Tether Required Recapitalization in May 2022
#130Tether fud in 2022 is truly embarassing and slanderous. The only time they had real problems was when part of their money was stolen and confiscated with connection to Crypto Capital - which only happened because they were refused normal banking. The only way tether fails is if the situation repeats in some way - but it appears American government finally gave up on trying to destroy usdt. As long as the US governmen…
If Tether is telling the truth in their attestation, they held $5 billion in cryptocurrency a month and a half ago, and had only about $160 million in extra assets to cover their liabilities. Given the extent of the collapse of the cryptocurrency market (and markets in general, do note), by Tether's own words, Tether is either insolvent or required someone decently steep infusions of cash. As far as I'm aware Tether has not announced either, so either Tether is lying about its own solvency or... Tether is covering up its own insolvency.
Actually, come to think of it, Tether does claim to publish asset and liability totals (if not breakdowns) in near real time, so let's see how it's doing. And, surprise, Tether somehow still has just $160 million in extra assets over liabilities. In fact, between the attestation date of March 31, 2022 and the latest update as of last night, this buffer has changed by just $186. That kind of performance is... well, not credible.