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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#161

Post by hbosch »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

In theory, you're correct. If 1B USDT is backed up, 1 to 1, with exactly 1B USD and no one every moves, sells, invests, or otherwise trades the underlying USD then the coin is actually stable... but it's already been established that Tether is backed by assets other than USD[0]. So... how much are you willing to trust them?

0. https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...

Re: Tether Withdrawals Top $10B

#162

Post by candiddevmike »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

Think the concern is the folks behind tether have printed tethers to buy/prop up Bitcoin over the years. You can see the issuance of new tethers align closely with Bitcoin rallies or sell offs.

Re: Tether Withdrawals Top $10B

#163

Post by idiotsecant »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

>the only way Tether is not stable is if the people behind it have been wildly profligate

This is exactly the case and exactly what most people believe has happened. It's a minor miracle that usdt hasn't evaporated already, it's a matter of time.

Re: Tether Withdrawals Top $10B

#164

Post by Majromax »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

> whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1.

Buy Tethers with what? If the money is in fact saved in regulated banks or other such instruments, there's nothing liquid left to defend the peg on the exchange.

Instead, the standard "backed stablecoin" approach is to make money with a small spread on redemptions/creation, while allowing others to do that hard work. Tether takes (https://tether.to/es/fees) a 0.1% spread on redemptions, so if you hand them $1mUSDT you'll get back $999k USD.

> But they should be solid as long as they have made more money on those investments than they've spent in salaries and yachts and what-not, and Tether was already huge back when BTC was below $2k.

One possible "bank run" scenario is that their backing is in fact stable, but it is illiquid. Suppose Tether invested part of its reserve in long-term loans to another company (like Binance). If Tether ever faces a crisis of confidence, it would face large-scale redemption requests, but it may be unable to call in its loans to fund those requests. That would leave Tether unable to redeem its currency, and a public suspension of redemptions would drive a further exodus.

In theory, every single USDT in circulation could be redeemed at a moment's notice. Unwinding some $73 billion in investments would be a Herculean feat even if everything is fully legitimate.

Re: Tether Withdrawals Top $10B

#165

Post by mesozoic »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

You're assuming they're actually receiving the dollars for the tethers they mint which they have chose not to prove.

Re: Tether Withdrawals Top $10B

#166

Post by jonahbenton »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

There is an assumption behind your question to the effect of saying "If we assume Tether is not, ultimately, a fraud, it seems like the only way..."

That is, IMHO, a questionable assumption.

Now, "fraud" in this case too strong a term. The intent to defraud may not be explicit in Tether's internal conversations and practices.

All business ventures by definition involve risk, and corporate structures and venues and liability shields and so forth exist precisely to create a space for risky ventures to be undertaken without failure leading to death or personal poverty for the principals. In those cases, the customers, investors, and other participants are also partaking in the risk, based on information that is deliberately- sometimes responsibly, sometimes incidentally, and sometimes maliciously- incomplete.

At the end of the day, when the full accounting is known, a post facto judgement of fraud vs speculation may be rendered.

But the assumption that Tether is behaving as one might want one's bank to be behaving, in terms of customer/user risk exposure, should be strongly, strongly questioned.

Re: Tether Withdrawals Top $10B

#167

Post by pyrrhotech »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

That's how it should work. What if instead, multibillion dollar exchanges that have a vested interest in keeping the price of crypto propped up instead paid Tether much smaller numbers to print out of thin air and create artificial demand during any price drops?

Re: Tether Withdrawals Top $10B

#168

Post by rglullis »

AlexandrB wrote: post #155
jules-jules wrote: post #147

Earlier quoted context omitted.

I'd be careful about adding Stasis to this list. Discord users have been complaining about not being able to withdraw through their platform for some time now.

This is what get's me when people say "do your research" in crypto. Where am I supposed to do that? Do I need to trawl Discord until I'm satisfied a coin is on the up-and-up? Is the absence of complaints like this for a crypto project evidence of quality or evidence of vigorous moderation?

Going by my experience, 100% of the people saying "do your own research" are either shills or they are getting into a project without having no idea of how things work. If people can explain easily and if it is a legit opportunity, they wouldn't be saying "do your research", this will just be accumulating as much as they could without making too much of a fuss about it.

Corollary: any coin that is on the up-and-up and you can not easily explain the tokenomics is worthless.

Re: Tether Withdrawals Top $10B

#169

Post by aftbit »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

What if Tether has issued a substantial amount of USDT to people in exchange for either nothing or things that ultimately prove to be worth much less than $1/USDT issued?

Re: Tether Withdrawals Top $10B

#170

Post by TameAntelope »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

My understanding is that while USDT isn't this $1:$1 ratio you describe, other stablecoins are, specifically USDC.

So what you're describing does exist, but isn't what USDT is. IMO the infatuation with USDT has always confused me a bit; why would anyone use USDT over USDC in the first place?

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