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Tether Required Recapitalization in May 2022

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Re: Tether Required Recapitalization in May 2022

#211

Post by kristjansson »

steveBK123 wrote: post #156
zionic wrote: post #122

Earlier quoted context omitted.

>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…

I propose a ban on all non-productive trips by car. Only good people should be allowed to emit carbon unless for productive reasons that pass the carbon threshhold for the amount of carbon the trips will emit. Good people as defined by a social credit system. I will decide what is a productive reason & what is the carbon threshhold! People totally have the option of living under this type of government - it exists in…

This is a great idea! We could break ones social credit down into units. What to call them ... Rallods, maybe? Everyone could earn Rallods for doing productive, pro-social things. People could even send some of the Rallods to each other, in exchange for taking on productive, pro-social task they'd prefer not to do. Rallods could even be exchanged for goods!

Oh wait ...

Re: Tether Required Recapitalization in May 2022

#212

Post by jfk13 »

ntoskrnl wrote: post #141
kasey_junk wrote: post #116

Earlier quoted context omitted.

Thats breaking the peg though! Tether says its 1 to 1 with the pegged fiat currency. It doesn’t say its .98-1.01. There are pegs that do this sort of range based pegging but Tether is not claiming that.

Tether's claim is that verified users can redeem USDT for USD 1:1 at https://tether.to/ . Exchanges like Kraken are secondary markets and Tether does not claim anything about them.

> verified users can redeem USDT for USD 1:1

Or maybe not, who knows:

"Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all."

Oh, and don't forget the fees:

"Fee per fiat withdrawal: The greater of $1,000 or 0.1%"

Re: Tether Required Recapitalization in May 2022

#213

Post by retcon »

JumpCrisscross wrote: post #115
Grimburger wrote: post #110

Earlier quoted context omitted.

Quoted post unavailable.

> We take the 00:00Z price each day for 365 days and then average it Take the average price at close of Lehman Brother's stock in 2008 and you get a positive number. That doesn't make it less broke. > holds its price above a $0.98 average When we say money market funds "broke the buck" in 2008, we are talking about one fund going to 97¢ [1]. Moving the goalpost to on average outperforming what counts as badly bust in…

Is it not well known that the Lehman International (London) book turned the all history record yield when finally unwound by the liquidators, and made LB fundamentally solvent at the death?

Edit: solvent at crisis time. LBI wasn't linked to onshore information systems.

Re: Tether Required Recapitalization in May 2022

#214

Post by JumpCrisscross »

retcon wrote: post #213
JumpCrisscross wrote: post #115

Earlier quoted context omitted.

> We take the 00:00Z price each day for 365 days and then average it Take the average price at close of Lehman Brother's stock in 2008 and you get a positive number. That doesn't make it less broke. > holds its price above a $0.98 average When we say money market funds "broke the buck" in 2008, we are talking about one fund going to 97¢ [1]. Moving the goalpost to on average outperforming what counts as badly bust in…

Is it not well known that the Lehman International (London) book turned the all history record yield when finally unwound by the liquidators, and made LB fundamentally solvent at the death? Edit: solvent at crisis time. LBI wasn't linked to onshore information systems.

> made LB fundamentally solvent at the death?

The problem wasn't solvency. It was liquidity. The point of bank regulation is to ensure that banks can survive small bouts of illiquidity and remain solvent through major ones.

Re: Tether Required Recapitalization in May 2022

#215

Post by DebtDeflation »

dogecoinbase wrote: post #207
TameAntelope wrote: post #29

Is this what the earlier "hash drop" tweet [0] was about? [0] https://twitter.com/patio11/status/1527616238586716160

Hah, good catch. Kind of can't believe he's still doing that after the last time [0] 0: The tweet: https://twitter.com/patio11/status/1241551327743770624 The, ah, assertion: https://twitter.com/patio11/status/1241553311024603140 > I am materially wrong about the most consequential thing I've had to have a view on in 15 years. You should probably degrade your estimate of my ability to think through complex problems. T…

Wait, so on March 25, 2020 he predicted that there was going to be a coronavirus pandemic (and that Japan would be impacted)? The WHO had already declared a global pandemic on March 12, 2020 and there was no reason to believe that Japan or any other country would be spared.

Re: Tether Required Recapitalization in May 2022

#216

Post by lxgr »

mathgenius wrote: post #52
Anderkent wrote: post #16

Earlier quoted context omitted.

You mean any stable coin that is _not_ 1-1 backed?

No, once you have leverage the ratio doesn't matter anymore. It's just whoever has deeper pockets wins.

That's not how leverage works.

If you're long on an asset and are not lending it out, neither short selling nor leverage can hurt you with a fully backed stablecoin – you can always just go to its issuer and redeem it.

As an analogy, consider owning shares of some publicly traded corporation. No matter what happens on the stock market, this doesn't impact your ownership of the actual, physicaly corporation, which entitles you to dividend payments, a proportional share of its assets when liquidated etc.

Re: Tether Required Recapitalization in May 2022

#217

Post by mbrubeck »

runesofdoom wrote: post #56
rowls66 wrote: post #20

Earlier quoted context omitted.

I assume that the USDT holding of the big exchanges are on behalf of their customers. I those customer begin asking to convert their USDT to USD, that could be a massive run.

I'm not a crypto participant, but my understanding is that technically Tether doesn't promise redemption in USD, just backing by USD. That still seems like it could precipitate a crash, but IDK if such a crash would be best described as a run or not.

Tether does offer redemption, but the minimum amount you can redeem is 100,000 USDT, and there is a fee that ranges from 0.1% to 1% depending on the size of the redemption:

https://tether.to/en/fees

So if a well-capitalized arbitrageur can buy a million USDT at a price less than 0.999, they can redeem them for a profit, as long as Tether keeps honoring redemptions.

Re: Tether Required Recapitalization in May 2022

#218

Post by randbox »

randbox wrote: post #176
JumpCrisscross wrote: post #129

Earlier quoted context omitted.

> 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, t…

> There is a middle ground between banning and a free for all. Providing basic banking as a public utility so most deposits by individuals, local governments, and small businesses are not stored with investment banks engaged in speculation. Public banks can be limited to originating loans on 100% security of material personal property such as crops, livestock, cheese, gold, lumber, steel and prohibited from originati…

> The problem isn't getting loans on one's crops. It's transferring the price risk to someone else. When a farmer plants, they want a guaranteed profit. Loans don't address that problem. Futures do. (It's why they were invented, in the 17th century, by the Dutch and Japanese.)

The problem is excess credit available to financial firms engaging in leveraged speculation and financial services investment, resulting in financial sector employment and compensation that is super-proportionate to any real savings generated for non-financial producers. This leverage is enhanced by the lack of free (zero-fee) public alternative for basic banking services. It is not necessary for public banks providing basic banking services to guarantee profits for farmers. Provide savings, transfers, and liquidity loans at present values at what an option to sell existing previously planted crops would be worth might be sufficient to reduce deposits held by banks engaging in leveraged speculation. Providing basic banking as a public utility is the middle way the parent commenter advocated because it does not require banning anything.

Re: Tether Required Recapitalization in May 2022

#219

Post by cuteboy19 »

wyxuan wrote: post #75

Patrick is overindexing on the investments portion of the report – which is a little under 5% of backing. There are investment deals and crypto, but it's unknown if this represents the entirety of the amount fwiw. If we take a step back and look at the key takeaway from the audit report is that amount of commercial paper was reduced and amount of T-bills (essentially cash) was increased by 5 bil. Good news if you thi…

The question is, why would you hold tether if there is even a 1% chance of collapse?

Remember, there is literally no upside, it's not as if USDT will go to the moon.

So why not dump it for the time being in either Bitcoin or USD?

Re: Tether Required Recapitalization in May 2022

#220

Post by CyanBird »

JumpCrisscross wrote: post #50
axg11 wrote: post #12

The 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…

Want to stick it to the man for real?

Buy Iranian government bonds, Venezuelan government bonds, Bolivian government bonds, etc

Will you get a return? Not all that likely (not unlikely either) , but you would indeed be sticking it to "the man"

Buying tether? Ha heck no

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