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Tether Required Recapitalization in May 2022

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Re: Tether Required Recapitalization in May 2022

#251

Post by 77fourtyfive »

ntoskrnl wrote: post #128
patio11 wrote: post #24

Earlier 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.

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 tam…

coinmarketcap/coingecko are generally not very reliable for evaluating the stability of stablecoin pegs

most liquidity tends to aggregate on dexes like Curve, which is also where you could have seen the whole LUNA/UST debacle play out in real time as large actors swapped out of UST into USDC/USDT/DAI

Re: Tether Required Recapitalization in May 2022

#252

Post by rglullis »

SilasX wrote: post #53
shuckles wrote: post #39

Earlier quoted context omitted.

Before you thought Tether was unable to hold a peg why would you be long Tether? Isn’t it better to just be long the USD?

I had invested in liquidity pools (which collect fees for you for facilitating trades between tokens that you contribute), and some such pools had Tether. One downside of such pools is that, if any one of the assets in it goes to zero, all your invested capital goes to zero (though you keep the fees). It was therefore a Tether long. I had also held a small amount for online purchases. More generally, the reason to ho…

USDC has the exact same properties as USDT, but has no legal issue and is backed by an entity that is a infinitely more trustworthy.

There is Gemini USD - similar story.

There is DAI if you are long on ETH/BTC and still want/need liquidity.

Curve has a pool without USDT (cDAI/cUSDC).

Uniswap lets you make any type of pair. On its heyday (before v3), I was providing to DAI/USDC and I was getting 2% returns per month.

So my question is: why USDT, when there is a handful of better stabletokens that can be used for the exact same purpose? If it is common knowledge that Tether is not to be trusted, why would any honest person still use it?

Re: Tether Required Recapitalization in May 2022

#253

Post by jtbayly »

NovemberWhiskey wrote: post #140
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…

Right. I used to sit on a trading floor next to a commodities sales desk. If the GP's mental model is that people who are involved in futures are, by definition, involved in speculation, then that is a wrong model: a lot of "real economy" manufacturers hedge their exposure to price changes for their inputs or outputs through the futures market.

Precisely. A friend of mine trades futures for a non-profit made up of growers as members. It is more efficient insurance than the federal government offers them and saves them millions.

Re: Tether Required Recapitalization in May 2022

#254

Post by postalrat »

gringoDan wrote: post #48
onesafari wrote: post #17

What happens if Tether fails, realistically? There's a lot of doomsaying around it, but after seeing the crypto market shrug off the loss of Terra Luna without contagion or bailout ala GFC crisis, the fear may be overblown. Terra was backed entirely by hot air, whereas Tether is mostly backed. Wouldn't the net loss be similar or even less?

So assume Tether loses its peg. Worst-case: 1. Anyone holding Tether tries to cash out. Whales and important customers are allowed to redeem USDT for USD at a 1:1 ratio. Tether sells its crypto and other assets to cover redemptions, driving down the price of those assets. 2. Eventually Tether limits the withdrawals. 3. You're stuck with Tether you can't withdraw. What do you do? Try to exchange it for BTC or ETH ("bl…

You say the price will explode. But is that explosion just the relative price of bitcoin and tether? Tether is dropping to 0 and so bitcoin price "explodes" because you are still comparing it to tether.

Re: Tether Required Recapitalization in May 2022

#255

Post by api »

JumpCrisscross wrote: post #129
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…

> 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…

> 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.

This is just the finance sector subset of the larger problem of bullshit jobs. We know a substantial fraction of jobs are bullshit (non-value-creating), but which ones? I have a strong suspicion this is unsolvable because any metric you start using to decide which jobs are bullshit will instantly be gamed. The system will work as hard as it can to prevent you from figuring it out, and since it's made of people it is at least as intelligent as you are.

The only foolproof way we know of to reduce the number of bullshit jobs is brutal recession, but unfortunately that also takes a ton of fragile but very innovative and promising things down with it. Recession is a bit like extreme chemotherapy. It might kill some cancer cells but it also kills a shitload of healthy ones and sometimes the treatment ultimately fails because it doesn't kill enough of the former to justify the latter.

Similar principles exist in other areas like advertising. There's a saying in the ad business: "I know I'm wasting 80% of my ad spend. I just don't know which 80%."

Re: Tether Required Recapitalization in May 2022

#256

Post by Grimburger »

retcon wrote: post #209
Grimburger wrote: post #110

Earlier quoted context omitted.

Quoted post unavailable.

> I will bet you $5,000 that [...] Sure, buddy... Course in a good market you'd lay that risk on the order book not come fishing for suckers here...

I'm happy to discuss terms. Over one year I don't see any risk to this bet at all. And it seems the people I'm offering to feel the same way, as they are running away terrified from it.

I offer you the same deal, $5000 USD 1:1 that Tether maintains the peg above $0.98 for the next year averaged at the UTC 00:00 USDT/USD price on Kraken everyday.

We both keep it with an intermediary who invests in something that attempts to maintain a semblance of keeping up with inflation.

One year from now we tally up the score and the correct person wins. You only need a few days of tether collapsing to win this bet.

It's a simple wager that surely makes sense for those with all these strong words and bravado in here.

Re: Tether Required Recapitalization in May 2022

#257

Post by lottin »

tlb wrote: post #242
lacker wrote: post #54

Earlier quoted context omitted.

It's such a weird "bet", though. Pay $1, get back $1 if you win, get back $0 if you lose.

You can make 30% interest on deposits. It's better than picking up pennies in front of the proverbial steamroller. More like quarters.

When you hold Tether, you're taking a risk that your Tethers might not be redeemable in USD. As far as I know, this risk isn't compensated in any way, shape or form.

When you deposit your Tethers somewhere, you're taking an additional risk, namely the risk that you might not get the deposit back. The interest that you get on deposits is compensation for taking that risk, but not for the other risk.

Re: Tether Required Recapitalization in May 2022

#258

Post by jtbayly »

ceeplusplus wrote: post #226
robertlagrant wrote: post #225

Earlier quoted context omitted.

The person you're replying to was talking about futures traders. Where did you get a rich guy's son from?

Speculating on futures and other derivatives is basically what those rich guy's sons are doing in their hedge funds. Most hedge funds get worse returns than the S&P 500.

So... then let them? If they're losing money compared to what they could by doing nothing, I don't see the problem.

Re: Tether Required Recapitalization in May 2022

#259

Post by lottin »

tyrfing wrote: post #236
runarberg wrote: post #112

Earlier quoted context omitted.

I’m confused. Banks and credit unions pay interest on savings because they can loan or invest that money with higher yields then the interest they pay to the customer/member. How exactly do cryptocurrencies finance their DeFi yields to their investors? The only way I can think of is with the money of future investors, but that is a pretty blatant Ponzi scheme.

Loans.

Why would anyone pay 30% interest on a loan, in an environment of negative interest rates?

Re: Tether Required Recapitalization in May 2022

#260

Post by Tenoke »

patio11 wrote: post #166
Grimburger wrote: post #132

Earlier quoted context omitted.

1:1

Given that the other crypto people offering “keep me honest” bets are offering 5:1, 10:1, and 25:1, on better terms, no, that’s not interesting, but I’ll write you a free option to laugh about me over the Internet if it turns you you’re right.

So how confident you are that you are right? Sounds like less than 4%. Is it less than 1%?
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