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Top stablecoins shed $7B in May as traders redeem tokens en masse

blockworks.co

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Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#261

Post by hoschicz »

axlee wrote: post #166
taspeotis wrote: post #165

Look I am very ignorant about all this stuff but ... is there any downside to shorting a stablecoin? Please be gentle with me: Like if you short it and the price doesn't move (by design) are you out any money? The price won't go up (by design) because nobody's going to spend too much money from their reserves to support a price over US$1. But it's possible for the reserves to run dry in which case the price goes down…

You end up paying the transaction fees, which are insane. On top of the interest.

You don't on chains such as Polygon, Fantom, etc etc etc. Really only Ethereum is very expensive; you don't have to use it.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#262

Post by hoschicz »

dropnerd wrote: post #175
taspeotis wrote: post #165

Look I am very ignorant about all this stuff but ... is there any downside to shorting a stablecoin? Please be gentle with me: Like if you short it and the price doesn't move (by design) are you out any money? The price won't go up (by design) because nobody's going to spend too much money from their reserves to support a price over US$1. But it's possible for the reserves to run dry in which case the price goes down…

i have been interested in shorting tether since 2017. if i had gone through with it, i would have paid 5 years of interest for close to no return, including in 2018 when crypto fell 90%. also, if enough people are levered short, crypto traders could short squeeze you. the price just needs to go up temporarily. also, there's counterparty risk. is the exchange you're trading on going to stay up if tether goes to 0? dep…

See my sibling comment. You can do a permissionless short on Tether on the blockchain for a varying interest rate difference between USDC and USDT. I've been paying approx 2 % a year for the last year now.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#263

Post by funstuff007 »

Animats wrote: post #25

The big question with Tether has been, if they are holding commercial paper, whose commercial paper? Traders who deal in commercial paper of real companies that do real stuff don't see Tether present in that market. The dollar amounts are too big to hide. The suspicion is that their "commercial paper" is high-interest loans to other cryptocurrency companies. With the whole crypto sector in decline, those loans are at…

> Traders who deal in commercial paper of real companies that do real stuff don't see Tether present in that market. The dollar amounts are too big to hide.

Very similar to Madoff's derivatives transactions. He was so big, but there little evidence of him transacting his main "strategy" in the market.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#264

Post by cma »

leereeves wrote: post #244
robinduckett wrote: post #149

Earlier quoted context omitted.

In the UK, it is only a taxable event when the coin is exchanged to a "readily convertible asset", i.e. Bitcoin, Mainnet ETH.

Tether isn't readily convertible?

Not if we dont even know what it is backed by, readily convertible one minute, can't dump it for $.01 the next once it happens.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#265

Post by dubswithus »

OtomotO wrote: post #20

The moment I learned that people want to buy crypto as a means to get rich in (evil ;)) fiat money, I knew I had a ponzi scheme in front of me. The interesting idea behind crypto once was to have a totally different system. Yet in reality, with greedy apes on a spacerock, it was an unreachable Utopia

With so many startups how can you be sure all of them will fail to provide value?

It’s totally possible the whole thing is unworkable and dies out. Another option is that it survives in some niche area that provides value or just becomes entrenched like HFT.

And it’s possible a world changing blockchain startup hasn’t been invented yet. Any tech breakthroughs with processing power or storage could have a huge effect on blockchain.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#266

Post by anonymousab »

viraptor wrote: post #8
ur-whale wrote: post #2

Is $7B a lot? Isn't Tether's cap alone around 10 times that? Is this an observable trend or just a small spike of an otherwise generally volatile phenomenon?

> Isn't Tether's cap alone around 10 times that? Tether's cap is not the same as Tether's available liquidity to redeem the token. We don't know what's the limit of withdrawals they can handle in reality.

Surely it's 100%, surely the Tether project was not abjectly lying about their entire raison d'être this whole time.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#267

Post by adgjlsfhk1 »

whimsicalism wrote: post #226
adgjlsfhk1 wrote: post #50

Earlier quoted context omitted.

you can't do that with crypto either (and crypto likely will have higher transaction fees)

> crypto likely will have higher transaction fees If you are sending a fair bit of money, I very much doubt that.

most transactions are small. crypto might put pressure in banks to lower transaction fees for large transactions, but that is a very niche benefit

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#268

Post by JohnJamesRambo »

jimmydorry wrote: post #253
puranjay wrote: post #159

Earlier quoted context omitted.

I think what OP meant was why would anyone hold Tether at this point instead of a more transparent and less fudded stabelcoin like USDC

The temptation is too great. If the stablecoin has a non-zero administrative cost, someone has to pay it. And if no-one wants to pay it, then it is going to have to invest a portion of the dollars it holds to make up the difference (and to ultimately reward the creators / seed investors). There are probably no 100% cash-backed stablecoins.

This is the breakdown for USDC. Luckily for crypto, USDC keeps climbing the charts and USDT will be a memory soon. Bad money is always exchanged out for good.

>Jeremy Allaire @jerallaire 3/ As of 12:00pm EST Friday, May 13, 2022, the USDC reserve consisted of $11.6 billion cash (22.9%), $39.0 billion U.S. Treasuries (77.1%), for a total of $50.6 billion (100%), and there were 50.6 billion USDC in circulation

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#269

Post by dubswithus »

iownzerobtc wrote: post #24
bitcharmer wrote: post #7

It seems we have a serious problem with the first generation of cryptocurrencies being mainly a vehicle for scams and otherwise extracting value from gullible people. From what I've seen so far in most cases "stable-" isn't really stable and currency definitely doesn't work like one. Or am I just biased by sourcing my information from HN and only seeing the cases where crypto crashes and burns instead of all the succ…

USDC and DAI are both collateralized and doing fine at the moment and can operate as a decentralized currency and payment rail. It is never 100% risk free, though. The best way to maintain peg to dollar is just to hold the dollar. Many stablecoin holders are taking on this higher risk as they seek yield in protocols like Aave and dYdX, or to have ready liquidity to deploy this in the crypto investment market.

I don’t think any stable coins hold 1:1 because it would be impossible to earn much money on the float?

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#270

Post by cmsd2 »

cma wrote: post #264
leereeves wrote: post #244

Earlier quoted context omitted.

Tether isn't readily convertible?

Not if we dont even know what it is backed by, readily convertible one minute, can't dump it for $.01 the next once it happens.

Please tell me this is a joke. The fact tether trades readily on an exchange is a major factor for it being convertible, even if at a price you don’t like.
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