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Tether Required Recapitalization in May 2022

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Re: Tether Required Recapitalization in May 2022

#271

Post by gringoDan »

postalrat wrote: post #254
gringoDan wrote: post #48

Earlier quoted context omitted.

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.

Correct. Price of BTC denominated in Tether goes up, price of BTC denominated in USD likely goes down, as a) Tether liquidates crypto assets to cover redemptions and b) people sell off their crypto assets due to uncertainty/fear in the market.

Re: Tether Required Recapitalization in May 2022

#272

Post by tlb »

lottin wrote: post #257
tlb wrote: post #242

Earlier quoted context omitted.

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.

For sure, holding tether (or any stablecoin) without investing it is pointless. It can't go up, but might go down. The only reason to hold it (longer than to do a transaction) is if you're making a return.

Re: Tether Required Recapitalization in May 2022

#273

Post by runarberg »

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.

Yeah, that still doesn’t make sense. If that were to be sustainable you would have charge higher interest on the loans then you give to savings. That means a customer has the potential of getting a loan in an alien currency which they’d have to sell to USD, and then buy some more of that alien currency to pay it back with much higher interest then if they would have just gone to a bank/credit union/loan agency.

These DeFi yields must be funded in other ways than just loans.

Re: Tether Required Recapitalization in May 2022

#274

Post by caffeine »

zionic wrote: post #122
JumpCrisscross wrote: post #50

Earlier 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…

The problem is this:

One day, people who think like you will come to power and decide that under their administration, [activity your livelihood is based on] constitutes “extracting value from the system” and is no longer permitted.

Maybe you are a golfer, or a restaurateur. But “what you’re doing is solely about enriching yourself.” Your fine cuisine is not feeding the poor. It is immoral to play golf while children go hungry. You have clearly become wealthy while doing nothing for the greater good.

They will come to you holding guns and demand that you cease your activity, and hand over your “wealth” - maybe your house, your savings, the food in your pantry, the clothes on your bank, maybe your wife or your daughter.

“We will take back for the People what is theirs” they will say. If you refuse, you will starve in prison, and they will take your life anyway. If you accept, you will starve in the street.

Re: Tether Required Recapitalization in May 2022

#275

Post by rglullis »

SilasX wrote: post #262
rglullis wrote: post #252

Earlier quoted context omitted.

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 .…

I’m familiar with the others and use them as well. https://news.ycombinator.com/item?id=31422545 https://news.ycombinator.com/item?id=31417134 https://news.ycombinator.com/item?id=31412835 My comment was answering a question about “why stablecoins at all”. To answer your question, because some uniswap v3 pools with USDT offered competitive returns, like the 0.05% WETH/USDT one. That was one of many I used, which incl…

It's not about the "concerns" that we should be worried about. We should also be worried about not perpetuating a gigantic scam.

Honesty is not just about "I wasn't the one profiting from the bad thing". It's also "I'm willing to call evil/immoral for what it is".

Re: Tether Required Recapitalization in May 2022

#276

Post by legulere »

mh- wrote: post #33
rickreynoldssf wrote: post #27

I think Tether is the ultimate "Fake it till you make it" organization in crypto. Its kind of a joke now but everyone is in on the joke but it will probably end up being the defacto crypto parking place once things get real in crypto (e.g. you can buy a house with it) and the adults come in and shake out the current management.

> once things get real in crypto (e.g. you can buy a house with it) it feels odd to speak about this scenario like it's a foregone conclusion.

More centralized digital currencies with regulations backed by central banks have a pretty big potential to disrupt basic banking services. Most problems of cryptocurrencies can be solved with a trusted third party. The question is only how long banks can lobby against that.

Re: Tether Required Recapitalization in May 2022

#277

Post by mh- »

legulere wrote: post #276
mh- wrote: post #33

Earlier quoted context omitted.

> once things get real in crypto (e.g. you can buy a house with it) it feels odd to speak about this scenario like it's a foregone conclusion.

More centralized digital currencies with regulations backed by central banks have a pretty big potential to disrupt basic banking services. Most problems of cryptocurrencies can be solved with a trusted third party. The question is only how long banks can lobby against that.

That is far from the only question.

Re: Tether Required Recapitalization in May 2022

#278

Post by SilasX »

rglullis wrote: post #275
SilasX wrote: post #262

Earlier quoted context omitted.

I’m familiar with the others and use them as well. https://news.ycombinator.com/item?id=31422545 https://news.ycombinator.com/item?id=31417134 https://news.ycombinator.com/item?id=31412835 My comment was answering a question about “why stablecoins at all”. To answer your question, because some uniswap v3 pools with USDT offered competitive returns, like the 0.05% WETH/USDT one. That was one of many I used, which incl…

It's not about the "concerns" that we should be worried about. We should also be worried about not perpetuating a gigantic scam. Honesty is not just about "I wasn't the one profiting from the bad thing". It's also "I'm willing to call evil/immoral for what it is".

I don’t consider being slightly undercollateralized a “gigantic evil scam” and the rhetoric around Tether is still definitely overblown, and if that were your primary concern (or am I not supposed to say that anymore?), you should have led with it rather than comparing it to similar defi returns.

Re: Tether Required Recapitalization in May 2022

#279

Post by TameAntelope »

drexlspivey wrote: post #265
TameAntelope wrote: post #91

Earlier quoted context omitted.

I'm not an expert by any means on this topic, but for non-crypto assets that are pegged, going even 0.1% below the peg is a huge deal. A peg is a peg, it's supposed to be more or less certain.

No it's not, if you think pegs are supposed to stay forever at the same price you don't understand how markets and order books work.

I very much don't understand how markets and order books work, but people who do understand those things tell me pretty consistently how big of a deal it is when a money market fund loses its peg, even by a tiny amount.

Re: Tether Required Recapitalization in May 2022

#280

Post by TameAntelope »

dogecoinbase wrote: post #238
DebtDeflation wrote: post #215

Earlier quoted context omitted.

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.

> Japan will face a national health crisis within a month. (spoiler: they didn't)

...yes they did.
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