This isn't just about Tether, this is it.
Tether starting to lose its peg too, after Terra did
321–330 of 976 posts
Re: Tether starting to lose its peg too, after Terra did
#322Earlier quoted context omitted.
My issue is that these people are smart, but not "I work at Blackrock as a day-trader smart". In Finance, there are laws against a lot of the easy wins, and now the professionals are entering the Crypto space they're going to run circles around the amateurs. As in, it's easy to be the best in your local club, but it's a real wake-up call when you try out at a regional.
Still, 'smart' is usually not buying at ATH (even a local high) or not having a stop loss if you don't have time to stare at your screen all day and night. I don't know how many people 'woke up' to a 90% dump in terra and were too late to act; that's not smart and you don't have to be blackrock smart for that. This is not exclusive to cryptocurrencies of course; I don't have any, but I do trade other more traditional…
I completely get your point, and you're correct, but there are layers to it, especially in crypto. And I guess that means layers of fishy stuff.
If your luna stop loss was done in UST, you are also effed, even if you took the precaution of stop loss, because the "stable"coin dipped. Not saying that this was "safe" to do, but there are surely people out there who did this and got screwed, and I guess that would feel terrible.
Re: Tether starting to lose its peg too, after Terra did
#323The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…
I don't understand how you bodge a stable coin startup. Surely you just mint the tokens in exchange for dollars, and then put ~50% of the dollars in zero risk investments (some form of treasury bonds), and then take the 0.5-1% interest per year as your revenue. Tether currently has $81b marketcap so you could be making $400-800m per year doing basically nothing?
> Surely you just mint the tokens in exchange for dollars
Step 1: find someone willing to give you dollars in exchange for a token that's guaranteed to be worth something between 0 and 1 dollars.
Step 2: find a bank willing to let you be a money transmitter for millions of anonymous pseudo-dollars whose owner you have no idea of, setting off every single money laundering alarm in the building.
Re: Tether starting to lose its peg too, after Terra did
#324Earlier quoted context omitted.
A deflationary currency was never going to be viable as money.
This. Bitcoin is essentially the USD + US stock market in 1922. Hard money and unregulated securities markets already broke the world once. The crypto wizards somehow managed to forget a century of hard won lessons.
It was hardly "hard money" in 1922, as the Fed was created in 1913, and the dollar started plummeting. If you want to see what a hard money world looks like, look at the 40 years or so prior to 1913, when most civilized nations were on a gold standard.
Re: Tether starting to lose its peg too, after Terra did
#325Tether is back up to around $0.98, but volume is high. Somebody is pouring cash into Tether to support the price. Similar over at UST. Price is back up to $0.60, but volume is far above normal. Remember, with a stablecoin, there is no upside to holding . Any indication of risk means it's time to get out. Even if Tether has enough reserves to get the price back to $1, there will be substantial cashing out. That's why…
The high buy volume at $0.98 is due to arbitrage. This is to be expected before the final crash. People are using the opportunity to net an instant 2% return. Buy $10M USDT at $0.98, redeem at Tether for $1, take home $200K of profit instantly. Thing is, this will only last until Tether runs out of liquidity. Then all bets are off.
> redeem at Tether for $1
Is the redemption window really open? That's something people have been extremely skeptical of.
Re: Tether starting to lose its peg too, after Terra did
#326Earlier quoted context omitted.
Matt Levine did a great write up of algorithmic stablecoins here: https://www.bloomberg.com/opinion/articles/2022-05-11/terra-... "1. You wake up one morning and invent two crypto tokens. 2. One of them is the stablecoin, which I will call “Terra,” for reasons that will become apparent. 3. The other one is not the stablecoin. I will call it “Luna.” 4. To be clear, they are both just things you made up, just numbers o…
So why would one want to have Luna when you got Terra? I know Terra is backed, I know Luna is speculation, not any different from doing a roulette game.
There is no upside to holding Terra. If the system works, it'll always be grounded to 1 dollar. Luna on the other hand can go to the moon.
The names are the cleverest part of the whole scheme.
Re: Tether starting to lose its peg too, after Terra did
#327Earlier quoted context omitted.
Still, 'smart' is usually not buying at ATH (even a local high) or not having a stop loss if you don't have time to stare at your screen all day and night. I don't know how many people 'woke up' to a 90% dump in terra and were too late to act; that's not smart and you don't have to be blackrock smart for that. This is not exclusive to cryptocurrencies of course; I don't have any, but I do trade other more traditional…
I completely get your point, and you're correct, but there are layers to it, especially in crypto. And I guess that means layers of fishy stuff. If your luna stop loss was done in UST, you are also effed, even if you took the precaution of stop loss, because the "stable"coin dipped. Not saying that this was "safe" to do, but there are surely people out there who did this and got screwed, and I guess that would feel t…
> and I guess that would feel terrible.
Absolutely; there are proud whales saying they lost millions and laughing (not sure why) but I am very sorry for the people who lost a few k$ and now are in deep shit because they didn’t understand what they were doing. The ‘how can this be; I will get my money back right?’ type of thing.
Re: Tether starting to lose its peg too, after Terra did
#328Earlier quoted context omitted.
There is nothing "instant" in the process of buying millions of USDT, then sending them over to Tether for redemption against USD. The redemption process of such sums is a manual process which takes at least some days, even if it works out in the end (assuming Tether is liquid).
It’s instant given it’s guaranteed. If that doesn’t follow then it topples under its own promise.
It is guaranteed - by Tether. But the effectiveness of this guarantee is what's questioned, and the only way to fully validate this guarantee is to wait until the USD have left any accounts controlled by Tether and arrived in your bank account. You are inside the danger zone and outside of the profit zone until this process has completed. And this process is not instant at all.
[edit] Indeed, as dgellow commented, Tether actually does not strictly guarantee the redemption of USDT to USD. They use sleazy legalese in their Terms of Service to reserve the right to "delay" a redemption in case of illiquidity, without specifying how long that delay may last, so effectively they can simply "delay" your redemption for an infinite time.
Re: Tether starting to lose its peg too, after Terra did
#329Tether is back up to around $0.98, but volume is high. Somebody is pouring cash into Tether to support the price. Similar over at UST. Price is back up to $0.60, but volume is far above normal. Remember, with a stablecoin, there is no upside to holding . Any indication of risk means it's time to get out. Even if Tether has enough reserves to get the price back to $1, there will be substantial cashing out. That's why…
> Remember, with a stablecoin, there is no upside to holding.
As always people around here tend to see the world from their point of privilege. If you are in Turkey, Sudan or Venezuela right now there is a huge upside in holding a stable coin pegged to the dollar. Only 13% of the world population is lucky enough to live on a stable democracy with a stable economic system.
Re: Tether starting to lose its peg too, after Terra did
#330The one thing that I can't wrap my head around with Tether is: where did it all go? Tether must have been paid tens of billions in fiat dollars, and not even their bankers can say where those are. There's only so many hundred millions you can put into villas, cars, yachts and parties before it's inconceivable that it wouldn't get noticed. When it comes to crypto overall, my impression is that it needs to get bad befo…
> Tether must have been paid tens of billions in fiat dollars Do they? That's an honest question. They only provide attestations and no audits. And those only showed a lot of Commercial paper. If they sell an exchange $1B for Commercial paper related to that exchange. It costs the exchange a lot less than buying $1B in fiat dollars.
The way I understand their business model is: you pay $1 into our bank account, and we'll give you 1 USDT on one of a few chains. We'll invest it in low-risk securities, keep the gains, and give you back $1 for the USDT if you come asking. At least that's the theory, I think they've also been doing lending, it's notoriously shady. But still, a lot of people probably paid them real $ for there to be 78bn Tether.
Edit: in all likelihood, those CPs don't exist, btw. There was a good article by Bloomberg who tried to track those down.