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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#341

Post by SilasX »

ChrisLomont wrote: post #336
SilasX wrote: post #302

Earlier quoted context omitted.

Everything you’ve just said would apply equally well to money market mutual funds (which hold the same kinds of assets), and yet they very rarely have problems honoring redemptions or keeping $1/share peg.

First, MMMFs target $1/share, they do not promise it nor are they legally beholden to honor it. It's a goal, not a promise. It also works because the US dollar has been remarkably stable and most of their holdings are USD. No crypto is so stable, with a bunch of them being about the most volatile assets you can lose money with.

> First, MMMFs target $1/share, they do not promise it nor are they legally beholden to honor it. It's a goal, not a promise.

How is that relevant to the claim in question? (Which, if you’ll recall, was whether tether can maintain the peg and redemptions while holding the same assets as MMMFs, which generally do that just fine.)

> It also works because the US dollar has been remarkably stable and most of their holdings are USD.

Okay, now you lost me, and I’m not convinced you have the recent discussion in mind. The original comment was claiming that Tether can’t maintain the peg, because it holds non-dollar assets. I pointed out a trillion dollar industry by that maintains a peg, using those same assets, and you’re saying the non-dollar assets only succeed there because the dollar is stable? Which is somehow an argument about how these assets are good enough for MMMFs to work but not Tether?

Please take a minute to review the thread and see if you’re still supporting the claim I disputed.

Re: Tether Withdrawals Top $10B

#342

Post by hiq »

dsomers wrote: post #313
giaour wrote: post #285

Earlier quoted context omitted.

> but everyone cashing out their USDT is not a scenario going to happen Didn't bankers say something similar in 1928?

If I recall correctly, the stock market _only_ lost 90% of its value during the crash that proceeded the Great Depression.

It would be more relevant to compare to bank runs. How many banks got only 90% of their deposits withdrawn and managed to go through this?

Re: Tether Withdrawals Top $10B

#343

Post by everfree »

parkingrift wrote: post #324
everfree wrote: post #178

Earlier quoted context omitted.

> Shorting Tether with another stable coin is a fools errand. Why? There are plenty of US-based, regulated and audited stablecoins out there. You could use them as collateral to short Tether.

Ha. This would be the equivalent of betting against the US dollar by buying treasury bonds. I doubt the solvency of any single exchange or crypto institution if there is a true run on Tether. No one who believes that Tether is a scam would risk making that bit by leveraging another loosely regulated stable coin.

Many other popular asset-backed stables aren't loosely regulated like Tether. They are often regulated by NYSDFS.

Re: Tether Withdrawals Top $10B

#344

Post by optimalsolver »

TameAntelope wrote: post #170
ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

My understanding is that while USDT isn't this $1:$1 ratio you describe, other stablecoins are, specifically USDC. So what you're describing does exist, but isn't what USDT is. IMO the infatuation with USDT has always confused me a bit; why would anyone use USDT over USDC in the first place?

USDC hasn't been audited either, so how would we know that?

Re: Tether Withdrawals Top $10B

#345

Post by solveit »

ineptech wrote: post #322
WinstonSmith84 wrote: post #278

Earlier quoted context omitted.

Tether, or rather Finex is a famous MM. Don't worry too much about their "other investments", they are up a lot no matter BTC price. Tip of the iceberg https://bitinfocharts.com/bitcoin/wallet/Bitfinex-coldwallet Also, you're going with the assumption they shall be able to redeem 100%. Crash happens, like we have seen, but everyone cashing out their USDT is not a scenario going to happen. Or if you want to account fo…

> Crash happens, like we have seen, but everyone cashing out their USDT is not a scenario going to happen. This seems wildly optimistic. All it would take is for users to adopt some new FOTM stablecoin faster than Tether backers can liquidate their reserves. It needn't be rational, either; it could be catalyzed by, let's say, a *ism scandal involving someone connected to Tether.

Without commenting on the likelihood of a tether bank run in general, it seems incredibly unlikely that it'll be catalyzed by an *ism scandal purely based on the general political leanings of crypto whales (hard to pin down on the left-right spectrum, but definitely highly libertarian for obvious reasons).

Re: Tether Withdrawals Top $10B

#346

Post by postalrat »

SparkyMcUnicorn wrote: post #293
ceejayoz wrote: post #232

Earlier quoted context omitted.

My Dad sends me money via Zelle. It shows up instantly in my account, with zero fees, even if it's 10pm on a Sunday. https://mashable.com/article/ethereum-gas-fees-skyrocket-bor... > If you were trying to complete a transaction on the Ethereum network last night, you might have been taken aback by the ridiculously high gas fees you saw. For example, one user purchased a $25 NFT on Saturday evening. Their total price?…

Zelle has strict limits on how many transactions you can do and how much you can transfer. Yeah, ETH has high fees. Don't use it directly. Use an L2, Polygon, or something else where fees are pennies or less. ETH is not a good chain to be on for the average user, unless you have a lot of money to waste on gas.

So don't use ethereum because the fees are too high?

Re: Tether Withdrawals Top $10B

#347

Post by TameAntelope »

optimalsolver wrote: post #344
TameAntelope wrote: post #170

Earlier quoted context omitted.

My understanding is that while USDT isn't this $1:$1 ratio you describe, other stablecoins are, specifically USDC. So what you're describing does exist, but isn't what USDT is. IMO the infatuation with USDT has always confused me a bit; why would anyone use USDT over USDC in the first place?

USDC hasn't been audited either, so how would we know that?

Because they've claimed it and we have no reason not to believe them, unlike USDT which we have many reasons not to believe them.

Re: Tether Withdrawals Top $10B

#348

Post by Geee »

jameshart wrote: post #323
Geee wrote: post #180

Earlier quoted context omitted.

The problem is that it's not that simple to just park $80b on a bank account. The bank will use the money to buy bonds or give it out in mortgages to get interest on it. It's akin to kicking the can to the bank, and getting the money out might fail or be too slow. It's probably better to manage the reserve yourself, to be able to manage risk and liquidity properly, rather than outsource it to a bank.

The problem with trying to park $80bn in a bank account is not the risk that the bank might invest it. That is what banks do. You can find a legitimate bank who will be willing to hold your $80bn with reasonable terms for how fast you can access it, backed by insured guarantees and as secure as you would like. But such a bank, when you show up with your $80bn, in order to protect their ability to reliably offer those…

Yes, that's another problem and probably the more likely one. Buying and selling bonds and other stuff also requires arrangements with banks and so on, but might be easier from capital control perspective, or actually work as a money laundering mechanism, but I'm not really sure.

Re: Tether Withdrawals Top $10B

#349

Post by ProjectArcturis »

amanj41 wrote: post #311
robonerd wrote: post #234

Earlier quoted context omitted.

Most of these are just "do a thing you can already do with money, but shittier"

I would guess that you have never been made to remit money to someone living in a different country. There are multiple uses for a CBDC but this one is a low hanging fruit example. I have had headaches doing because of existing infrastructure. Wire fees + exchange fees

Why aren't stablecoins already used widely for remittances? Is it the gas fees? Or lack of technical sophistication on the receiving end?

Re: Tether Withdrawals Top $10B

#350

Post by LatteLazy »

jcranmer wrote: post #310
LatteLazy wrote: post #261

Earlier quoted context omitted.

They only need to have made 2% on those other investments and the 2% lost on crypto is irrelevant. Also, if 2% of outstanding tether has been lost (forgotten wallet keys etc) then those can never be redeemed and again, tether wins. Inflation is another factor worth considering here: tethers deposits are deminishing but it's investments are (or should be) shielded. I think people fail to notice how similar a (non-frau…

> They only need to have made 2% on those other investments and the 2% lost on crypto is irrelevant. A quarter of their investments are commercial paper, which hasn't averaged as high as 2% yield since a brief period in March 2020. Actual cash of course has 0% yield. US Treasuries (sub 1-year), which make up nearly half their assets, also hasn't hit 2% yield any time recently. So no, they aren't recouping their loss…

Don't mistake me for a tether fan. I don't pretend to know if it will work or if it moral or if it's all a scam. I don't own any.

I'm just laying out the maths...

And to be clear, they only need to make 2% total to cover their crypto loses. If the average tether coin exists for 18 months before being redeemed, 1.5% per annum will net them 2.2% over that period and they're golden.

That extra 0.2%, for a $10bn withdrawal is 2million USD in profit right? Not bad split equally between 5 employees, for a month with massive crypto loses and 10bn in net withdrawals...

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