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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#351

Post by medo-bear »

Axsuul wrote: post #233
medo-bear wrote: post #151

Earlier quoted context omitted.

its a massive investment and if you look at it this way you have to ask, is ukraine such a sure bet and what are the consequences of that investment going south. and the failure to ask these questions is indicative that too many people see the usd as being in unlimited supply, which by itself devalues the usd

Nothing is a sure bet but leaving Russian aggression unchecked destabilizes the region. The world counts on the US to maintain the peace and status quo. As long as there's still confidence in that, the US currency will continue being the world's reserve currency along with all the benefits that come with that.

> The world counts on the US to maintain the peace and status quo

ok

Re: Tether Withdrawals Top $10B

#352

Post by ProjectArcturis »

horsecabletruck wrote: post #213
ProjectArcturis wrote: post #198

Earlier quoted context omitted.

What could you do with a USD stablecoin that you can't do with a regular old dollar? Other than let everyone see your transactions and account balances.

Many things. A stablecoin that implements ERC20 interface can be used across Ethereum ecosystem and it’s smart contracts. You could even program your own smart contracts around the token, such as to setup a time lock or auction. Examples: converting it to another token on a decentralized exchange, purchasing an NFT, holding the token in a non-custodial wallet, holding the token in a multi-signatory wallet, participat…

Auctions already exist. Time-locking your own money is a very niche case but I'm sure you could find a way to do it with regular dollars. You can buy other tokens with dollars. You can set up trust funds, corporations, and non-profits in dollars. Escrow exists. Loans exist.

The difference is the decentralization of it, but why is that an advantage? We've had hundreds/thousands of years working out the kinks of, say, how to operate an escrow provider. Replacing that all with "smart" contracts just opens you up to hacks of poorly written code, of which Ethereum itself is a prime example.

Re: Tether Withdrawals Top $10B

#353

Post by ProjectArcturis »

randomhodler84 wrote: post #328
robonerd wrote: post #234

Earlier quoted context omitted.

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

“But without permission”. Shittier might be acceptable if you do not wish to seek permission. Which is the whole point.

So, for crime? Like, what is the legitimate use-case where not needing permission is the defining requirement?

Re: Tether Withdrawals Top $10B

#354

Post by LatteLazy »

ncallaway wrote: post #315
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…

> I think people fail to notice how similar a (non-fraud) tether model is to a traditional bank That’s exactly what’s unethical about it. They’re operating a bank, but have skipped all the regulations and oversight that banks operate with. I have no issue with Tether operating a fractional reserve deposit system, if they are subject to the same oversight (and insurance) that banks are subject to.

The reason banks are regulated is the risk of contagion and the risk of short term drops in markets making them illiquid or shallow so banks can't meet their commitments.

But tether has no risk of contagion to a bank does it?

And markets have never been more stable or deep or liquid.

So the case for regulation here is weak.

Again. I don't actually know if tether is a giant fraud, or how much actual business case there is here for stable coins. I'm just saying, it's sort of easy to make a case at least that they're fine.

Re: Tether Withdrawals Top $10B

#355

Post by hiq »

boc wrote: post #300
cowtools wrote: post #227

Earlier quoted context omitted.

I don't know if it will necessarily cause crypto prices to crash

Crypto is priced on the exchanges in terms of USDT, USDC, etc. If USDT dies then BTC goes to like $500 on Binance. The cascade effects will cause runs on other exchanges, and then you're betting that they have enough reserves to cover a run. I'd want to be far away from the scene when that happens. The fiat banking system is backstopped against this behavior by the FDIC, which guarantees your funds are safe even if t…

> If USDT dies then BTC goes to like $500 on Binance.

Do you just mean that confidence will be so low that people will try to shun cryptocurrencies and dump their positions, or are you talking about another mechanism?

Re: Tether Withdrawals Top $10B

#356

Post by hackingforfun »

worik wrote: post #301
NortySpock wrote: post #244

Earlier quoted context omitted.

Well, friction in transactions, arbitrage, and collective belief in the value of an asset.

>....and collective belief in the value of an asset. Among other things the financial system is a web of trust. IMO one of the fundamental things that crypto gets wrong is replacing trust with algorithms. I do not think that can be done. Trust is about people. Time will tell if an algorithm that can automate trust can be found. I do not expect it will

I think a sufficiently advanced algorithm can over time.

Bitcoin is an example of a system of trust that has worked pretty well so far (although it requires a lot of electricity, but that is the trade off). There are also people on the Bitcoin core team, so there is some trusted element there.

Crypto will likely continue to innovate on algorithms, given the chance.

I think there can be trust in people, plus algorithms, with algorithms taking over more over time. This is already happening even in traditional finance, i.e. giving more control over to algorithms that participate in HFT. People do monitor those, but people monitor crypto, too, and maybe the failures in crypto so far mean too much control has been given.

I would argue that some more things in finance can be automated, without things being so black and white (i.e. no control vs total control given to algorithms). I do think the trust model given to governments and traditional finance gatekeepers can be iterated on, with some regulation involved too. I don't think we've figured everything out yet.

Re: Tether Withdrawals Top $10B

#357

Post by hiq »

xwolfi wrote: post #209
alasdair_ wrote: post #134

Earlier quoted context omitted.

How, exactly? I know it seems simple to short Tether, but in practice there doesn't seem to be a safe way to do it such that if the value plummets to almost zero (and takes much of the crypto ecosystem with it, including some exchanges) you could actually guarantee you'd get paid in US dollars at the end of it all without a long lockup period. You could do something like buy Coinbase puts or something, but there is s…

In a short play you're paid immediately in USD. You sold the minute you acquired tether and now all you have is a Tether-denominated liability to pay back, which you assume will cost you 0 since you ll be able to get all those tether back at much less than you sold the initial loan. Ofc, for servicing this liability in tether, you have to pay interests in USD, as long as the market stays irrational. You need to find…

So from the large Tether holder's perspective, it's like a big deposit with USD interests and a very long time horizon, with the caveat that they'll get their principal back in USDT (with a rate 1:1) (eventually) instead of USD. And you do that through some legal contract, right?

Re: Tether Withdrawals Top $10B

#358

Post by sudosysgen »

jerf wrote: post #174
hbosch wrote: post #161

Earlier quoted context omitted.

In theory, you're correct. If 1B USDT is backed up, 1 to 1, with exactly 1B USD and no one every moves, sells, invests, or otherwise trades the underlying USD then the coin is actually stable... but it's already been established that Tether is backed by assets other than USD[0]. So... how much are you willing to trust them? 0. https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...

And look at the incentives of all the individual parties in such a scenario. I think this is the only way a "stablecoin" can function as designed... but it is not possible to construct an entity that has any scalable incentive to provide the backing that would create such a coin. For that entity, it is nothing but downside. Therefore, stable coins are a fiction on par with perpetual motion machines. In the short term…

Why couldn't you use short-term fed paper? Even a 0.5% yearly yield would be more than enough.

Re: Tether Withdrawals Top $10B

#359

Post by TuringNYC »

dragontamer wrote: post #269
shadedtriangle wrote: post #218

Earlier quoted context omitted.

> All you need for a stable stablecoin is to save every dollar put in to it. That’s the issue right there. How does Tether save its dollars? We can see it in their transparency report[1]. Whether you believe them or not it’s not just cash in a bank account. * 0.41% Non-U.S. Treasury Bills * 55.53% U.S. Treasury Bills * 0.15% Reverse Repurchase Agreements * 5.81% Cash & Bank Deposits * 9.63% Money Market Funds * 28.47…

> What if the value of those assets is already below 1:1 because of recent market events? My long-term treasuries are down well over 10% this YTD, in case anyone wants to know. So if Tether had say, $50-billion in 10-to-30Y treasuries at the start of the year, they only have $45-billion of that now. There are serious market risks when you buy/sell Treasuries. Yes, they're among the safest instruments on the market, b…

>> So if Tether had say, $50-billion in 10-to-30Y treasuries at the start of the year, they only have $45-billion of that now.

This is nuts - they dont and it wouldnt make any sense. You cant have a short term cash-equivalent backed with long-duration bonds. It would be a total asset-liability mismatch.

For reference:

T-bonds mature in 20 or 30 years and offer the highest interest payments bi-annually.

T-notes mature anywhere between two and 10 years, with bi-annual interest payments, but lower yields.

T-bills have the shortest maturity terms—from four weeks to one year.

Re: Tether Withdrawals Top $10B

#360

Post by sudosysgen »

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…

What prevents you from only selling the coins to US citizens with full KYC? Wouldn't that be enough?
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