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Tether starting to lose its peg too, after Terra did

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Re: Tether starting to lose its peg too, after Terra did

#461

Post by scoopertrooper »

Nition wrote: post #383
mwill wrote: post #191

Earlier quoted context omitted.

Do people in crypto sincerely believe Tether is backed? I'm not being sarcastic here, I'm genuinely asking. I'm a bit of a skeptic of how the crypto market has developed overall, and the intentions of the major players, so I keep reminding myself that I'm biased, but I haven't believed Tether is even remotely close to being fully backed for a long while, and I've just sort of assumed everyone who's 'bought in' to the…

The pinned top post on reddit.com/r/tether is titled "Tether has always been fully backed and the assurance opinion made available today confirms it once again, and puts Tether ahead of the industry on transparency."

Read the comments on that post though.

Re: Tether starting to lose its peg too, after Terra did

#462

Post by brazzy »

geogra4 wrote: post #371
brazzy wrote: post #357

Earlier quoted context omitted.

Sidenote: the actual tulip bulbs were far less silly. They were a productive investment. You could plant them to make more bulbs.

You can stake crypto to make more crypto too!

Fair point - but you can't stake NFTs, can you?

Re: Tether starting to lose its peg too, after Terra did

#463

Post by ptero »

hbbio wrote: post #396
alexb_ wrote: post #386

The entire concept of a "stablecoin" reminds me a lot of something from SIGBOVIK 2014. Keep in mind, this was written in 2014, before any stablecoins actually existed, and that SIGBOVIK is supposed to be a joke conference where people present extremely silly ideas as if they were real breakthroughs. > DollarCoin: We propose skipping the middleman and providing direct proof-of-dollar with a blockchain that consists of…

Mind that... it actually was a good idea. Until people started cheating with it, exactly as you say. Tokenized dollars allow to benefit from the tech (smart contracts), which is itself great and opens a lot of possibilities. What's not is: Ponzi schemes (Terra), crooks (Tether?). Edit: There are valid stablecoins like USDC (they hold sufficient reserves) and even valid algorithmic stablecoins e.g. LUSD, backed by Eth…

> There are valid stablecoins like USDC (they hold sufficient reserves)

Those reserves are sufficient until they are not. There are always risks of losing the peg and anyone investing in them should be aware of and track the main ones. My 2c.

Re: Tether starting to lose its peg too, after Terra did

#464

Post by vkou »

csomar wrote: post #244
Animats wrote: post #180

Tether 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…

One upside: 0.5-1% interest per day at Bitfinex. > Remember, with a stablecoin, there is no upside to holding. The people running Tether has a stake in the upside. It's this moment where they need to convert their supposed holdings to sustain the price. It's not going to be expensive (maybe even profitable) given the high yield of USDT right now.

1% interest a day isn't worth very much when you discover they've ran off with your principal.

Re: Tether starting to lose its peg too, after Terra did

#465

Post by shawabawa3 »

hnaccount_rng wrote: post #232
eudoxus wrote: post #163

Earlier quoted context omitted.

"stablecoins in general" doesn't really apply here since the two in question work radically different. Collateralized vs Algorithmic. Theoretically the Terra UST stable coin didn't need reserves to keep the peg at $1, unlike Tether USDT, which does.

how do algorithmic stable coins work?

The idea behind UST was that if it falls below $1, you can redeem it for $1 of Luna instead. The idea being that UST is "backed" by the activity on the terra Blockchain (fees are paid in Luna)

Of course, that means if UST is below $1 there is an arbitrage loop. buy UST at a discount, redeem it for Luna, sell Luna for USDC, repeat

This causes downward pressure on Luna's price. As Luna drops so does the faith in UST recovering, you end up with.... Luna dropping from $100 to $0.01, there's nothing backing UST effectively and it's still trading below peg (around $0.40)

Re: Tether starting to lose its peg too, after Terra did

#466

Post by h2odragon »

xur17 wrote: post #443
h2odragon wrote: post #421

Earlier quoted context omitted.

There are people "in crypto" who believe the FDIC will make good any losses on their investments; which they hold because "crypto can't be controlled or monitored by governments!" I'm expecting the talking heads to have to spend time on "why there won't be a bitcoin bailout" today or tomorrow.

> There are people "in crypto" who believe the FDIC will make good any losses on their investments Do you have a source for this? I'm heavily involved "in crypto", and have not seen any indications of beliefs like this.

Source: A couple of conversations with people in real life. If circumstances had been different these people would've been pushing Amway or similar.

Re: Tether starting to lose its peg too, after Terra did

#467

Post by alexb_ »

alexb_ wrote: post #386

The entire concept of a "stablecoin" reminds me a lot of something from SIGBOVIK 2014. Keep in mind, this was written in 2014, before any stablecoins actually existed, and that SIGBOVIK is supposed to be a joke conference where people present extremely silly ideas as if they were real breakthroughs. > DollarCoin: We propose skipping the middleman and providing direct proof-of-dollar with a blockchain that consists of…

cryptocurrency people telling me that burning money in exchange for a token is a good idea actually is the last thing I expected when I posted this

yet, somehow, I am not in any way, shape, or form surprised

Re: Tether starting to lose its peg too, after Terra did

#468

Post by raiyu »

jmyeet wrote: post #455
shafyy wrote: post #55

Earlier quoted context omitted.

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere. The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters into this with billions of dollars spent in advertising. So, no, they don't deserve to lose their money to these assholes. These assholes need to be prosecu…

I actually hate people disavowing themselves of responsibility here. While there is definitely some shady stuff in Crypto (particularly NFTs, which seem to be 99% scams), there's a certain level of personal responsibility required here. People saw the meteoric rise of Bitcoin and got a serious case of FOMO. Everyone wanted to be on the next Bitcoin. This, ultimately, is the American Dream: to get rich by doing nothin…

The American dream is to make it through hard work, what you are referring to is simple greed and laziness and it’s been around since humanity attained consciousness.

Re: Tether starting to lose its peg too, after Terra did

#469

Post by vkou »

sgt101 wrote: post #416
londons_explore wrote: post #277

Earlier quoted context omitted.

Financially literate people see that tether might be backed by thin air. They're pretty clear on their homepage that "Every Tether token is 100% backed by our reserves, which includes traditional currency and cash equivalents, and may include other assets and receivables from loans made by Tether to third parties.". "receivables from loans" can be worth nothing if it's a loan to someone with no assets. I believe the…

The thing is that someone will know, if someone does know what the level of backing is then they can figure out what the point of collapse would be and that will allow the construction of a scheme to make it collapse. If they can do that then there is a bunch of money to be made.

> If they can do that then there is a bunch of money to be made.

Hoping to make money by betting on Tether collapsing is like taking out insurance against the event of a combined global thermonuclear war & genocidal alien invasion of the Earth.

If you win the bet, you won't have anyone to collect from.

Re: Tether starting to lose its peg too, after Terra did

#470

Post by jmyeet »

alexb_ wrote: post #386

The entire concept of a "stablecoin" reminds me a lot of something from SIGBOVIK 2014. Keep in mind, this was written in 2014, before any stablecoins actually existed, and that SIGBOVIK is supposed to be a joke conference where people present extremely silly ideas as if they were real breakthroughs. > DollarCoin: We propose skipping the middleman and providing direct proof-of-dollar with a blockchain that consists of…

Here's a question for tether "investors": why are you investing in something whose stated goal is to maintain a peg to the USD instead of, you know, just holding money in US dollars?

You're adding a bunch of risk for literally no upside.

The only thing you gain is to to trade that on the blockchain, which is really a response to the oracle problem.

So you've greatly increased your risk with no upside to slightly increase your utility. That doesn't seem like a good deal.

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