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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

#61

Post by [deleted] »

adhesive_wombat wrote: post #45
dragontamer wrote: post #15

Earlier quoted context omitted.

In the short term, they have the reserves for sure. In the short term, this is more of a classic bank-run. The Terra-coin + Luna scared a lot of cryptocoin holders, and now they're running away from another stablecoin. Even if Bitfinex had the money, the amount of traders leaving USDT has to be a colossal amount. The amount of money Bitfinex can transfer at any given time is limited, so the peg will bend and buckle.…

> UST / Luna had substantial reserves. Did they, or did they just claim to while minting stablecoin in order to pump the price of Bitcoin? Which these guys (Tether) would want to do because the owners of Tether are a massive exchange, and they depend on Bitcoin being high to attract customers to the market, and the first thing news customers so is bring the real objective with them: actual cash.

[deleted]

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

#62

Post by someotherperson »

adhesive_wombat wrote: post #30

The 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…

> 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

This is victim blaming. Nobody deserves to be exploited, robbed or otherwise for any reason.

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

#65

Post by adhesive_wombat »

dragontamer wrote: post #54
adhesive_wombat wrote: post #45

Earlier quoted context omitted.

> UST / Luna had substantial reserves. Did they, or did they just claim to while minting stablecoin in order to pump the price of Bitcoin? Which these guys (Tether) would want to do because the owners of Tether are a massive exchange, and they depend on Bitcoin being high to attract customers to the market, and the first thing news customers so is bring the real objective with them: actual cash.

UST is Terra-coin, which collapsed 3 days ago. USDT, Tether, is a completely different coin. the one we're discussing today. --------- UST + Luna had substantial reserves. They proved it with their actions this past week. They weren't *enough* reserves mind you, but they were posting their BTC-wallets on Twitter and showing the movements.

Yes, sorry that wasn't clear, and I said Tether when I meant stablecoin in general. I meant that they didn't have the reserves they needed ("substantial" isn't good enough) and now Tether has an even bigger incentive to run uncollateralized because of who they are.

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

#66

Post by frozenport »

adhesive_wombat wrote: post #30

The 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…

How are VCs making money?

They invested $$$ and the company became insolvent?

Don't the investors loose?

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

#67

Post by jabbany »

nikanj wrote: post #31

Look at the front page of https://coinmarketcap.com/ There are 10114 different coins listed. Even if cryptos will deliver on the promises of the fully decentralized future, are we going to need that many different instruments? Today practically all merchants takes Visa and Mastercard. Some even take Amex, and a minuscule amount take BTC. Does anyone take a coin from page 73 of coinmarketcap.com?

To be fair a lot of those are specialty tokens for specific services/uses. Overall, the crypto situation can be thought of as more similar to, say, "gift cards" issued by companies.

You could say the same thing about a $5 Starbucks gift card --- you'd be hard pressed to spend it directly against any other merchant, but you could feasibly try to sell it for < $5 real dollars and if Starbucks went under, it would be worthless.

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

#69

Post by eterm »

turtledove wrote: post #59
rtpg wrote: post #32

Earlier quoted context omitted.

You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!

So wait, assuming I had a hundred k, and they were willing and able to pay out, I could buy 97k of tether and redeem it for 100k? Just an instant 3% return? This seems like there's no way they are opening themselves up to arbitrage like this.

It's $95k of tether now ;)

And why wouldn't they allow this arb?

By committing to that arbitrage you're pricing very low the risk of not actually being able to get your money once it has collapsed.

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

#70

Post by mmaunder »

adhesive_wombat wrote: post #30

The 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…

History has shown that dollar pegs last as long as a leader can defer gratification.
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