Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tether Required Recapitalization in May 2022

kalzumeus.com

Post reply on HN
Print view View original

81–90 of 336 posts

Re: Tether Required Recapitalization in May 2022

#81

Post by JackFr »

peyton wrote: post #57
AlexandrB wrote: post #38

Earlier quoted context omitted.

No kidding. Crypto is deeply unpopular with a significant portion of the public - myself included. This is not the same as the early era of smartphones where you either had one or didn't really know much about them (i.e. were neutral). Many people have made up their minds on the utility (or lack thereof) of crypto and want nothing to do with it. Some of the recent incidents of backlash around NFTs in games come to mi…

It’s just money. It’s a commodity. If I can get a better deal on a house if I pay with crypto, I’ll do it—don’t need your approval, really.

> It’s just money.

Not really.

> I’ll do it—don’t need your approval, really

Mine? No. You want a title to go with that house ? Well then, yeah, there are some third parties whose opinions matter.

Re: Tether Required Recapitalization in May 2022

#82

Post by UncleEntity »

mathgenius wrote: post #41
gringoDan wrote: post #15

Earlier quoted context omitted.

Any stablecoin that is NOT backed 1-1 by fiat, correct? I.e., algorithmic stables. If you're 100% collateralized by USD in your bank account, how can it get de-pegged?

With leverage you can long or short more than the available supply of tethers. You are effectively creating fake tether with leverage, and then selling it (or buying it). This stuff also happens with equities, commodities, etc. If there was no leverage, then yes, a 1:1 backed stablecoin would hold it's value. EDIT: I mean the story here is far from clear, you also need to consider arbitrage bots that act between exch…

Even with leverage one would assume that a 1:1 backed asset would survive intact with the people loaning out their coins taking the losses in the case of a run.

If they engage in fractional reserve issuance (which it appears they do) then all holders of the coin will be subject to losses if they can’t cash out before the reserves run out. Pretty much guaranteed run by that point.

Re: Tether Required Recapitalization in May 2022

#83

Post by lkrubner »

astoor wrote: post #71
axg11 wrote: post #12

The most important point in this article is that whether Tether is fully collateralized ultimately doesn't matter. As long as there are well-capitalized parties (Bitfinex, other exchanges) that want to prop up Tether, it will be fine. Nobody should be under the illusion that Tether is decentralized or anything other than a bet on Bitfinex.

So Tether has become something like an international reserve cryptocurrency, which gives them an "exorbitant privilege"[0], meaning they can do pretty much whatever they want safe in the knowledge that everyone else will do everything they can to prevent them from failing because everyone else would have too much to lose if they did fail. That has kept it going for a long time, and might (or might not) keep it going…

The "exorbitant privilege" usually belongs to a government with a vast military, and/or substantial colonial possessions -- something that allows force to be used in an emergency. There is a reason why the US dollar, but not the Swiss franc, is an international reserve currency.

Re: Tether Required Recapitalization in May 2022

#84

Post by rapsey »

gringoDan wrote: post #74
jandrese wrote: post #73

Earlier quoted context omitted.

Are there any 1-1 fiat stablecoins that aren't just flat out lies? Like every new crypto coin minted requires a matching real dollar to be stashed away. My impression is that nobody does this because it would mean massive waits to buy the crypto coins when the real dollars run low and because the way to make real money is with leverage.

USDC is legit: https://www.centre.io/usdc-transparency

Current market cap is 52 billion. Just where is that money?

Re: Tether Required Recapitalization in May 2022

#85

Post by astrange »

avalys wrote: post #37
winslett wrote: post #28

Earlier quoted context omitted.

It is one step closer to shutting the doors on Bitcoin as an isolated financial ecosystem. Bitcoin-to-actual-USD is a trackable / taxable event. Whales avoid it like the plague. By moving to a pseudo-dollar like Tether, market makers can hang out while they wait for a suspect better buy-in price in the future. Should pseudo-dollars go way, they actual-Dollar transactions get a taxable haircut. Additionally, the frict…

Aren't sales of Bitcoin for Tether taxable anyway?

Decentralized exchanges probably don’t give you the reports you need to do taxes even if you wanted to do them.

Re: Tether Required Recapitalization in May 2022

#86

Post by nradov »

PKop wrote: post #59
lacker wrote: post #54

Earlier quoted context omitted.

It's such a weird "bet", though. Pay $1, get back $1 if you win, get back $0 if you lose.

If you just sit in Tether sure, but the ecosystem of stablecoins gives you access to DeFi yield opportunities with much better "passive" interest than bank deposits or treasuries, so the bet is a little more sophisticated than dollar for dollar.

Actually the DeFi yield opportunities are not any better than Treasuries on a risk-adjusted basis. You might not be familiar with the actual risk level, including counterparty risk. Some of the cryptocurrency grifters have intentionally obscured that issue.

Re: Tether Required Recapitalization in May 2022

#87

Post by thebean11 »

grapehut wrote: post #63
graeme wrote: post #46

Earlier quoted context omitted.

It’s not just 0.1% off the peg. It’s 0.1% off and facing large redemptions. That makes the peg loss seem significant

The large redemptions are what is causing them to be 0.1% off the peg...

Or is being 0.1% below peg causing large redemptions? People buying USDT at a discount and redeeming at face value.

Re: Tether Required Recapitalization in May 2022

#88

Post by nootropicat »

Tether fud in 2022 is truly embarassing and slanderous. The only time they had real problems was when part of their money was stolen and confiscated with connection to Crypto Capital - which only happened because they were refused normal banking. The only way tether fails is if the situation repeats in some way - but it appears American government finally gave up on trying to destroy usdt.

As long as the US government itself doesn't try to destroy them again - in few years tether is going into hundreds of billions.

Re: Tether Required Recapitalization in May 2022

#89

Post by ceejayoz »

gringoDan wrote: post #74
jandrese wrote: post #73

Earlier quoted context omitted.

Are there any 1-1 fiat stablecoins that aren't just flat out lies? Like every new crypto coin minted requires a matching real dollar to be stashed away. My impression is that nobody does this because it would mean massive waits to buy the crypto coins when the real dollars run low and because the way to make real money is with leverage.

USDC is legit: https://www.centre.io/usdc-transparency

Tether has attestations, too. They're not audits; Tether got caught moving money in right before an attestation check, and moving it out right after.

https://ag.ny.gov/press-release/2021/attorney-general-james-...

> In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’

> On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account.

An attestation tells you what the bank balance is. An audit tells you where it comes from, who has claim on it, etc.

Re: Tether Required Recapitalization in May 2022

#90

Post by astrange »

microtherion wrote: post #14
billions wrote: post #7

Bitcoin is the real stable coin. Everything else is fluctuating in price discovery until hyperbitcoinization completes.

The Dollar is the real stable coin, thanks to its unbreakable peg to the dollar.

Sometimes collectible coins trade for more than face value.
Post reply on HN