Tether starting to lose its peg too, after Terra did

Post by ComputerGuru » Thu, May 12, 2022, 5:35 PM UTC

Alex3917 wrote: post #497

jmyeet wrote: post #470

Earlier quoted context omitted.

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 incr…

> You're adding a bunch of risk for literally no upside. You mine a Bitcoin that 'should' be worth 5k USD, but is instead selling 60k USDT. So instead of selling that Bitcoin for 5k, you instead sell ~8% of your Bitcoin for 5k USDT, pay your expenses, and keep the other 92% of the Bitcoin you mined.

Post by tgsovlerkhgsel » Thu, May 12, 2022, 5:38 PM UTC

Post by whimsicalism » Thu, May 12, 2022, 5:50 PM UTC

AlexandrB wrote: post #864

whimsicalism wrote: post #833

Earlier quoted context omitted.

I encourage you to do your own research, there is more than enough information out there. The basic jist is that there are two ways of getting Dai, either 1. buying it from someone else with Dai (no extra $0.66) 2. minting it as a loan collateralized by your holdings in some other crypto (which requires $1 + X% backing) where X varies depending on the crypto. I believe you also get paid some "stability" fees for doin…

166% collateral doesn't seem so safe in a market where swings of 20%+ are not uncommon and 50%+ are not unheard of. Plus the value of many cryptocurrencies seem to be correlated and they will shed value together in a bad market. I think the thing that would give me the most confidence is the large portion of USDC collateral - but why not just use USDC then?

Post by m12m3kg » Thu, May 12, 2022, 5:52 PM UTC

Post by vineyardmike » Thu, May 12, 2022, 5:53 PM UTC

ForHackernews wrote: post #353

davidweatherall wrote: post #189

Earlier quoted context omitted.

I don't understand how you bodge a stable coin startup. Surely you just mint the tokens in exchange for dollars, and then put ~50% of the dollars in zero risk investments (some form of treasury bonds), and then take the 0.5-1% interest per year as your revenue. Tether currently has $81b marketcap so you could be making $400-800m per year doing basically nothing?

Great, you've invented a boring old bank. That's not innovation. (Well, technically an unlicensed wildcat bank, but still) Literally the only new thing about blockchains is an ecologically destructive brute-force solution to the byzantine generals problem. However, it turns out nobody except CS students cares much about that, so they have to dress it up with cartoon apes and web3 buzzwords.