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The problem with doing a DAI-USDT short is that they're correlated: if Tether implodes, it may take down DAI as well.
by Clewza313 6y ago
The problem with doing a DAI-USDT short is that they're correlated: if Tether implodes, it may take down DAI as well.
- betwixthewires 6y agoHow are they correlated in such a way that this mechanism exists? The only correlation they have is that they're pegged to the same asset. Tether, if it truly has 1 to 1 backing, has no fear of losing value. DAI can lose its peg. I'd still put my money on DAI because I understand its mechanics and they're very good and I don't think for a second Tether has 1:1 USD backing. But aside from the USD hyperinflating or something, what other mechanism exists between the two?
- Clewza313 6y agoYour Tether-DAI bet has to be made on an exchange, many of which are shady and unregulated; for example, we know Bitfinex is closely tied to Tether itself. When the tide goes out, we'll also find which exchanges have been putting their hands in the cookie jar, and many will implode Mt Gox style.
- graeme 6y agoYou’d at most lose what you staked, right? Like if the bet is truly 100:1, and you bet $100 and win but the exchange implodes, you only lose the $100 correct? Mind you not sure how it can be a risk free 100:1. I think this assumes the leverage is on the same exchange that goes bust.
- deleted 6y ago[deleted]