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Having all that Tether massively increases trade volume. Exchanges make money on fees, which of course rise proportionally to trade volume.

gruez 5y ago
>Having all that Tether massively increases trade volume. How? Having massive amounts of tether in your wallet doesn't increase trade volume, having users who trade increases trade volume. If I own 1B USDT and deposit it to some random exchange and let it sit there, the volume isn't going to change one bit.
- agumonkey 5y ago
  I think it would work on margin trading. Having more asset allows to lend to more margin traders. Which also more risky so more chances for the exchange to get fees
- fastball 5y ago
  Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. With a stablecoin like Tether, you have people constantly "cashing out" by just trading their BTC/ETH/etc for Tether. It is much easier to go back and forth between some "hard"-dollar value (scare quotes due to the question around how "hard" Tether actually is) and cryptos, and therefore encourages more trading. Long story short – Tether reduces the friction of certain trades, which obviously is going to make those trades more common.
  - gruez 5y ago
    > Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. Are we talking about whales or someone holding a bitcoin or two? Trading/withdraw limits at non-USDT exchanges (eg. coinbase/kraken/gemini) are quite generous, and you'd only be running into issues if you're selling several bitcoins per day. As a concrete example, kraken has a $500k daily withdraw limit for their "Intermediate" account.
    - pests 5y ago
      Everyone I know trades in stable coins. It's the safest to park overnight or to keep coins in when you don't want to be exposed to crypto. Most exchanges do not have true USD. Coinbase and binance yes, but only because they do the KYC work. Anywhere else like Probit, KuCoin, any DeFi - there will only be stable coins.
- ac29 5y ago
  Remember, Tether's customers are the exchanges, not random end users. New Tether mints go directly to the exchanges, presumably in exchange for short term loan agreements (Tether themselves doesnt claim to have more than a few percent backing in cash, its mostly unspecified "commercial paper"). The exchanges can now use this new found liquidity to trade themselves, run promotions, etc.

gruez 5y ago

>Having all that Tether massively increases trade volume. How? Having massive amounts of tether in your wallet doesn't increase trade volume, having users who trade increases trade volume. If I own 1B USDT and deposit it to some random exchange and let it sit there, the volume isn't going to change one bit.

agumonkey 5y ago
I think it would work on margin trading. Having more asset allows to lend to more margin traders. Which also more risky so more chances for the exchange to get fees
fastball 5y ago
Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. With a stablecoin like Tether, you have people constantly "cashing out" by just trading their BTC/ETH/etc for Tether. It is much easier to go back and forth between some "hard"-dollar value (scare quotes due to the question around how "hard" Tether actually is) and cryptos, and therefore encourages more trading. Long story short – Tether reduces the friction of certain trades, which obviously is going to make those trades more common.
- gruez 5y ago
  > Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. Are we talking about whales or someone holding a bitcoin or two? Trading/withdraw limits at non-USDT exchanges (eg. coinbase/kraken/gemini) are quite generous, and you'd only be running into issues if you're selling several bitcoins per day. As a concrete example, kraken has a $500k daily withdraw limit for their "Intermediate" account.
  - pests 5y ago
    Everyone I know trades in stable coins. It's the safest to park overnight or to keep coins in when you don't want to be exposed to crypto. Most exchanges do not have true USD. Coinbase and binance yes, but only because they do the KYC work. Anywhere else like Probit, KuCoin, any DeFi - there will only be stable coins.
ac29 5y ago
Remember, Tether's customers are the exchanges, not random end users. New Tether mints go directly to the exchanges, presumably in exchange for short term loan agreements (Tether themselves doesnt claim to have more than a few percent backing in cash, its mostly unspecified "commercial paper"). The exchanges can now use this new found liquidity to trade themselves, run promotions, etc.