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That's largely an orthogonal point. You may be suspicious of USDT or USDC's claim. But the point is that at least some fraction of the market is not, which is w
by dcolkitt 5y ago
That's largely an orthogonal point. You may be suspicious of USDT or USDC's claim. But the point is that at least some fraction of the market is not, which is why USDT trades at $1.00.
Now that may turn out in the future to be revealed to be a sham, and the market will lose faith. But right now USDT only has market value because some segment of people believe in the promises made by the Tether Corporation. If I fork the chain, and I'm running a clone of USDT, and the Tether Corp says "there are no promises behind that token", then very clearly forked-USDT will be worth zero.
- lupire 5y agonot quite. stablecoins do not get stability from belief in the backing assets. they get stability merely from a shared agreement to pretend the coin is stable, so as not to lose whatever stake they have put in.
- user-the-name 5y agoBut that shared agreement still does not transfer to the forked blockchain.
- nly 5y agoI don't think "pretend" is enough. I've certainly used USDT as a medium of exchange for a few minutes because it has a stable exchange rate, but I wouldn't hold it for an extended period.
- stepanhruda 5y agoShared agreement is not quite enough, that’s why algorithmic stablecoins fail. You can say that’s due to lack of agreement but it all comes down to incentives. The only reason stablecoins work is because they have a mechanism where you can quickly 1. mint a new coin and sell it for slightly more than $1 for it 2. buy a coin for less than $1 and redeem it for $1 in value