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Nope, occasionally exchanges will manipulate the price up to liquidate shorts - for instance the highest recorded trade price of USDT was about $1000 and dexes

Nope, occasionally exchanges will manipulate the price up to liquidate shorts - for instance the highest recorded trade price of USDT was about $1000 and dexes leave you at risk of flashbots and smart contract bugs.

X6S1x6Okd1st 5y ago
I've held a short position on USDT through AAVE for a couple months now. USDT would have to go to ~2 to liquidate me.
- qeternity 5y ago
  If USDT goes, so does AAVE and everything else. And as has been mentioned, the iFinex crew have squeezed USDT to $1,000 before.
  - X6S1x6Okd1st 5y ago
    AAVE on polygon has 1B in ETH, 851M in Dai, 1B in USDC and only 215M in USDT. Why would AAVE blow up if USDT blows up?
    - dustintrex 5y ago
      Because the fiat valuations of ETH, DAI, USDC and all coins will tank if Tether implodes.
      - anonymoushn 5y ago
        Why? USDC is backed by dollars and treasuries...
        dustintrex 5y ago
        Not anymore it isn't, and they've admitted it: https://beincrypto.com/coinbase-drops-guarantee-of-usdc-stablecoin-to-dollar-backing/ https://beincrypto.com/coinbase-drops-guarantee-of-usdc-stab...
        anonymoushn 5y ago
        I wrote that it was backed by dollars and treasuries. You wrote that it wasn't backed solely by dollars. So we agree.
        dustintrex 5y ago
        No, we don't, since USDC can now be backed by pretty much anything: > "the assets in fact include commercial paper, corporate bonds and other assets."
        anonymoushn 5y ago
        Hello, You're right. Their latest attestation[0] does not yet reflect their move to only cash and treasuries[1]. 0: https://www.centre.io/hubfs/pdfs/attestation/2021%20Circle%20Examination%20Report%20August%202021%20Final.pdf?hsLang=en https://www.centre.io/hubfs/pdfs/attestation/2021%20Circle%2... 1: https://www.centre.io/blog/usdc-reserves-composition https://www.centre.io/blog/usdc-reserves-composition
  - anonymoushn 5y ago
    Can you cite this? I have seen some pictures of Kraken wicks but not liquidations on Aave and not trades on FTX USDT quarterly futures above $1.10 or whatever.
    - qeternity 5y ago
      You’ve just cited it. I never said they squeezed in all places. They squeezed it where there was sufficient short interest: Kraken.
      - anonymoushn 5y ago
        I haven't just cited it! I said I saw a screenshot. I don't have a date or whatever, but if someone has a date then I can download the ticks from that day and check it out. Without a date I can't compare the short interest at Kraken to e.g. the $100,000,000 OI in USD-settled USDT futures at FTX today.
        qeternity 5y ago
        May 11, 2019 - https://trade.kraken.com/charts/KRAKEN:USDT-USD https://trade.kraken.com/charts/KRAKEN:USDT-USD Took me all of 10 seconds to find this.
        FatalLogic 5y ago
        Are you sure that actually happened? It should have been a huge story, but there seems nothing reported https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min:may+1+2019,cd_max:may+25+2019 https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min... If something that weird (a USDT price spike to $1000) really did happen, somehow nobody noticed and nobody was affected, in spite of millions of dollars of daily trades in that market at that time It's probably a glitch in Kraken's historical chart
        qeternity 5y ago
        Many people noticed. It’s not a big deal because the market is mostly wash trading. It’s not a glitch. How you can say it’s “probably” a glitch is beyond me, you have zero evidence to support that. There have been other instances of Tether spiking well above $1, that is simply the most egregious.
  - SilasX 5y ago
    Mentioned, yes. Cited (as happening on a decentralized exchange), no.
  - ikeboy 5y ago
    What is the actual mechanism by which AAVE collapses if USDT nukes?
SilasX 5y ago
DeFi exchanges operate algorithmically with published smartcontracts, so they can't be deliberately manipulated like that[1] -- can you link the example of the DeFi where USDT traded at $1000? Or were you just equivocating between DeFi and centralized exchanges in response to a comment that specifically suggested DeFi? [1] Which is not to say they can't be manipulated at all, but you'd have to go after the entire market or exploit some existing bug; it's different from the ones where centralized exchanges pull arbitrary shenanigans on their own platforms.
- qeternity 5y ago
  OP is obviously talking about CEX since it’s not possible for a DEX to have a USD market (like the above mentioned USDT/USD). As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which is coming to DEXs). DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation. But without margin, there’s not much economic benefit for a bad actor.
  - SilasX 5y ago
    >OP is obviously talking about CEX Certainly -- I agree OP (arcticbull) was replying to a comment about DeFI by explaining the dangers of a centralized exchange! That makes it a confused, unhelpful response, not one that "obviously" meant something coherent if you squint hard enough and practice sufficiently strained exegesis. >As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which are coming to DEXs). Margin has "come to" DEX the moment smartcontracts offer collateralized DeFi lending, which they have, so I'm not sure what you mean here. >DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation. The reason (I'm claiming) centralized exchanges are more vulnerable is that a) they own the platform and are the word of god on it -- whence the stories of people getting margin called at flash-crash prices that don't exist on other platforms. If they say prices are trading at some level, you just have to deal with it. That's not possible when you have to trade how the algorithm says. b) If someone "stupidly" buys in one direction on a DEX, "for manipulation", they've vulnerable to the entire universe of arbitrageurs who can exploit the resultant price differences. Inter-[centralized] exchange arbitrage is much harder. I brought up the point simply to emphasize that, to the extent that there's manipulation, it does not look like the manipulation you'd see on CEX, which was how OP was basing his argument. Furthermore, even the issue of more expensive liquidity from transaction fees wouldn't be true for the far-cheaper L2 sidechains. (Btw, you might want to use the terms in their unabbreviated forms at least once just to make it easy on people who aren't up to speed.)

X6S1x6Okd1st 5y ago

I've held a short position on USDT through AAVE for a couple months now. USDT would have to go to ~2 to liquidate me.

qeternity 5y ago
If USDT goes, so does AAVE and everything else. And as has been mentioned, the iFinex crew have squeezed USDT to $1,000 before.
- X6S1x6Okd1st 5y ago
  AAVE on polygon has 1B in ETH, 851M in Dai, 1B in USDC and only 215M in USDT. Why would AAVE blow up if USDT blows up?
  - dustintrex 5y ago
    Because the fiat valuations of ETH, DAI, USDC and all coins will tank if Tether implodes.
    - anonymoushn 5y ago
      Why? USDC is backed by dollars and treasuries...
      - dustintrex 5y ago
        Not anymore it isn't, and they've admitted it: https://beincrypto.com/coinbase-drops-guarantee-of-usdc-stablecoin-to-dollar-backing/ https://beincrypto.com/coinbase-drops-guarantee-of-usdc-stab...
        anonymoushn 5y ago
        I wrote that it was backed by dollars and treasuries. You wrote that it wasn't backed solely by dollars. So we agree.
        dustintrex 5y ago
        No, we don't, since USDC can now be backed by pretty much anything: > "the assets in fact include commercial paper, corporate bonds and other assets."
        anonymoushn 5y ago
        Hello, You're right. Their latest attestation[0] does not yet reflect their move to only cash and treasuries[1]. 0: https://www.centre.io/hubfs/pdfs/attestation/2021%20Circle%20Examination%20Report%20August%202021%20Final.pdf?hsLang=en https://www.centre.io/hubfs/pdfs/attestation/2021%20Circle%2... 1: https://www.centre.io/blog/usdc-reserves-composition https://www.centre.io/blog/usdc-reserves-composition
- anonymoushn 5y ago
  Can you cite this? I have seen some pictures of Kraken wicks but not liquidations on Aave and not trades on FTX USDT quarterly futures above $1.10 or whatever.
  - qeternity 5y ago
    You’ve just cited it. I never said they squeezed in all places. They squeezed it where there was sufficient short interest: Kraken.
    - anonymoushn 5y ago
      I haven't just cited it! I said I saw a screenshot. I don't have a date or whatever, but if someone has a date then I can download the ticks from that day and check it out. Without a date I can't compare the short interest at Kraken to e.g. the $100,000,000 OI in USD-settled USDT futures at FTX today.
      - qeternity 5y ago
        May 11, 2019 - https://trade.kraken.com/charts/KRAKEN:USDT-USD https://trade.kraken.com/charts/KRAKEN:USDT-USD Took me all of 10 seconds to find this.
        FatalLogic 5y ago
        Are you sure that actually happened? It should have been a huge story, but there seems nothing reported https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min:may+1+2019,cd_max:may+25+2019 https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min... If something that weird (a USDT price spike to $1000) really did happen, somehow nobody noticed and nobody was affected, in spite of millions of dollars of daily trades in that market at that time It's probably a glitch in Kraken's historical chart
        qeternity 5y ago
        Many people noticed. It’s not a big deal because the market is mostly wash trading. It’s not a glitch. How you can say it’s “probably” a glitch is beyond me, you have zero evidence to support that. There have been other instances of Tether spiking well above $1, that is simply the most egregious.
- SilasX 5y ago
  Mentioned, yes. Cited (as happening on a decentralized exchange), no.
- ikeboy 5y ago
  What is the actual mechanism by which AAVE collapses if USDT nukes?

SilasX 5y ago

DeFi exchanges operate algorithmically with published smartcontracts, so they can't be deliberately manipulated like that[1] -- can you link the example of the DeFi where USDT traded at $1000? Or were you just equivocating between DeFi and centralized exchanges in response to a comment that specifically suggested DeFi? [1] Which is not to say they can't be manipulated at all, but you'd have to go after the entire market or exploit some existing bug; it's different from the ones where centralized exchanges pull arbitrary shenanigans on their own platforms.

qeternity 5y ago
OP is obviously talking about CEX since it’s not possible for a DEX to have a USD market (like the above mentioned USDT/USD). As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which is coming to DEXs). DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation. But without margin, there’s not much economic benefit for a bad actor.
- SilasX 5y ago
  >OP is obviously talking about CEX Certainly -- I agree OP (arcticbull) was replying to a comment about DeFI by explaining the dangers of a centralized exchange! That makes it a confused, unhelpful response, not one that "obviously" meant something coherent if you squint hard enough and practice sufficiently strained exegesis. >As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which are coming to DEXs). Margin has "come to" DEX the moment smartcontracts offer collateralized DeFi lending, which they have, so I'm not sure what you mean here. >DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation. The reason (I'm claiming) centralized exchanges are more vulnerable is that a) they own the platform and are the word of god on it -- whence the stories of people getting margin called at flash-crash prices that don't exist on other platforms. If they say prices are trading at some level, you just have to deal with it. That's not possible when you have to trade how the algorithm says. b) If someone "stupidly" buys in one direction on a DEX, "for manipulation", they've vulnerable to the entire universe of arbitrageurs who can exploit the resultant price differences. Inter-[centralized] exchange arbitrage is much harder. I brought up the point simply to emphasize that, to the extent that there's manipulation, it does not look like the manipulation you'd see on CEX, which was how OP was basing his argument. Furthermore, even the issue of more expensive liquidity from transaction fees wouldn't be true for the far-cheaper L2 sidechains. (Btw, you might want to use the terms in their unabbreviated forms at least once just to make it easy on people who aren't up to speed.)