4 ms·

Institutional stables (USDC,USDT,BUSD) are backed by traditional USD (more or less audited) Algorithmic stables are vulnerable to things like what happened to

by emrx 4y ago

Institutional stables (USDC,USDT,BUSD) are backed by traditional USD (more or less audited) Algorithmic stables are vulnerable to things like what happened to ust because the coin basket has to be balanced always, DAI tends to be more or less stable because it has a big part of its reserves in USDC so its more like a wrapped USDC with a little ETH. The more damaged ones were people who felt attracted for the completely unrealistic 20% interest. However, this absolute dump was coordinated by big funds, they saw they could borrow and dump whatever, nobody would save the peg.

CryptoPunk 4y ago
fubb1 4y ago
all stablecoins are 100% scam... they dont have the reserve they wont pay the money they are not backed...
Nursie 4y ago
Nobody really knows what USDT is backed with, but it makes a pretty good show of pretending to have reserves... > this absolute dump was coordinated by big funds Really? Because people have been talking about the reserve to pay out the promised interest falling away for some time now.
throwaway4good 4y ago
Sorry - my comment was referring to algorithmic stable coins - Tether is not an algorithmic stable coin and obviously the biggest of the stable coins.
arcticbull 4y ago
> Institutional stables (USDC,USDT,BUSD) are backed by traditional USD (more or less audited) Sorry you can't say USDT and "more or less audited" in the same sentence. Literally un-audited. It's an empty vault in the Bahamas lol. [1] Institutionalized stable would be a better description of USDT. The issue is algorithmic and partially-collateralized stable coins are all, each and every one of them, vulnerable to attack. They purport to be $1, but you know fundamentally they are not. Therefore you can attack the peg and walk away with boatloads of money. This is actually how Soros made his money - he broke the GBP when it was pegged. [2] It's much easier to break these pseudo-dollars since the market is unregulated, you can do whatever you want, and they're small potatoes in the world of tradfi. [edit] This is a great listen on the whole thing. [3] [1] https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether https://www.bloomberg.com/news/features/2021-10-07/crypto-my... [2] https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp https://www.investopedia.com/ask/answers/08/george-soros-ban... [3] https://cryptocriticscorner.com/2022/05/04/episode-71-terra-luna-and-algorithmic-stablecoins/ https://cryptocriticscorner.com/2022/05/04/episode-71-terra-...
- TrapLord_Rhodo 4y ago
  but what if you fully collateralize using uncorrelated assets? Theoretically you can purchase synthetic stocks, tokenized real estate, other stablecoins. No one has tried it yet tho.
  - arcticbull 4y ago
    Since all of those went down together just now, I think that might not be enough.
    - TrapLord_Rhodo 4y ago
      well you only get a depeg with huge volitilty. Luna dropped 97%, that's why it depeged. Synethic SnP, real estate is like 10% max which isn't high enough volitilty to lead to what esseentially was a bankrun on UST. The problem is getting people to trust the underlying collateral. Also, you can take the Dai approach and be over collateralized. Dai is at 150%, instead of trying to maintain parity.
overtonwhy 4y ago
Emphasis on "less audited": https://www.coindesk.com/markets/2021/08/09/tether-reveals-more-details-about-its-reserves/?outputType=amp https://www.coindesk.com/markets/2021/08/09/tether-reveals-m... "The order further finds that Tether and Bitfinex’s combined assets included funds held by third-parties, including at least 29 arrangements that were not documented through any agreement or contract, and that Tether transferred Tether reserve funds to Bitfinex, including when Bitfinex needed help responding to a “liquidity crisis.”" https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21
buggeryorkshire 4y ago
Audited? Where?
CTDOCodebases 4y ago
USDT is as murky as it gets. It's backed mostly by debt of unknown origin.

by emrx 4y ago

CryptoPunk 4y ago

fubb1 4y ago

all stablecoins are 100% scam... they dont have the reserve they wont pay the money they are not backed...

Nursie 4y ago

Nobody really knows what USDT is backed with, but it makes a pretty good show of pretending to have reserves... > this absolute dump was coordinated by big funds Really? Because people have been talking about the reserve to pay out the promised interest falling away for some time now.

throwaway4good 4y ago

Sorry - my comment was referring to algorithmic stable coins - Tether is not an algorithmic stable coin and obviously the biggest of the stable coins.

arcticbull 4y ago

> Institutional stables (USDC,USDT,BUSD) are backed by traditional USD (more or less audited) Sorry you can't say USDT and "more or less audited" in the same sentence. Literally un-audited. It's an empty vault in the Bahamas lol. [1] Institutionalized stable would be a better description of USDT. The issue is algorithmic and partially-collateralized stable coins are all, each and every one of them, vulnerable to attack. They purport to be $1, but you know fundamentally they are not. Therefore you can attack the peg and walk away with boatloads of money. This is actually how Soros made his money - he broke the GBP when it was pegged. [2] It's much easier to break these pseudo-dollars since the market is unregulated, you can do whatever you want, and they're small potatoes in the world of tradfi. [edit] This is a great listen on the whole thing. [3] [1] https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether https://www.bloomberg.com/news/features/2021-10-07/crypto-my... [2] https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp https://www.investopedia.com/ask/answers/08/george-soros-ban... [3] https://cryptocriticscorner.com/2022/05/04/episode-71-terra-luna-and-algorithmic-stablecoins/ https://cryptocriticscorner.com/2022/05/04/episode-71-terra-...

TrapLord_Rhodo 4y ago
but what if you fully collateralize using uncorrelated assets? Theoretically you can purchase synthetic stocks, tokenized real estate, other stablecoins. No one has tried it yet tho.
- arcticbull 4y ago
  Since all of those went down together just now, I think that might not be enough.
  - TrapLord_Rhodo 4y ago
    well you only get a depeg with huge volitilty. Luna dropped 97%, that's why it depeged. Synethic SnP, real estate is like 10% max which isn't high enough volitilty to lead to what esseentially was a bankrun on UST. The problem is getting people to trust the underlying collateral. Also, you can take the Dai approach and be over collateralized. Dai is at 150%, instead of trying to maintain parity.

overtonwhy 4y ago

Emphasis on "less audited": https://www.coindesk.com/markets/2021/08/09/tether-reveals-more-details-about-its-reserves/?outputType=amp https://www.coindesk.com/markets/2021/08/09/tether-reveals-m... "The order further finds that Tether and Bitfinex’s combined assets included funds held by third-parties, including at least 29 arrangements that were not documented through any agreement or contract, and that Tether transferred Tether reserve funds to Bitfinex, including when Bitfinex needed help responding to a “liquidity crisis.”" https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21

buggeryorkshire 4y ago

Audited? Where?

CTDOCodebases 4y ago

USDT is as murky as it gets. It's backed mostly by debt of unknown origin.