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It’s mostly just counterparty risk but in a different way than what you described: if usdt implodes, then the exchanges goes down with it and you can’t withdraw
by NhanH 4y ago
It’s mostly just counterparty risk but in a different way than what you described: if usdt implodes, then the exchanges goes down with it and you can’t withdraw your usd. You have to construct your position in such a way that your fiat money is outside of the crypto exchange.
- SilasX 4y agoSix months later and people still neglect the existence of decentralized exchanges![1] On Compound, they have a frustratingly big collateral buffer, and have built up reserves over time from past liquidations, so it’s really hard not to get your collateral back. (Caveat: To be sure, there could be a latent smartcontract vulnerability here.) As in the thread, it is much harder to get a flash rally on decentralized exchanges, since you’d have to keep it up for enough blocks to trigger the Oracle. If I were going to (further) short Tether, I would convert a bunch of USD to USDC and deposit it on Compound, then borrow ~65% of it back as Tether, which I would immediately convert to USDC then USD to invest more safely. You could also put some of than back into Compound to increase your USDC collateral buffer. [1] https://news.ycombinator.com/item?id=28792712 https://news.ycombinator.com/item?id=28792712