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If i had any tether I would sell it all right now, on the off chance that tether is in fact not fully backed. In the end there is no upside to holding it, so ev

If i had any tether I would sell it all right now, on the off chance that tether is in fact not fully backed. In the end there is no upside to holding it, so even small risk is unnecessary

mhoad 4y ago
It’s not going to be fully backed. I think that’s become increasingly clear at this point.
- smoovb 4y ago
  Let's say it's 70% or even 50% backed. The withdrawals so far are are about 10% of its holdings. Won't we have to wait for another 40-60% draw down to find out if it's not fully backed? Seems like so far, anyone who wanted out, got out.
  - aaaaaaaaata 4y ago
    ...what if it's 20-30%?
    - smoovb 4y ago
      Then time for a class action against the NYAG office for not disclosing this to the public.
matdehaast 4y ago
Tethers collapse or fall from the peg would be such a contagion within the entire crypto ecosystem. I would think all crypto holdings are at risk if there are large adverse findings in the disclosure.
- onlyrealcuzzo 4y ago
  Why would Tether collapsing bring down USDC? Theoretically, USDC is backed (or more backed) by dollars. I'm not sure why anyone has ever held a Tether for even 1 second. Even if you believe in it 100% - why not hold something other people believe in more?
  - bushbaba 4y ago
    USDC is not backed 1:1 by USD dollar`, they removed that claim. https://cointelegraph.com/news/coinbase-removes-backed-by-us-dollars-claim-for-usdc-stablecoin https://cointelegraph.com/news/coinbase-removes-backed-by-us...
    - charcircuit 4y ago
      The current claim is now: USDC is fully backed by cash and short-dated U.S. government obligations, so that it is always redeemable 1:1 for U.S. dollars.
    - Mizza 4y ago
      I don't know why they all need to play this game. I guess because of their terrible performance after the IPO, they feel the need to make returns and using the reserves for riskier investments is just too tempting. I'm surprised somebody like Chase hasn't started their own stablecoin and proven openly: we're backed 100% by T-Bills. We get some profit from holding your money, but it's small and safe. Why do they all have to be shady?
      - drakythe 4y ago
        Banks did this before the civil war, see https://daily.jstor.org/banks-own-private-currencies-in-19th-century-america/ https://daily.jstor.org/banks-own-private-currencies-in-19th... the article doesn't go into detail, but says that congress "effectively ended the practice" after the Civil War was settled. I suspect that if any bank tried to push out their own Crypto the Fed would have /Questions/ for them and in general it wouldn't work out well for the bank in question.
  - ceejayoz 4y ago
    > Why would Tether collapsing bring down USDC? Theoretically, USDC is backed (or more backed) by dollars. Because they're probably doing similar tricks with reserves and non-audit attestations. https://www.coindesk.com/layer2/2022/03/24/correctly-was-wrong-circles-accountant-tweaks-fine-print-of-usdc-attestation/ https://www.coindesk.com/layer2/2022/03/24/correctly-was-wro... "Grant Thornton has switched from calling the $52.3 billion stablecoin’s reserve accounts 'correctly stated' to the more equivocal 'fairly stated.' Here’s why that matters."
- aaaaaaaaata 4y ago
  > all crypto holdings are at risk Of what, a few months of a 50% dip? Look at the chart, we've seen all of this before.
pru567 4y ago
There's big yield in stablecoins. But yeah, it seems likely that the risk is not worth the yield.
- iskander 4y ago
  The "honest" yield of on-chain lending protocols has decreased significantly through the year since it mostly came from lending to leverage traders. For example, USDC yield on Aave is down to ~2.8%, I think Compound's stable yield has been down to <1% for a while. There are other sources of yield, such as Gemini Earn (6.5%), which lend to larger trading firms. Those feel riskier since they're more exposed to systemic collapse in crypto and lock up your dollars with a long withdraw delay. Then there are the ponzi yields (10-40%), like the recently collapsed UST and the soon-to-collapse USDD and USDN. I think it's obvious why those are a bad idea.
  - pru567 4y ago
    I was actually trying to figure out the risks of lending GUSD (a fully audited and collateralized stablecoin) to a Curve pool. I generally think its a bad idea, but I can't figure out why. Related reading : { https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-dollar#section-superior-regulatory-requirements-how-gusd-is-regulated https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-do..., https://every.to/almanack/curve-wars https://every.to/almanack/curve-wars }
    - Canada 4y ago
      The main risk of being in that pool is that you might get stuck with GUSD which you would have a very hard time getting rid of unless you have an account with Gemini, and even then, I've heard of them refusing to redeem GUSD for USD to people who actually bought GUSD directly from them with USD. The secondary risk of being in that pool is if any of the 3pool assets die. You'd have to hope to be automated enough to be out the door with the good ones. Finally, the reward for being in there is the marketability of the CRV which is the lions share.
    - ceejayoz 4y ago
wolongong942 4y ago
Somebody has been redeeming huge amounts in the past 3 days, maybe someone knew what was up. You'd definitely want to redeem before they have to resort to those El Salvador IOUs at the bottom of the reserves pile.
323 4y ago
> there is no upside to holding it People don't hold tether because they love tether. They hold it because they need it to trade crypto. So you need to balance the risk of tether being a scam with the opportunity risk of not being able to trade because you don't hold it.
- NovemberWhiskey 4y ago
  But that's not the case; is it? Many, many people who hold USDT could equally well hold USDC or GUSD, couldn't they?
  - 323 4y ago
    In theory, in practice it's more complicated. USDC usage is increasing, but it will be a while until it can displace USDT.
  - Canada 4y ago
    There's basically no markets for GUSD. Even if it's the most fully backed by dollar bank deposits option, it's pretty much illiquid.
    - NovemberWhiskey 4y ago
      Is there somewhere I can read an explanation of why? What you'd normally expect in a market like this is flight-to-quality.
      - Canada 4y ago
        (This is an analogy, but it's almost literally the reality for a massive global market that not seen by the mainstream) I'm not sure where you would read about it. It's like this... Bahamas dollars are pegged 1:1. They can be spent interchangeably in the Bahamas. You can redeem them 1:1 in the Bahamas. Very credible. But most people are not in the Bahamas, and can't redeem them where they are. The Bahamas won't let just anyone in, and it's expensive to go there anyway. (Oh sure, if you're American and live in Florida it's no big deal, but if you're Chinese or Indian or something it's a big pain in the ass) There are money changers in other places that will take Bahamas Dollars, but they'll only take your B$100 notes and you're looking at like 4% loss to sell them, and for all your 20s, 10s, etc nobody will give you more than 50% for them if they will accept them at all. So these things are somewhat redeemable if you're in Canada or France... but in many places they are not redeemable at all. Or you could use this other thing called Tether that just works. It costs 0.25-0.50% to turn into local currency if you're talking $10,000+ amounts. It can be done in almost place on Earth where you have running water and electricity. GUSD is basically like B$. So given that reality, it's a no brainer to take Tether over GUSD, even if you think Tether is shady. This is also something I didn't get about Tether for a long time... it's actually successful because its operators are shady, not in spite of it. They have been doing whatever it takes to maintain actual liquidity, and has done so for years. Gemini does not, it just sits there and brags about how it could totally pay everyone back if it wanted to.
qgin 4y ago
Tether knows that people are not going to be happy when they find out the backing. They wouldn’t fight it in court so hard otherwise.

If i had any tether I would sell it all right now, on the off chance that tether is in fact not fully backed. In the end there is no upside to holding it, so even small risk is unnecessary

mhoad 4y ago

It’s not going to be fully backed. I think that’s become increasingly clear at this point.

smoovb 4y ago
Let's say it's 70% or even 50% backed. The withdrawals so far are are about 10% of its holdings. Won't we have to wait for another 40-60% draw down to find out if it's not fully backed? Seems like so far, anyone who wanted out, got out.
- aaaaaaaaata 4y ago
  ...what if it's 20-30%?
  - smoovb 4y ago
    Then time for a class action against the NYAG office for not disclosing this to the public.

matdehaast 4y ago

Tethers collapse or fall from the peg would be such a contagion within the entire crypto ecosystem. I would think all crypto holdings are at risk if there are large adverse findings in the disclosure.

onlyrealcuzzo 4y ago
Why would Tether collapsing bring down USDC? Theoretically, USDC is backed (or more backed) by dollars. I'm not sure why anyone has ever held a Tether for even 1 second. Even if you believe in it 100% - why not hold something other people believe in more?
- bushbaba 4y ago
  USDC is not backed 1:1 by USD dollar`, they removed that claim. https://cointelegraph.com/news/coinbase-removes-backed-by-us-dollars-claim-for-usdc-stablecoin https://cointelegraph.com/news/coinbase-removes-backed-by-us...
  - charcircuit 4y ago
    The current claim is now: USDC is fully backed by cash and short-dated U.S. government obligations, so that it is always redeemable 1:1 for U.S. dollars.
  - Mizza 4y ago
    I don't know why they all need to play this game. I guess because of their terrible performance after the IPO, they feel the need to make returns and using the reserves for riskier investments is just too tempting. I'm surprised somebody like Chase hasn't started their own stablecoin and proven openly: we're backed 100% by T-Bills. We get some profit from holding your money, but it's small and safe. Why do they all have to be shady?
    - drakythe 4y ago
      Banks did this before the civil war, see https://daily.jstor.org/banks-own-private-currencies-in-19th-century-america/ https://daily.jstor.org/banks-own-private-currencies-in-19th... the article doesn't go into detail, but says that congress "effectively ended the practice" after the Civil War was settled. I suspect that if any bank tried to push out their own Crypto the Fed would have /Questions/ for them and in general it wouldn't work out well for the bank in question.
- ceejayoz 4y ago
  > Why would Tether collapsing bring down USDC? Theoretically, USDC is backed (or more backed) by dollars. Because they're probably doing similar tricks with reserves and non-audit attestations. https://www.coindesk.com/layer2/2022/03/24/correctly-was-wrong-circles-accountant-tweaks-fine-print-of-usdc-attestation/ https://www.coindesk.com/layer2/2022/03/24/correctly-was-wro... "Grant Thornton has switched from calling the $52.3 billion stablecoin’s reserve accounts 'correctly stated' to the more equivocal 'fairly stated.' Here’s why that matters."
aaaaaaaaata 4y ago
> all crypto holdings are at risk Of what, a few months of a 50% dip? Look at the chart, we've seen all of this before.

pru567 4y ago

There's big yield in stablecoins. But yeah, it seems likely that the risk is not worth the yield.

iskander 4y ago
The "honest" yield of on-chain lending protocols has decreased significantly through the year since it mostly came from lending to leverage traders. For example, USDC yield on Aave is down to ~2.8%, I think Compound's stable yield has been down to <1% for a while. There are other sources of yield, such as Gemini Earn (6.5%), which lend to larger trading firms. Those feel riskier since they're more exposed to systemic collapse in crypto and lock up your dollars with a long withdraw delay. Then there are the ponzi yields (10-40%), like the recently collapsed UST and the soon-to-collapse USDD and USDN. I think it's obvious why those are a bad idea.
- pru567 4y ago
  I was actually trying to figure out the risks of lending GUSD (a fully audited and collateralized stablecoin) to a Curve pool. I generally think its a bad idea, but I can't figure out why. Related reading : { https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-dollar#section-superior-regulatory-requirements-how-gusd-is-regulated https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-do..., https://every.to/almanack/curve-wars https://every.to/almanack/curve-wars }
  - Canada 4y ago
    The main risk of being in that pool is that you might get stuck with GUSD which you would have a very hard time getting rid of unless you have an account with Gemini, and even then, I've heard of them refusing to redeem GUSD for USD to people who actually bought GUSD directly from them with USD. The secondary risk of being in that pool is if any of the 3pool assets die. You'd have to hope to be automated enough to be out the door with the good ones. Finally, the reward for being in there is the marketability of the CRV which is the lions share.
  - ceejayoz 4y ago

wolongong942 4y ago

Somebody has been redeeming huge amounts in the past 3 days, maybe someone knew what was up. You'd definitely want to redeem before they have to resort to those El Salvador IOUs at the bottom of the reserves pile.

323 4y ago

> there is no upside to holding it People don't hold tether because they love tether. They hold it because they need it to trade crypto. So you need to balance the risk of tether being a scam with the opportunity risk of not being able to trade because you don't hold it.

NovemberWhiskey 4y ago
But that's not the case; is it? Many, many people who hold USDT could equally well hold USDC or GUSD, couldn't they?
- 323 4y ago
  In theory, in practice it's more complicated. USDC usage is increasing, but it will be a while until it can displace USDT.
- Canada 4y ago
  There's basically no markets for GUSD. Even if it's the most fully backed by dollar bank deposits option, it's pretty much illiquid.
  - NovemberWhiskey 4y ago
    Is there somewhere I can read an explanation of why? What you'd normally expect in a market like this is flight-to-quality.
    - Canada 4y ago
      (This is an analogy, but it's almost literally the reality for a massive global market that not seen by the mainstream) I'm not sure where you would read about it. It's like this... Bahamas dollars are pegged 1:1. They can be spent interchangeably in the Bahamas. You can redeem them 1:1 in the Bahamas. Very credible. But most people are not in the Bahamas, and can't redeem them where they are. The Bahamas won't let just anyone in, and it's expensive to go there anyway. (Oh sure, if you're American and live in Florida it's no big deal, but if you're Chinese or Indian or something it's a big pain in the ass) There are money changers in other places that will take Bahamas Dollars, but they'll only take your B$100 notes and you're looking at like 4% loss to sell them, and for all your 20s, 10s, etc nobody will give you more than 50% for them if they will accept them at all. So these things are somewhat redeemable if you're in Canada or France... but in many places they are not redeemable at all. Or you could use this other thing called Tether that just works. It costs 0.25-0.50% to turn into local currency if you're talking $10,000+ amounts. It can be done in almost place on Earth where you have running water and electricity. GUSD is basically like B$. So given that reality, it's a no brainer to take Tether over GUSD, even if you think Tether is shady. This is also something I didn't get about Tether for a long time... it's actually successful because its operators are shady, not in spite of it. They have been doing whatever it takes to maintain actual liquidity, and has done so for years. Gemini does not, it just sits there and brags about how it could totally pay everyone back if it wanted to.

qgin 4y ago

Tether knows that people are not going to be happy when they find out the backing. They wouldn’t fight it in court so hard otherwise.