4 ms·

I'm not an expert by any means on this topic, but for non-crypto assets that are pegged, going even 0.1% below the peg is a huge deal. A peg is a peg, it's sup

I'm not an expert by any means on this topic, but for non-crypto assets that are pegged, going even 0.1% below the peg is a huge deal. A peg is a peg, it's supposed to be more or less certain.

drexlspivey 4y ago
No it's not, if you think pegs are supposed to stay forever at the same price you don't understand how markets and order books work.
- TameAntelope 4y ago
  I very much don't understand how markets and order books work, but people who do understand those things tell me pretty consistently how big of a deal it is when a money market fund loses its peg, even by a tiny amount.
  - vagab0nd 4y ago
    Define "tiny". Is 0.1% tiny? 0.01%? 0.001%? USDT maintains its peg by allowing certain entities to redeem USDT 1 to 1. How much USDT's price fluctuates depends on how well that mechanism works, and market conditions.
    - graeme 4y ago
      By claiming certain entities can redeem 1:1. No one has ever documented a Tether redemption. They have a very tiny number of clients and the terms say they don’t have to redeem at all.
      - drexlspivey 4y ago
        > No one has ever documented a Tether redemption Are you just making stuff up? There were $10B worth of redemptions only last week.
        graeme 4y ago
        No there was a $10 billion market cap reduction. The exchange rate on Tether’s owned exchange, Bitfinex was $1 most of the past week where it was less elsewhere. Likely Tether was using open market operations to trade dollars for Tethers and keep the rate up. Documenting a redemption would involve using the official redemption mechanism where you redeem $100,000+ at a time, pay a $100-$1000 fee, get a wire transfer from Tether etc. If you can find anyone ever documenting having done that, let me know
        drexlspivey 4y ago
        How about the CEO of FTX who says they are doing it every day ? https://www.bloomberg.com/news/articles/2022-04-25/odd-lots-full-transcript-sam-bankman-fried-and-matt-levine-on-crypto https://www.bloomberg.com/news/articles/2022-04-25/odd-lots-...
        graeme 4y ago
        Sam Bankman Fried would be among those most likely to be co-defendants in a trial. But, what I said was it’s never been documented. * Does he buy Tether at par or at a discount? * Can he redeem when he wants, in any quantity, or do they have arrangements? * Is he redeeming for dollars or in kind? Terms allow for latter * Does he buy with dollars or with commercial paper? I do not believe he has shown material which would let us answer any of these questions
77fourtyfive 4y ago
from https://tether.to/en/fees/ https://tether.to/en/fees/ the 'fee per fiat withdrawal' is 'The greater of $1,000 or 0.1%' so it would theoretically make sense for the peg to be 0.1% off as there is no more profit from redemptions at that level.

I'm not an expert by any means on this topic, but for non-crypto assets that are pegged, going even 0.1% below the peg is a huge deal. A peg is a peg, it's supposed to be more or less certain.

drexlspivey 4y ago

No it's not, if you think pegs are supposed to stay forever at the same price you don't understand how markets and order books work.

TameAntelope 4y ago
I very much don't understand how markets and order books work, but people who do understand those things tell me pretty consistently how big of a deal it is when a money market fund loses its peg, even by a tiny amount.
- vagab0nd 4y ago
  Define "tiny". Is 0.1% tiny? 0.01%? 0.001%? USDT maintains its peg by allowing certain entities to redeem USDT 1 to 1. How much USDT's price fluctuates depends on how well that mechanism works, and market conditions.
  - graeme 4y ago
    By claiming certain entities can redeem 1:1. No one has ever documented a Tether redemption. They have a very tiny number of clients and the terms say they don’t have to redeem at all.
    - drexlspivey 4y ago
      > No one has ever documented a Tether redemption Are you just making stuff up? There were $10B worth of redemptions only last week.
      - graeme 4y ago
        No there was a $10 billion market cap reduction. The exchange rate on Tether’s owned exchange, Bitfinex was $1 most of the past week where it was less elsewhere. Likely Tether was using open market operations to trade dollars for Tethers and keep the rate up. Documenting a redemption would involve using the official redemption mechanism where you redeem $100,000+ at a time, pay a $100-$1000 fee, get a wire transfer from Tether etc. If you can find anyone ever documenting having done that, let me know
        drexlspivey 4y ago
        How about the CEO of FTX who says they are doing it every day ? https://www.bloomberg.com/news/articles/2022-04-25/odd-lots-full-transcript-sam-bankman-fried-and-matt-levine-on-crypto https://www.bloomberg.com/news/articles/2022-04-25/odd-lots-...
        graeme 4y ago
        Sam Bankman Fried would be among those most likely to be co-defendants in a trial. But, what I said was it’s never been documented. * Does he buy Tether at par or at a discount? * Can he redeem when he wants, in any quantity, or do they have arrangements? * Is he redeeming for dollars or in kind? Terms allow for latter * Does he buy with dollars or with commercial paper? I do not believe he has shown material which would let us answer any of these questions

77fourtyfive 4y ago

from https://tether.to/en/fees/ https://tether.to/en/fees/ the 'fee per fiat withdrawal' is 'The greater of $1,000 or 0.1%' so it would theoretically make sense for the peg to be 0.1% off as there is no more profit from redemptions at that level.