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I have a question on this. If the redemption fee is 0.1%, then that makes a USDT worth $0.999. Why is it assumed that a tether should be worth $1.00 and not $0.
by chadash 4y ago
I have a question on this. If the redemption fee is 0.1%, then that makes a USDT worth $0.999. Why is it assumed that a tether should be worth $1.00 and not $0.999?
- anonymoushn 4y agoYou're correct. To expand a bit, in general, when demand for crypto trading is going up, Tether should be worth about 10bps more than a dollar (because this is what Tether will charge you to create new Tethers, and the supply is mostly expanding), and when demand for crypto trading is going down, Tether should be worth about 10bps less than a dollar (because this is what Tether will give you for your Tethers, and the supply is mostly contracting).
- renonce 4y agoThat's exactly the case, and I would consider a price below $0.999 or a price above $1.001 to be a depeg. It's just that few people cared enough about such a tiny fee so Tether can earn $2m out of every $1b minted. At its worst times Tether charged 3% redemption fee, making 1USDT equal 0.97USD, but by disguising it as a fee they could claim that 1USDT is just 1USD.