4 ms·
You can get a dollar for a dollar, it's just not worthwhile to do so yet for arbitrageurs due to the tiny magnitude of the drift. Tether actually depegging happ
by bidirectional 4y ago
You can get a dollar for a dollar, it's just not worthwhile to do so yet for arbitrageurs due to the tiny magnitude of the drift. Tether actually depegging happens when someone tries to redeem with them and they can't do it, the market price is misleading.
An analogous money market fund example would be if I can't redeem until tomorrow noon yet need to urgently meet some financing need today, I could sell to someone for a tiny discount and they can redeem tomorrow.
- kasey_junk 4y agoWhere can you redeem it for a dollar? Tether doesn’t promise they will redeem it. Have there been large redemptions?
- bidirectional 4y agoWith the Tether organisation themselves. They have enabled redemptions well in excess of 10 billion dollars since the start of the market crash.
- 22c 4y agoDay traders generally can't redeem Tether, you need to be a "verified customer of Tether". Most Tether redemptions are done by large institutions.
- kasey_junk 4y agoSo why aren’t those large institutions arbing the spread right now? If the answer is that they don’t have faith they can get the redemptions to cover their positions that’s also breaking the peg.
- bidirectional 4y agoBecause the spread is too small, when it widened a few weeks ago the spread was heavily arbed.
- kasey_junk 4y agoOk, so a $1 peg doesn’t exist or it’s been broken. If Tether is pegged to a range against the dollar that’s fine and normal! Just claim that. Or better yet don’t claim a peg at all if you have no mechanism to actually defend it.
- bidirectional 4y agoThe peg breaks when Tether refuses/is unable to redeem USDT for USD. Obviously in any secondary market whether order book or AMM based there is going to be trading within a range.
- prvit 4y agoDay traders can redeem tether on tether.to, as long as they aren't US based.