4 ms·

That’s a huge deal for something that’s supposedly pegged. If that were to happen to a traditional money market account it would be front page financial news.

capableweb 4y ago
Unless it goes below 0.92 USD (all time low of USDT, in 2017-2018, which it recovered from), I'm not sure it's as big deal as you make it sound like.
- ddorian43 4y ago
  It will go there. The ponzi will break sooner or later. The nice thing is, that the more it continues, the bigger the fall will be.
  - herendin 4y ago
    >The nice thing is, that the more it continues, the bigger the fall will be. Why is that "nice"?
    - ddorian43 4y ago
      It's nicer than the alternative (to explode even later)
      - herendin 4y ago
        >The nice thing is, that the more it continues, the bigger the fall will be. >It's nicer than the alternative (to explode even later) These two outcomes are mutually exclusive. You're speaking nonsense.
        ddorian43 4y ago
        Both outcomes are nicer than the alternative (all crypto-bros become billionaire and everyone else staying poor and being enslaved)
- kasey_junk 4y ago
  I would argue that means it’s not pegged (which is fine!). But people seem to think there is a peg on usdt and there isn’t, at least not as the term is used in traditional finance.
  - Semaphor 4y ago
    Going in with full naivety, assuming the company actually has enough USD to redeem every single USDT in existence, but it’s a slow, manual process only offered to big holders. Wouldn’t the peg still not always hold in a volatile situation, like the current one? All that’s required is enough people not trusting Tether Inc.
    - kasey_junk 4y ago
      “it’s a slow, manual process only offered to big holders” Is the most charitable reading you can give and I think it’s outside of peoples expectations of what a peg means. I’m actually quite fine with tether having whatever redemption rules they want, but that is not the traditional definition you’d see with something like a money market. I would never say usdt is pegged to the dollar.
      - Semaphor 4y ago
        So instead of a peg [0], it’s kinda like a crawling peg [1], or an even better match, the linked exchange rate system in Hong Kong [2] [0]: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system https://en.wikipedia.org/wiki/Fixed_exchange_rate_system [1]: https://en.wikipedia.org/wiki/Crawling_peg https://en.wikipedia.org/wiki/Crawling_peg [2]: https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in_Hong_Kong https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in...
manholio 4y ago
That's precisely how you would keep a peg: let the market enforce it and bear the brunt of the speculative action, then intervene brutally to restore the peg and reward those who held the line with profits. If you do it a few times, nobody will bet against the peg ever again. Of course, this is all predicated on you actually having the massive assets required to fight a speculative market. That shouldn't be a problem for something like USDT which should be backed 1:1. So let's sit back and enjoy some price discovery (though I wouldn't be caught dead in USDT).
- mijoharas 4y ago
  > which should be backed I think the major issue is that there seems to be a lot of evidence that it isn't.
- gilrain 4y ago
  > That shouldn't be a problem for something like USDT which should be backed 1:1. What if we all know it’s backed 1:1 by junk bonds?
- pjc50 4y ago
  Reminded of when the UK was unable to defend the stablepound against, er, Soros: https://www.investopedia.com/terms/b/black-wednesday.asp https://www.investopedia.com/terms/b/black-wednesday.asp
le-mark 4y ago
Money market funds sometimes are priced above or below $1 due to market conditions. It’s rare but does happen.
- ptero 4y ago
  If a large money market fund is priced 2.5% away from peg I suspect it is either a huge arbitrage opportunity that will get arbitraged in minutes if not seconds, or a strong signal that this fund is toast. Not an expert, would be happy to be refuted.
pjc50 4y ago
https://www.investopedia.com/terms/b/breaking-the-buck.asp https://www.investopedia.com/terms/b/breaking-the-buck.asp

capableweb 4y ago

Unless it goes below 0.92 USD (all time low of USDT, in 2017-2018, which it recovered from), I'm not sure it's as big deal as you make it sound like.

ddorian43 4y ago
It will go there. The ponzi will break sooner or later. The nice thing is, that the more it continues, the bigger the fall will be.
- herendin 4y ago
  >The nice thing is, that the more it continues, the bigger the fall will be. Why is that "nice"?
  - ddorian43 4y ago
    It's nicer than the alternative (to explode even later)
    - herendin 4y ago
      >The nice thing is, that the more it continues, the bigger the fall will be. >It's nicer than the alternative (to explode even later) These two outcomes are mutually exclusive. You're speaking nonsense.
      - ddorian43 4y ago
        Both outcomes are nicer than the alternative (all crypto-bros become billionaire and everyone else staying poor and being enslaved)
kasey_junk 4y ago
I would argue that means it’s not pegged (which is fine!). But people seem to think there is a peg on usdt and there isn’t, at least not as the term is used in traditional finance.
- Semaphor 4y ago
  Going in with full naivety, assuming the company actually has enough USD to redeem every single USDT in existence, but it’s a slow, manual process only offered to big holders. Wouldn’t the peg still not always hold in a volatile situation, like the current one? All that’s required is enough people not trusting Tether Inc.
  - kasey_junk 4y ago
    “it’s a slow, manual process only offered to big holders” Is the most charitable reading you can give and I think it’s outside of peoples expectations of what a peg means. I’m actually quite fine with tether having whatever redemption rules they want, but that is not the traditional definition you’d see with something like a money market. I would never say usdt is pegged to the dollar.
    - Semaphor 4y ago
      So instead of a peg [0], it’s kinda like a crawling peg [1], or an even better match, the linked exchange rate system in Hong Kong [2] [0]: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system https://en.wikipedia.org/wiki/Fixed_exchange_rate_system [1]: https://en.wikipedia.org/wiki/Crawling_peg https://en.wikipedia.org/wiki/Crawling_peg [2]: https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in_Hong_Kong https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in...

manholio 4y ago

That's precisely how you would keep a peg: let the market enforce it and bear the brunt of the speculative action, then intervene brutally to restore the peg and reward those who held the line with profits. If you do it a few times, nobody will bet against the peg ever again. Of course, this is all predicated on you actually having the massive assets required to fight a speculative market. That shouldn't be a problem for something like USDT which should be backed 1:1. So let's sit back and enjoy some price discovery (though I wouldn't be caught dead in USDT).

mijoharas 4y ago
> which should be backed I think the major issue is that there seems to be a lot of evidence that it isn't.
gilrain 4y ago
> That shouldn't be a problem for something like USDT which should be backed 1:1. What if we all know it’s backed 1:1 by junk bonds?
pjc50 4y ago
Reminded of when the UK was unable to defend the stablepound against, er, Soros: https://www.investopedia.com/terms/b/black-wednesday.asp https://www.investopedia.com/terms/b/black-wednesday.asp

le-mark 4y ago

Money market funds sometimes are priced above or below $1 due to market conditions. It’s rare but does happen.

ptero 4y ago
If a large money market fund is priced 2.5% away from peg I suspect it is either a huge arbitrage opportunity that will get arbitraged in minutes if not seconds, or a strong signal that this fund is toast. Not an expert, would be happy to be refuted.

pjc50 4y ago

https://www.investopedia.com/terms/b/breaking-the-buck.asp https://www.investopedia.com/terms/b/breaking-the-buck.asp