4 ms·

You can't control the secondary market. I can sell my Tethers for whatever value I want. If I think that, for some reason, their value is zero, I can try to sel

by haolez 4y ago

You can't control the secondary market. I can sell my Tethers for whatever value I want. If I think that, for some reason, their value is zero, I can try to sell at a discount before others realize this.

LegitShady 4y ago
The point is that tether is wlsupposed to be willing to buy back tethers at $1 each so that if the price drops below $1 they buy all the sub $1 tether until the price returns to $1. You can sell it at a discount but why if you can get $1 for it. That makes no sense. For tether to depeg something else must be going on
- deleted 4y ago
  [deleted]
- peteradio 4y ago
  Wonder if its a friction thing. Do you have to setup a special account to redeem on the primary channel?
  - pjc50 4y ago
    The "official" channel has a MOQ of $100,000: https://tether.to/en/fees/ https://tether.to/en/fees/ There is a huge amount of friction. It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. As always, the question is what actual assets Tether has to meet its claims.
    - rosnd 4y ago
      > It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. Of course they do.
    - benaadams 4y ago
      Alameda Research (re: FTX exchange) normally makes a ton of money doing the arbitrage between dollars and tether but its having liquidity problems, so not doing it currently.
- shawabawa3 4y ago
  It can temporarily depeg if there are more people selling than there are people who are able to redeem who are incentivised to defend the peg On Bitfinex the peg has held strong because Bitfinex have a close relationship with Tether and enabled customers to convert USD/USDt freely (for now) Other exchanges are experiencing either a temporarily blip (will eventually get arbitraged away) or it's the beginning of Tether being insolvent. Time will tell
  - LegitShady 4y ago
    >people who are able to redeem who are incentivised to defend the peg This doesn't make any sense. Either you can sell it for $1 or you can't. If you can then it's free money to buy tether from people selling below $1 and selling it back to tether for $1. I would describe the relationship between tether and bf as more than "close" they have the same owner.
- compsciphd 4y ago
  so thinking about this. assumption: bitfinex has "dollars" to backup every USDT. If bitfinex will buy a USDT for a $1 if it drops below $1 to maintain the peg, they can do this because they have "dollars" backing each share. however, they would also have to destroy that USDT on purchase (as they just spend the $1 backing it). They could print more USDT (/ sell that back) for $1 and they would be whole again, but if there is downwards pressure on USDT, one should expect to see the market cap for tether to drop while bitfinex is buying/destroying currently existing USDT. If one doesn't see this drop, wouldn't that be indicative of a problem?
  - LegitShady 4y ago
    Does destroying currency (reducing the amount in circulation) put downward pressure on it? Not in my experience.
    - compsciphd 4y ago
      I (believe) what I said if there's downward pressure on the currency, therefore to maintain the peg they have to buy it (and in a sense destroy it). not that destroying it leads to downward pressure, but that we should see a reduction in market cap. I'm wondering if we can see this fluctuation in market cap.
- benaadams 4y ago
  They are, they just aren't buying them back on coinbase. Tether don't manage the secondary market (cexes and dexes) Though the minimum redeemable amount is $100k https://tether.to/en/fees https://tether.to/en/fees Why they are depegging is people are selling for under a dollar on coinbase (perhaps in panic); and Alameda Research (re: FTX exchange) who normally makes a ton of money doing the arbitrage between dollars and tether is having liquidity problems, so not doing it currrently.

by haolez 4y ago

LegitShady 4y ago

The point is that tether is wlsupposed to be willing to buy back tethers at $1 each so that if the price drops below $1 they buy all the sub $1 tether until the price returns to $1. You can sell it at a discount but why if you can get $1 for it. That makes no sense. For tether to depeg something else must be going on

deleted 4y ago
[deleted]
peteradio 4y ago
Wonder if its a friction thing. Do you have to setup a special account to redeem on the primary channel?
- pjc50 4y ago
  The "official" channel has a MOQ of $100,000: https://tether.to/en/fees/ https://tether.to/en/fees/ There is a huge amount of friction. It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. As always, the question is what actual assets Tether has to meet its claims.
  - rosnd 4y ago
    > It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. Of course they do.
  - benaadams 4y ago
    Alameda Research (re: FTX exchange) normally makes a ton of money doing the arbitrage between dollars and tether but its having liquidity problems, so not doing it currently.
shawabawa3 4y ago
It can temporarily depeg if there are more people selling than there are people who are able to redeem who are incentivised to defend the peg On Bitfinex the peg has held strong because Bitfinex have a close relationship with Tether and enabled customers to convert USD/USDt freely (for now) Other exchanges are experiencing either a temporarily blip (will eventually get arbitraged away) or it's the beginning of Tether being insolvent. Time will tell
- LegitShady 4y ago
  >people who are able to redeem who are incentivised to defend the peg This doesn't make any sense. Either you can sell it for $1 or you can't. If you can then it's free money to buy tether from people selling below $1 and selling it back to tether for $1. I would describe the relationship between tether and bf as more than "close" they have the same owner.
compsciphd 4y ago
so thinking about this. assumption: bitfinex has "dollars" to backup every USDT. If bitfinex will buy a USDT for a $1 if it drops below $1 to maintain the peg, they can do this because they have "dollars" backing each share. however, they would also have to destroy that USDT on purchase (as they just spend the $1 backing it). They could print more USDT (/ sell that back) for $1 and they would be whole again, but if there is downwards pressure on USDT, one should expect to see the market cap for tether to drop while bitfinex is buying/destroying currently existing USDT. If one doesn't see this drop, wouldn't that be indicative of a problem?
- LegitShady 4y ago
  Does destroying currency (reducing the amount in circulation) put downward pressure on it? Not in my experience.
  - compsciphd 4y ago
    I (believe) what I said if there's downward pressure on the currency, therefore to maintain the peg they have to buy it (and in a sense destroy it). not that destroying it leads to downward pressure, but that we should see a reduction in market cap. I'm wondering if we can see this fluctuation in market cap.
benaadams 4y ago
They are, they just aren't buying them back on coinbase. Tether don't manage the secondary market (cexes and dexes) Though the minimum redeemable amount is $100k https://tether.to/en/fees https://tether.to/en/fees Why they are depegging is people are selling for under a dollar on coinbase (perhaps in panic); and Alameda Research (re: FTX exchange) who normally makes a ton of money doing the arbitrage between dollars and tether is having liquidity problems, so not doing it currrently.