5 ms·

Is there a way to bet against Tether?

by iamsanteri 4y ago

superzamp 4y ago
You can open a short position on e.g. Kraken, for as long as you can keep paying the yield to the stakers.
- graeme 4y ago
  Problem is if you win the bet you can also expect the exchange to go bust. They’re all part of the Tether system The lack of a good way to short Tether with a reliable counterparty is a major reason why Tether has lasted as long as it has
- alasdair_ 4y ago
  Of course, if Tether collapses, there is the sizable risk that so will most of the exchanges. Counterparty risk is a big deal.
  - iamsanteri 4y ago
    So we can expect that soon, if people are smart, a nice and stable unloading of this ”asset” will start.
albntomat0 4y ago
Someone looked into this, and found most ways of doing so had large counterparty risk, among other issues. https://fakemoneynews.substack.com/p/shorting-tether-for-fun-and-profit https://fakemoneynews.substack.com/p/shorting-tether-for-fun... HN discussion: https://news.ycombinator.com/item?id=34299618 https://news.ycombinator.com/item?id=34299618
bluecalm 4y ago
Bet against Grayscale, MicroStrategy or any other publicly traded crypto company. Hell, even Coinbase is good enough. All will face very difficult times once Tether collapses and takes most of the crypto "economy" with it. That's the only way I can think of to avoid crazy counter party risk.
- iamsanteri 4y ago
  Now this right here is not that bad of an idea. I thought coinbase is the only major publicly traded cryptocurrency company. What kind of an impact are we expecting on, say, Coinbase?
  - Chabsff 4y ago
    A tether collapse would instantly reduce the USD market cap of crypto by 80 billion, and that's without any investor behavior added on top. On top of that, Coinbase needs a stable coin to operate at any non-trivial scale. I'd say the impact would be severe. That is unless crypto investors just pretend nothing happened, and some other bullshit stable coin immediately takes care of the liquidity issue, which I'd call likely.
- drexlspivey 4y ago
  Yes short a company that just today their stock went up 24% as a substitute for shorting tether that can never go up above $1 that should lower your risk.
  - bluecalm 4y ago
    Don't short it. Buy long term put options and roll it. It's a better way to bet on a collapse. As to it going up today, it's still a 20b company with huge operational costs and no profits operating in funny money world full of scams, regulatory risk and having very little growth potential (after 13 years of crypto there is still no use case other than going around or breaking the law and it already reached its Super Bowl ads state so it's not like any more adoption is likely). Yes, you already missed the biggest gain as it's already worth about 25% of what naive public paid but there is still one way to go.
    - scaredginger 4y ago
      You pay through the nose for vol when buying puts on anything that looks like it should blow up
- 4y ago
ryuukai 4y ago
Of course. You can short tether on every crypto exchange, both centralized and decentralized (DEXes, DeFi apps) The only counterparty risk is the collateral that you use. Ether, BTC, usdc, etc. Some exchanges also support fiat currencies (eur, usd) Some hedge funds have been running tether shorts for a long time, maybe they cashed out when the rates spiked, if not they're just losing money. There's nothing new in this report. Tether/Finex's founders are well known for many years Also FYI, tether has been able to redeem > 20 billion$ in a few days, something that I am not aware of ANY other company, not even banks, being able to do - and def without CB/govt support
- m00dy 4y ago
  AFAIK, they sold some Chinese-commercial papers mostly from real-estate sector during that little time window.
- hervature 4y ago
  > The only counterparty risk is the collateral that you use. That's not really painting an accurate picture. If Tether goes to 0 (you win the short) there's a strong possibility your counterparty cannot pay you. So, you're either wrong and lose it, or, you're correct and lose it. That's not the making of a good trade.
  - angio 4y ago
    You can short on ethereum (with a payout in usdc) and you will be 100% paid out.
    - yao420 4y ago
      How and what is the liquidity? Can a well capitalized firm put down several hundred millions?
- matthewdgreen 4y ago
  Tether says they redeemed $20bn. We have no way to know if they redeemed it for actual dollars to parties that aren’t affiliated with Tether.
deleted 4y ago
[deleted]
x-complexity 4y ago
There are 2 main ways I can think of right now, but they each differ: 1) Deposit any other stablecoin into AAVE/(a decentralized lending platform) as collateral, borrow USDT from there, & sell USDT for another stablecoin. This method (semi-unfortunately) allows for rehypothecation: If you're ultra-convinced USDT will fail, it makes sense to do the above sequence again, this time using the received stablecoins that you now have from selling USDT. The risk is massively increased with each iteration of that sequence. 2) Insurance contracts, wherein you deposit funds into a pool that watches USDT's price. If the peg breaks, the funds from the other pool that bet against you will be used to pay for the rewards, and vice versa. Y2K finance has this in place, wherein there are 2 pools to choose from for each stableasset: One that pays out if the peg stays stable, and another if the peg breaks. This method is great for insuring stableasset values, & helps to provide downside protection. https://www.y2k.finance/ https://www.y2k.finance/
bouncycastle 4y ago
I wouldn't. Market can be irrational longer than you can remain solvent.

Is there a way to bet against Tether?

superzamp 4y ago

You can open a short position on e.g. Kraken, for as long as you can keep paying the yield to the stakers.

graeme 4y ago
Problem is if you win the bet you can also expect the exchange to go bust. They’re all part of the Tether system The lack of a good way to short Tether with a reliable counterparty is a major reason why Tether has lasted as long as it has
alasdair_ 4y ago
Of course, if Tether collapses, there is the sizable risk that so will most of the exchanges. Counterparty risk is a big deal.
- iamsanteri 4y ago
  So we can expect that soon, if people are smart, a nice and stable unloading of this ”asset” will start.

albntomat0 4y ago

Someone looked into this, and found most ways of doing so had large counterparty risk, among other issues. https://fakemoneynews.substack.com/p/shorting-tether-for-fun-and-profit https://fakemoneynews.substack.com/p/shorting-tether-for-fun... HN discussion: https://news.ycombinator.com/item?id=34299618 https://news.ycombinator.com/item?id=34299618

bluecalm 4y ago

Bet against Grayscale, MicroStrategy or any other publicly traded crypto company. Hell, even Coinbase is good enough. All will face very difficult times once Tether collapses and takes most of the crypto "economy" with it. That's the only way I can think of to avoid crazy counter party risk.

iamsanteri 4y ago
Now this right here is not that bad of an idea. I thought coinbase is the only major publicly traded cryptocurrency company. What kind of an impact are we expecting on, say, Coinbase?
- Chabsff 4y ago
  A tether collapse would instantly reduce the USD market cap of crypto by 80 billion, and that's without any investor behavior added on top. On top of that, Coinbase needs a stable coin to operate at any non-trivial scale. I'd say the impact would be severe. That is unless crypto investors just pretend nothing happened, and some other bullshit stable coin immediately takes care of the liquidity issue, which I'd call likely.
drexlspivey 4y ago
Yes short a company that just today their stock went up 24% as a substitute for shorting tether that can never go up above $1 that should lower your risk.
- bluecalm 4y ago
  Don't short it. Buy long term put options and roll it. It's a better way to bet on a collapse. As to it going up today, it's still a 20b company with huge operational costs and no profits operating in funny money world full of scams, regulatory risk and having very little growth potential (after 13 years of crypto there is still no use case other than going around or breaking the law and it already reached its Super Bowl ads state so it's not like any more adoption is likely). Yes, you already missed the biggest gain as it's already worth about 25% of what naive public paid but there is still one way to go.
  - scaredginger 4y ago
    You pay through the nose for vol when buying puts on anything that looks like it should blow up
4y ago

ryuukai 4y ago

Of course. You can short tether on every crypto exchange, both centralized and decentralized (DEXes, DeFi apps) The only counterparty risk is the collateral that you use. Ether, BTC, usdc, etc. Some exchanges also support fiat currencies (eur, usd) Some hedge funds have been running tether shorts for a long time, maybe they cashed out when the rates spiked, if not they're just losing money. There's nothing new in this report. Tether/Finex's founders are well known for many years Also FYI, tether has been able to redeem > 20 billion$ in a few days, something that I am not aware of ANY other company, not even banks, being able to do - and def without CB/govt support

m00dy 4y ago
AFAIK, they sold some Chinese-commercial papers mostly from real-estate sector during that little time window.
hervature 4y ago
> The only counterparty risk is the collateral that you use. That's not really painting an accurate picture. If Tether goes to 0 (you win the short) there's a strong possibility your counterparty cannot pay you. So, you're either wrong and lose it, or, you're correct and lose it. That's not the making of a good trade.
- angio 4y ago
  You can short on ethereum (with a payout in usdc) and you will be 100% paid out.
  - yao420 4y ago
    How and what is the liquidity? Can a well capitalized firm put down several hundred millions?
matthewdgreen 4y ago
Tether says they redeemed $20bn. We have no way to know if they redeemed it for actual dollars to parties that aren’t affiliated with Tether.

deleted 4y ago

[deleted]

x-complexity 4y ago

There are 2 main ways I can think of right now, but they each differ: 1) Deposit any other stablecoin into AAVE/(a decentralized lending platform) as collateral, borrow USDT from there, & sell USDT for another stablecoin. This method (semi-unfortunately) allows for rehypothecation: If you're ultra-convinced USDT will fail, it makes sense to do the above sequence again, this time using the received stablecoins that you now have from selling USDT. The risk is massively increased with each iteration of that sequence. 2) Insurance contracts, wherein you deposit funds into a pool that watches USDT's price. If the peg breaks, the funds from the other pool that bet against you will be used to pay for the rewards, and vice versa. Y2K finance has this in place, wherein there are 2 pools to choose from for each stableasset: One that pays out if the peg stays stable, and another if the peg breaks. This method is great for insuring stableasset values, & helps to provide downside protection. https://www.y2k.finance/ https://www.y2k.finance/

bouncycastle 4y ago

I wouldn't. Market can be irrational longer than you can remain solvent.