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After the fall of Terra, it's clear that stablecoins can only go down in value. There's also no FDIC to step in to take over the failing stablecoin. You're tr
by bb88 4y ago
After the fall of Terra, it's clear that stablecoins can only go down in value. There's also no FDIC to step in to take over the failing stablecoin. You're trusting USDC and by extension BlackRock to do the right thing here.
If it's not a security than it's not regulated.
- bhaak 4y agoTerra was no stablecoin and it has been constantly pointed out that it wasn't. USDC is backed 1 USDC for 1 USD. What you're actually seeing here is that the traditional finance system has lead to a crash in crypto. That's almost refreshing. Usually crypto fucks up by itself (see FTX and Terra for the most recent ones).
- whimsicalism 4y ago1 USD worth of treasuries or bank deposits, not a USD directly.
- bb88 4y agoWhat's their balance sheet at the moment assuming 8% of cash is missing? Is it still 1:1 or 1:.94? Also coindesk says TerraUSD is a stablecoin. https://www.coindesk.com/price/terrausd/ https://www.coindesk.com/price/terrausd/ Washington Post too: https://www.washingtonpost.com/business/what-are-stablecoins-why-did-terrausd-go-so-wobbly/2022/07/06/20f1c9a0-fcfc-11ec-b39d-71309168014b_story.html https://www.washingtonpost.com/business/what-are-stablecoins... Also Gemini says it as well: https://www.gemini.com/en-us/prices/terrausd-ethereum https://www.gemini.com/en-us/prices/terrausd-ethereum
- bhaak 4y agoTheir balance sheet is still 1:1 as the 8% at SBV has not yet been written off. The market reacts faster of course but the market has no crystal ball. It can't predict what's going to happen.
- JumpCrisscross 4y ago> USDC is backed 1 USDC for 1 USD It’s at least 87¢ and 23¢ of priority unsecured claims on a bank in receivership.
- chejazi 4y agoI assume you're deriving the 23¢ from the 23% they have banked, but I would like to note that of that 23%, roughly a third (3.3bn of 9.7bn) was with SVB. The rest was with other banks not facing the same issue.
- Laaas 4y agoArguably, the FTX debacle is in the same bucket, as it was caused by people having their money on an exchange that essentially functioned like a fractional reserve bank.
- landemva 4y agoFTX functioned more like a self-flushing toilet.
- incrudible 4y agoTerra was collateralized by crypto. USDT is collateralized by… something, maybe. Given that USDT always regained its peg regardless, the depeg of USDC seems like an overreaction.
- Lionga 4y agoUSDT always regained its peg until one day it doesn't
- bb88 4y agoTerra regained it's peg until it didn't.
- incrudible 4y agoTerra is not even in theory backed by real dollars, it had a known failure case, which did in fact occur. Again, the market priced that risk at virtually zero until the failure case was tangible.
- l-lousy 4y agoThat day will be when they finally release an audit
- baq 4y agoThis will never happen, it’ll have to be when redemptions stop working.
- tsimionescu 4y agoIs there any proof that anyone has ever successfully redeemed USDT from Tether?
- charcircuit 4y agoYes, there are even people on HN that have reported successful redemption of tether for USD. You can ask people directly. It's not like this is a rare thing that never happens. If people weren't able to do so you would expect people to actually make claims aginst it.
- mnaei 4y agoOver the last 24 hours USDC had a low of $0.85 at 3 AM EST to a high of $0.98 at 3 PM EST. I wonder how many startups would take a 2% - 15% cut to withdraw their money for short term expenses. Is there a secondary market for deposits at banks? Like a Silicon Valley Bank Stable Coin (Probably would have been called a Silicon Valley Dollar before 1913)
- joosters 4y ago...it's clear that stablecoins can only go down in value That's just a truism, regardless of the stablecoin or the state that it's in. No-one should ever expect a $1 stablecoin to trade significantly higher than $1, since the creators of the coin can easily arb the difference to pocket some free money.
- netheril96 4y agoActually, certain alogrithmic "stablecoins" are designed to oscillate around fiat so it is possible to be higher than $1. An example is AMPL: https://coinmarketcap.com/currencies/ampleforth/ https://coinmarketcap.com/currencies/ampleforth/. Of course, its value oscillates so much that "stable" might be a misnomer, but that is its goal.