We're in the get out while you still can phase. At some point they'll suspend conversion and holders will be stuck with something virtually worthless. It's like watching a landslide in its early stages, as soon as enough people realise what's going on it's going to be too late.
USDT is the fuel that powers a lot the crypto ecosystem. Good luck trying to move USD around between different places in the crypto ecosystem (especially outside office hours). While possible it's complicated, slow and has terrible uptime.
The biggest crypto markets in the world are quoted in tether.
No one needs USDT anymore. The fact that even Binance gets more credibility than Tether should tell you how scammy the people still trading USDT really are.
I'd be careful about adding Stasis to this list. Discord users have been complaining about not being able to withdraw through their platform for some time now.
This is what get's me when people say "do your research" in crypto. Where am I supposed to do that? Do I need to trawl Discord until I'm satisfied a coin is on the up-and-up? Is the absence of complaints like this for a crypto project evidence of quality or evidence of vigorous moderation?
Going by my experience, 100% of the people saying "do your own research" are either shills or they are getting into a project without having no idea of how things work. If people can explain easily and if it is a legit opportunity, they wouldn't be saying "do your research", this will just be accumulating as much as they could without making too much of a fuss about it.
Corollary: any coin that is on the up-and-up and you can not easily explain the tokenomics is worthless.
Yes, IMO you should treat a crypto investment as requiring much more DD than a typical investment. You should have a thesis about why a given project is more likely than baseline to succeed, and you should have done enough research in the actual community of users (not just investor shills) to convince yourself that real people are actually using this thing reliably. There is just too much vaporware and outright scams to do otherwise.
It's also a method of making yourself seem authoritative or knowledgeable without having to prove it. It implies that you did your research, but you aren't going to prove it because everybody else needs to do the same for themselves.
Sure thing! You won't be able to redeem unless you deposited fiat directly with the Stasis affiliated platform. And even then, users have been saying it's currently disabled.
This casually ignores the point being made. Tether is a fuel. USDT printed money without backing and pumped it into exchanges/btc/eth.
Without that upward pressure, there will be nothing preventing btc/eth from freefalling. Heck without that, what is the point of the above coins either.
"Proper" stable coins are still important (at least for me who still would like to see crypto as a viable alternative for payments), and at this point I am honestly hoping for USDT and BTC collapsing.
ETH's price is still unfortunately too correlated with BTC, so it will also fall down a lot when BTC comes under, but as long as the price of ETH is high enough to secure the network, it is not a problem.
If this was two weeks ago you most certainly would have included UST at the top of this list.
People reading this should definitely question the other ones on the list as well. what proof do we have that the rest of these coins are really stable?
No. I wouldn't. Never used Terra, and I already said here that I never understood these "algostables" with no collateral.
As for "proof", you should've learned already that there is no such thing as "proof" with any of them. It's all about risk. For the fiat backed, the risk could be measured by the trustworthiness of the institution behind it and how they are managing the real fiat they have in hand. I'll risk them of my list if I hear that any of them is doing any kind of shady (we are collaterized by other assets that are not money) like Tether.
DAI and synths also have a non-zero chance of catastrophe, but at least this is mitigated by the over-collaterization. Synthetix requires something like 6x the SNX for each sUSD you can mint and their governance was not afraid to increase this requirement (and consequently reduce their sUSD supply) when their token went down.
But Terra did have collateral. Luna equal to 1 USD was burnt (more like locked) once a UST was minted.
The whole conceit of DAI is that instead of burning luna at a rate of $1 they would burn it at a rate of $1.5 , The mechanism is exactly the same! And it will fail in exactly the same way.
DAI has multiple assets, the vaults are at 150% at a minimum and independent from one another and, most importantly, there is no one offering 20% APR on staked DAI. It already went through worse crashes than UST did and it managed to recover.
It's far from perfect, but it is certainly more resilient and has shown to be able to pass the Lindy test.
Iron/Titan did not have any such high apy and still collapsed. In case of terra, I concur that the driving force was the Anchor ponzi, but it was the mechanism that failed.
Iron was explicitly under-collaterized, and it was also trying to lure stakers by providing yield-farming. DAI is the opposite, stakers pay the stability fee to open a vault.
It did have a yield-farming component (you could mint DAI at 1% fee and put it in the DSR that would pay 2%), but that got completely knocked out in 2020. That crash was already a quite expensive lesson (tens of millions USD) for the MakerDAO team, and a lot of the investors had accepted a haircut in order to bring DAI back to the peg.
To repeat: I am not saying that DAI is bullet-proof. What I am saying though is that all the reasons you are using to make your case do not apply to DAI as it currently works.
100% agree to that list. I moved from USDT to USDC months ago. And now, that the exchange rate is very good i relocated around 80% on my stablecoins in EURS.
My opinion with EURS and the company stasis that issue this stablecoin is very positive, simply no problems. I feel safe holding eurs cause it is backed with fiat money. Never liked the synthetic assets, so for the moment i am good with Eurs and Usdc for the euro and dollar part of my portfolio..
Binance doesn't have that much to do with BUSD. It's a white labeled version of USDP run by Paxos which is an American fintech company not related to Binance.
Politically speaking, Binance is too tied to China.
Business-wise, Binance made its fame by shitting on Ethereum and its developers, and then copying every innovation they could while completely eliminating all the valuable aspects of decentralization. The Binance Chain is not really decentralized, which means that they can censor participants or revert transactions. They kept all the bad parts of blockchain tech, but none of the ethics.
Tether is the fuel for unlicensed unregulated exchanges that are happy to list the shit coins that legit exchanges won't touch because they're pump and dump scams. All those sketchy exchanges are almost certainly not keeping client funds segregated either so when Tether goes down all those exchanges will become insolvent and probably just disappear with the rest of the money.
The wisdom of holding is always relative to the rest of the market and what else you could be holding. Imagine a metals exchange. If copper were going up in value compared to the other metals, you’d want to hold copper. But you can also sell all your metals for cash. You would do this when all the metals are going down in value, which means USD is the “best-performing metal” and you want to be holding it. You always want to be holding the thing going up in value the most. Sometimes it’s USD, and the fact that it is also your reference point for pricing everything else doesn’t mean it’s not front of the pack sometimes. Obviously when you buy USD with your copper, the value of USD goes up. But since it’s all denominated in USD, that just looks like “all metals go down in price but especially copper”, and because so many other markets set the value of USD, it really just looks like “copper goes down”. It’s similar to the relative velocities etc you do when you study physics.
So primetime for holding cash is when there is deflation and you expect to be able to buy more for your dollars later, so you stash it in a bank account or under your mattress. This is generally bad for a regular economy because people stop spending and the economy slows down. That’s why there’s always a little bit of inflation, because better that than deflation! Inflation makes people use their money lest it lose value / gather dust sitting still, and spending money makes the economy run. Having to beat inflation with your investment is a chore, but it’s better that everybody individually decides to do something with their money. I digress.
For Tether, where the only things you can really buy are other cryptocurrencies, deflation just looks like a crypto bear market. So people are likely holding USDT right now.
At the same time, given that the value of USD is set by many trillions of dollars changing hands and millions of contracts priced in it every day, compared to Tether which is like a gift card for a record store that might go out of business, it’s possible for USDT to get unpegged if that record store posts bad results. The strength of the proposition that USDT can be redeemed for USD is the only thing holding it together.
This all is a good explanation for why you might hold USD instead of other assets. It’s a less compelling explanation for why you might hold USDT, which would be the same as holding USD except it also might crash and leave you with nothing.
I'm not going to do the job of Tether's accountants. There is no compelling reason to hold it given this risk. Nevertheless people do, and the reason is what I said + they additionally believe the claims about it being redeemable 1:1 for USD + it's easier to buy and sell crypto with it than actual USD.
> If copper were going up in value compared to the other metals, you’d want to hold copper. But you can also sell all your metals for cash. You would do this when all the metals are going down in value, which means USD is the “best-performing metal” and you want to be holding it.
I'm not sure I follow that description, are you really saying one buys commodities when they're rising in price and sells when they're falling? You make it sound like there's a trend one can observe .. and predict the future?
Back to real life, take a look a the copper price chart zoomed out to one year[0] It's been going up - and also down - all the time.
I'm reminded of the proverb "Nobody rings a bell at the top or the bottom of a market"...
Uh yeah, predicting the future is the entire idea. People are always guessing what the price is going to be in the future. If you guess correctly you make money when you sell later. If you don't, you lose money. Lots of people are highly incentivised & therefore trying really hard to predict the future, and this is what makes capitalism an efficient resource allocator. That's not only true of metals exchanges. If you think the price of copper is going up, you could also survey for and build a copper mine. That knocks on to labour markets, as you're now hiring miners. So the market's predictions can move the price of everything, and everything readjusts itself to match, all on its own, and finds itself ready (i.e. a whole mine built & ready to go) for when the prediction comes true, or adjusts itself back when it doesn't. The effect of efficient resource allocation + predictive power is that when e.g. supply goes down but demand is up, people have tried to predict this and have already built capacity for more supply. This is pretty fundamental to how most of the world works.
Markets function in general terms as information -> price machines, where people are rewarded for seeking out information and converting it into prices by moving money. If you HAVE INFORMATION that suggests copper's going to go up in value, you buy copper, and because you did that, it DOES GO UP A BIT. So the information becomes a price signal, in advance of the event that actually affects copper supply/demand. If you predict a supply/demand change, and then your prediction "comes true", the price moves, and you can sell at a profit. Magic. You are rewarded for predicting, and in exchange the market learns the correct price a little bit earlier by incorporating your "bets" in the market price. This is known as news being "priced in". Every single day watching financial markets involves big news that some analyst at a bank mispredicted, and then the price has to move a little further or a little back to correct the value it had "priced in". Sometimes announcements come in as predicted, and the markets barely react at all, even to a huge profit announcement. It's because they already knew. They predicted it.
As people "share" the information they have about the assets in the market by buying and selling, the price walks about as it discovers its value. On short timescales, this fluctuation is largely made up of people fretting about really tiny predictions in a capricious and flighty way. The most valuable information, i.e. the stuff that will let you buy in lowest and sell highest, is information the market doesn't know yet. Only some of the information is revealed by buying/selling, as it's a weaker signal than the prediction actually coming true & being reported as news. The creation of newsworthy events happens slowly, much slower than people can trade. People can make a lot of money doing insider trading, because they can predict the future value very accurately & without trades sending a huge signal as they're anonymous! But everyone agrees it's unfair to everyone else, so it's not allowed.
All the people playing this game are trying to predict, because predictions are more lucrative than current information that the market already knows. But they can also be wrong. Fortunately the price of an asset is the aggregate of everyone making predictions, and this averages out to a more useful summary of "what do these 300,000 people think" rather than "one dude at one trading desk". The "invisible hand of the free market" is the emergent wisdom of a whole lot of people trying to guess what's going to happen in the future. And it is pretty wise -- capitalism is actually pretty good at resource allocation to projects that are going to be most useful in the future. It performs better than a Politburo at this task. The main criticism of it is not that it's bad at this job, but that it is too good at it -- and too ruthless at exploiting the information it has to the detriment of the poor humans without much capital at the bottom.
> Lots of people are highly incentivised & therefore trying really hard to predict the future, and this is what makes capitalism an efficient resource allocator.
It seems a majority of those (highly-paid) people incentivised to predict the future seem not to be that good at it?
FT: "Active managers fail to beat the market again"[0]
FT: "Only a third of UK-based active equity funds outperform passives" [1]
FT: "Three-quarters of stockpickers lagged US market last year"[2]
FT: "Active funds underperformed during Covid market stress, watchdog finds"[3]
You missed the point entirely, which is a bit sad for the amount of effort I put into writing all that. It is right there in the bit you quoted. Individuals may do poorly or they may do well. The market as a whole, as you point out, is likely to do better than individual investors. The reason the market does well as a whole is that individual correct predictions are rewarded and incorrect ones are not, and there are a lot of people guessing. The smart ones tend to use more money and account for a lot of the market's overall intelligence, and the small fish tend to be dumber, so you would expect a Pareto distribution of performance of individual investors.
If your evidence that people aren't making good predictions is that the market itself does better, then... who do you think the market is made up of? It's just more people!
Are you really trying to argue that people aren't trying to predict the future when they buy a stock? Or are you just butting your head against these concepts and getting nowhere?
I know in the equities, forex, and other traditional markets, these things are all force-arb'd by arbitrageurs forcing the cycle. So is that possible here? Forgive my ignorance here, but how do i short Tether here?
And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact?
I don't even disagree that there are potentially major issues here but stating this as a fact is just silly.
> And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact?
That's not a safe bet.
https://en.wikipedia.org/wiki/Michael_Burry, which the film "The Big Short" is based off, correctly predicted the 2007-2009 collapse of the housing market, but nearly lost everything waiting for it to occur.
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million. Scion Capital ultimately recorded returns of 489.34% (net of fees and expenses) between its November 1, 2000 inception and June 2008. The S&P 500, widely regarded as the benchmark for the US market, returned just under 3%, including dividends over the same period.
You can be right and still not be able to safely profit. Especially in crypto, where shady exchanges can wipe out a big short position pretty much at will with some wash trading.
borrow APY variable for USDT on aave on Ethereum is currently 3% apy.
If you can stomach the various risks involved (e.g. smart contract risk, exposure to ethereum 51% attack or something) then acquire any asset that AAVE has (e.g. USDC, Dai, ETH, BTC), deposit it, withdrawal USDT & sell the USDT thereby naked shorting USDT for 3% APY at current rates.
Those rates are low enough that it just doesn't seem like the market is that spooked yet.
Way too much counterparty risk in crypto markets. If there is an epic tether crash, I can't be confident that I'll get my payout. Compare this to established markets. I could log into my Charles Schwab account, make a short bet that Charles Schwab will go bankrupt overnight, and if I'm right, I know I'll get my payout.
Both of which are pretty big issues in the scenario we're talking about. When Tether crashes it will take down a significant chunk of the crypto world with it.
If the bid and offer are like $2 - $.50, do you consider that a "depeg" or not? I think liquidity will disappear, transaction fees will go to the moon, and there won't really be a meaningful "price" because trades won't be happening.
I wonder how easy it is to actually short Tether assuming the likely scenario where USDT goes the way of UST and trading is effectively halted. How does one cover their short when no trading is possible? In a regular exchange, there are rules about how to handle this but I'm not clear how it happens with crypto.
It’s simple. You are going to need collateral — BTC or ETH will do. Use this to borrow USDT from the open source money markets. Sell the USDT for BTC or ETH. You can double down by cycling this recursively and borrowing up some percentage of to your collateral if you wish to increase your leverage.
Meanwhile, you are paying 3-4% to whomever you are borrowing from. Addendum Meanwhile, you are probably funding an ecosystem something you are do not understand and against in the first place. :-)
