Terra 2: Electric Tetheroo Since my previous journal was right on the money about Terra/Luna's collapse even correctly guessing the time frame of 2 months (by a quoted Redditor), I don't see why we couldn't do the same with tether. There are differences though. Terra was an obvious ponzi, hands down. In theory, tether's business model could work, assuming they actually get dollars for each tether issued and when redeemed, they keep burning the used tether. I mean selling for a dollar and buying back for 98-99 cents, is not a bad business model, while maintaining the peg. But there is a very objective assumption that Bitfinex doesn't have 100% backing of all the issued tethers, not even close. Lately they have started burning tethers indicating redemptions by brokerages. Now tether has survived 5 or so years, so why now a collapse journal? Well, there are some signs of concerns: 1. The collapse of Luna caused a distrust in stable coins. That includes tether. 2. The peg started to drop and Bitfinex is defending it, by buying them back, that lowers their reserves. This is all according to plan, as long as they do have their reserves or their investments can be called back quickly. 3. Bitfinex suddenly offers 30% return on your money if you don't cash out. Remember Terra promised only 20% and that was unsustainable, they had to lower it and the collapse started. The market cap (number of issued tethers) was just over 83 B. Now after buying a few billions back in the last few days, it is around 76 B. Redemption is only for preferred customers (whales). I am not going to put a time frame on this collapse, because as history taught us, scams can survive for quite a long time, but the current general weakness of the crypto market (and the general market too) doesn't bode well for the future of the biggest stable coin.
The only way crypto has any sort of future is some sort of dogecoin. Total bullshit, pretty much valueless, inflation negligible over the long term.
Can you elaborate on this? Bitfinex is offering some sort of financial product with a 30% annual yield?
Here is how the system could work and where we are in the process: "P-K-One Nobody knows for sure. But here is my pet theory. I have no evidence for it whatsoever. It's basically "how I would run a stable coin scam" A couple of guys found tether. They sell them for cash with 100% backing at first and, after a while, start taking unsecured debt obligations, too. The same guys then start founding shell companies. LLC for legal shielding. Those LLC then buy tether for debt obligations. Basically IOUs that are not backed and worthless but look real on paper. The LLCs start to give the tether out as loans. They collect interest on those loans and, if the borrowers default, also their collateral. The LLC founders pay that out to themselves. They now make real money lending fake money. When the market starts to collapse they redeem the borrowed tethers but not for their debt obligations but for the early cash buys. So on top of making real money from lending out fake money they now take real money giving back fake money. I think what we are seeing right now is 5. They burn tether as it is redeemed for the actual cash reserves."
Can it be shorted? I remember there was a hedge fund that had long term puts on the Swiss Franc Peg and they made out like bandits.
I am sure places like binance or kucoin have product for this. But the question will they pay up??? My bet, they would suspend withdrawal of huge windfall.