I tend to agree with this. The charts posted of outstanding USDT are very odd looking. It actually matches well with what John said in that you and I cannot redeem USDT for USD. It looks like just big block transactions happening so it instantly drops by 1B. Maybe small traders cash out a few million here or there in aggregate, and then the exchange pools all this together and sells it off to someone else who then makes the trade with Tether directly. Saying all this though, it is pretty extraordinary that it could go from 83B to 73B, hence a drop of about 13%, and no apparent risk with the payment of USD being done in full. Would any bank be able to absorb a 13% withdrawal so easily? I would personally love to see the other 73B all go into BTC in short order. Imagine what that would do to the price! The plunge of Luna and UST was clearly bad for the crypto market in general, but perhaps other blockchains failing will one day be super bullish for BTC. Why be in anything else that is hardly as decentralized when compared to BTC? Why put up with all that counter-party risk? Why risk coding errors and wormhole and bridge problems? The day will come I think where BTC sucks up all the crypto market cap like a big black hole making rounds through the galaxy sucking up everything in its path.
I thought the whole point of the last few months is that "DeFi" has no actual function, purpose, or utility, outside of enticing financially illiterate bagholders to fund harebrained schemes like Terra-Luna - ultimately transferring their hard-earned dollars to a tiny group of savvy insiders and schemers.
The fact of the matter is that unregulated, Wild West banking systems not only *can* collapse, but (historically) almost inevitably do so on a time scale of one or two decades at most. And this in the 19th century when things in general moved much slower. Anyone with some awareness of financial and market history, and a bit of intellectual honesty, would be forced to agree that a major crisis in the DeFi space is inevitable. It may or may not be catalyzed by Tether specifically, but you can bet that it will engulf most of the major players. The real question is what the implications will be for the crypto ecosystem going forward, after the storm breaks.
USDT value is proven every day 24/7/365, no holidays, no business hours, non-stop trading USDT is traded in the US exchanges, Coinbase, Kraken, and FTX.us I was holding $150K worth of USDT in my Metamask crypto wallet a few months ago (along with $50K of USDC and $50K worth of MIM) No-coiners or others on ET who've never owned USDT are posting their expertise on the demise of USDT. Isn't it ironic? https://pro.coinbase.com/trade/USDT-USD
i used USDT to get into Luna. I bought XLM at coinbase, sent it to Kucoin, there sold it for USDT, and then used to to buy LUNA. So What is so special about it ??? Apart from high probability of biggest financial fraud this world has ever seen ?
because I would need otherwise to get approved and it it would take longer. I am 100 percent behind idea of fully audited stable coin, USDT is outright, largest, financial fraud that ever exited. That is the difference. blockchain does not understand USD, It does understand stable coin.
HAHAHAHAHAHHahahahah, I'm sorry RedDuke, I was waiting for your response and you did not disappoint!! You're experiencing cognitive dissonance Imagine a Sequoia crypto trader reading your post. Yea, that dude performs wire transfers every day $100's of millions of USD to Binance, FTX.com, Coinbase, Kraken, Gemini, and run their super-duper algo via API so they can trade cryptos and futures NOT They use stablecoins like USDT and USDC. USDT has the biggest liquidity of all the stablecoins
Right now is almost 2:30 AM EDT 599,000 USDT transferred to FTX exchange a few minutes ago and it was completed in 30 seconds at a transaction fee of around $3 For the no-coiner experts on crypto assets and USDT, how about a couple of questions How long will it take to wire transfer $599K to FTX exchange? How much will it cost for the wire transfer? https://etherscan.io/tx/0x22e22cb834637f706998f2581b06539d0c10c59e45067c4cc6fcfa95932c3685 https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7
John, all of this may be so right now, but we really have to stress test this. Luna is an interesting case because their mechanism was on full display, as I said in a previous post, so it was easy to conjure up a plan to take it down. Waiting for a market drop was exactly what was needed because as BTC was being use to shore up the peg, its value kept dropping, which really provided the wind on the sails of the perpetrators. I don't know too much about the numbers involved, but it seems kind of silly to think that a few billion of BTC backed a stablecoin that had tens of billions in circulating supply. The idea that the Luna coin would be used to hold the peg, full well knowing that its value would also drop, I guess meant that there just wasn't enough value in order to maintain the peg. I'm sure I'm missing something, but looking at this all now, one has to wonder how a fluctuating coin could ever backstop a stablecoin. Clearly when value was dropping, you would reach a point where you didn't have enough. Correct me if I'm wrong, but it seems to me that the value of BTC in their accounts, plus the value of the Luna coin, should have equaled the value of the UST in circulation... is this correct? But of course if BTC drops in price, and Luna drops in price, then the peg breaks, and if you only have 15B in value lets say, propping up 30B in circulating UST, then its game over. It this how it all worked? Saying all this, you keep saying that Tether will never fail, but what are the weak points? The fact that the books are private means that the general public doesn't know if there is a number out there which will break it. Imagine enough Tethers being redeemed, and they say they need a few weeks to come up with the funds. Will this do it? I know you say much of USDT is locked up, but if most of the collateral is in commercial paper, how liquid is this really? Its of course a huge benefit if regular people cannot ask for USD back, but at the same time, a big whale who can ask for USD may all of a sudden ask for an amount too big. I bet the freely circulating supply of USDT is much bigger than the liquid USD that the company has on hand, and just like any bank branch says you need a few days if you want to withdraw 100k of cash or whatever value the actual number is, I bet that USDT will have similar issues. The opaqueness of the operation makes it more resistant to attack than Luna/UST, but I do believe that it does have a weakness somewhere. Perhaps a court ruling would scare enough people, and then a delay in payment would be the nail in the coffin. And I understand that you're saying this is all highly unlikely, and I agree given how everything is hush hush, but just like Madoff eventually was exposed when the financial crisis hit and redemptions exceeded his ability to pay, USDT will probably cross paths with an event that will stress test its reserves.