It pains me to read your post, NoahA Are you really associating stablecoin USDT with an algorithmic stablecoin UST? UST is backed by nothing except algorithm The LFG acquired BTC and billions of $ by selling LUNA and UST I don't want to explain the LUNA/UST design, I skimmed through the many explanations on Twitter Luna and UST both crashed to near $0 value because of a death-spiral as part of the algorthimic stablecoin design https://www.forbes.com/sites/rahulr...tablecoin-came-crashing-down/?sh=24577a2b71a2 ----------------- Can you explain on a high level how that would happen to USDT? Is there an equivalent to LUNA in the USDT design?
If you're trying to tell me that there is no weakness to Tether, I think you are very wrong. A 100% legitimate company would have no problem showing everyone the books and wouldn't need to use some obscure firm to do their audit. The fact that they say they are one of the biggest holders of commercial paper, and yet no trading desks can confirm any transactions with them, is highly suspicious.
I'm not trying to tell you anything on Tether USDT. People have made up their minds on Tether and I always say let's wait for the Tether collapse which I don't believe will happen You did not answer my 2 questions at the bottom of my last post. They were trick questions and do not apply to USDT, only to algorithmic stablecoins like UST If you or anyone or any group want to stress test USDT, one way to do it is to buy 50 Billion USDT and sign up with Tether to redeem $50 Billion There's a few challenges with that, one of them is that there are not 50 Billion USDT available at the exchanges and after all the transaction fees, will spend a lot more than $50 Billion I'm here defending Tether USDT but to be honest, it won't affect me if USDT goes to $0 since I'm not holding any right now and even when I do hold USDT, it's usually a small % of the portfolio allocation Like you, I believe the crash of USDT will end up pushing BTC price up as people trade USDT for BTC and other cryptos
That is the beauty of USDT. There is no public way to break it. As long as they just keep saying trust us, and they make payments when necessary, and government doesn't force them to prove collateral, then they can keep operating as they are. You would think that with the beauty of bitcoin being that we can see where every single satoshi is, and there is no counter party risk, that this crypto ethos would carry over to stablecoins. But this clearly isn't the case, and I don't see the long term viability of this approach. I truly believe that its not a matter of if, but rather when, a major shock deals a deadly blow. But because they have a system of "just trust us" set up, unlike Luna which had an open algorithm, the exploitation isn't going to be as easy. But the whole point is that if you inject 50B USD into the USDT, then the company that issues it should easily mint more and give it to you while they take the dollars. That is the whole point. If you buy it through an exchange, then I assume your cash at the exchange goes to the tether company and they release the newly created USDT coins. For a large order like this, you can't just buy what's available on the exchanges, but I see no reason why more isn't created for you once they have your USD and use the exchange as the middleman if the USDT company can't directly take your cash and issue your tokens.
EDIT: you cutoff my post, that was related to the stress-test exercise of USDT that you mentioned. It would be pointless to buy 50B USDT with the purpose of redeeming them for USD I disagree with an item, but other stuff I'll just leave it alone Tether Co. already received $72 Billion for the ones that have been minted and in circulation, currently If you buy 50 Billion USDT now, Tether Co will not mint a single USDT However as you're taking out the supply of USDT from the markets, the customers of Tether Co will most likely buy USDT from them You keep mentioning Luna but that's an algorithmic stablecoin which is completely different than USDT. It is not fair to undermine the value of USDT by using a failed algorithmic stablecoin You do not have to believe me, you can google LUNA UST Anyway, I should really hope that USDT de-pegs and starts to collapse. I just do not believe this If USDT starts to fail, 10's of billions worth of BTC and Eth and Solana and other cryptos will suddenly be bought using USDT on CEXes and DEXes, and most of them will be withdrawn to local wallets because leaving them on CEXes they are susceptible to the trades being reversed And BTC owners as well as ETH and SOL and other cryptos owners will not be selling for USD and risk exchanges freezing accounts and USD withdrawals due to the USDT mess Failure of USDT could start a very strong bull market in Bitcoin and cryptos
Yes, I completely agree with this as well. Why? The whole point is to see if they have the funds backing the USDT that they say they do. If they won't open the books, then doesn't it make sense to try "stress test" their assertions? It was surprising that 10B could be redeemed for USD. What would happen if we wanted to burn another 10B of USDT and get USD back? Somewhere this will break. If USDT is 100% backed, then it should be no problem, given enough time to sell some of that commercial paper for dollars. If I buy a BTC ETF, which I down own (from a much higher price...LOL), I fully expect that my shares are 100% backed by BTC in cold storage. Imagine if enough people sell their ETF shares, wanting money back, forcing the fund to sell BTC in order to come up with the cash, and then all of a sudden, while there is still hundreds of millions of dollars left of outstanding shares, there isn't a single bitcoin left to sell. This would mean that the ETF wasn't 100% backed by BTC. Its the exact same thing with USDT supposedly being backed 100% by USD. It just seems so simple to me so I'm not sure where the argument is. Sure, the chances of USDT being stress tested are very low, outside of some regulation overhaul, but the market can one day push hard enough in one direction that we get the chance to see who is swimming naked, just like Madoff in 2008.
I realize nowadays that $10B or even $50B doesn't sound like much money since the Fed printed trillions of $, but I'm pretty sure it's not easy to just have that much money lying around or even deposited in banks And whomever this stress-tester would have to be willing to take some major losses to prove what exactly? that Tether is a fraud? if Tether is a fraud they will lose $50B plus fees, and if Tether is not a fraud they will lose hundreds of millions of $ in fees and slippage God bless them but I don't see an upside to that stress-test exercise, do you?
If you know you're about to launch an attack, you can very easily short in advance. Isn't this what was done with Luna? They short bitcoin and Luna both, knowing one dropping will feed into the other. They look for a time of market weakness, since the wind will be at their back, and give it just a bit of a push. Perhaps even prep by creating lots of stablecoin FUD in advance.
That seems very risky as you and I both agree that BTC and cryptos may go up as USDT fails so they'll be losing on their shorts You mentioned Luna again and I cringe, lol. What happened with Luna is a death spiral caused by the design, which initiated a printing of billions of Luna tokens and eventually trillions The effect on BTC is because the LFG owned billions of $ worth of BTC's they needed to dump to defend the UST peg You know all of these already but you keep interjecting it to associate it with USDT which is not an algorithmic stablecoin. How many times do I have to say it NoahA? UST and USDT are completely different
Confidence has definitely been broke in the crypto-markets after watching the 3rd largest (caugh) stable-coin go to zero. She's down again... Kwon, the man who BROKE the crypto-market and made everyone poor again. Looks like he's in serious legal trouble too now. Guess they are going to make an example out of him, especially after his bragging videos/texts are being scrutinized. Everyone hates people like that, especially after you make them poor. Let's see if they give him same treatment as Jordan Belfart or Pharma Bro.