Bitcoin is still early

[nycEMMD]

this is essentially a speculative attack analagous to borrowing usd and buying btc

but if you pull the thread on your scenario a little bit, you have to wonder where would the borrowers step in to capture the arbitrage. your example was a 90% drop. what stops someone else from doing it at 80% and your borrower miss the arb window? or 70%. or 2%. you see where this goes.

there are people who will play that arbitrage game for fractions of a penny. which is a stabilizing factor for stablecoins

That's very true. The point was not that people go out of their way for this play. Let's say someone already decided they needed to borrow $1000. They want to use defi instead of the traditional banking system. Which stablecoin should they borrow? Well USDT would make the most sense as it's the most likely to crash. Any crash would provide a profit

In your example above, it would be a hard argument to make that people would be stepping in to buy USDT after a 2% drop if it was found it only has 10% of the collateral it states it has and regulatory bodies intervened and prevented centralized exchanges from using it.

[jacoavlu]

That's very true. The point was not that people go out of their way for this play. Let's say someone already decided they needed to borrow $1000. They want to use defi instead of the traditional banking system. Which stablecoin should they borrow? Well USDT would make the most sense as it's the most likely to crash. Any crash would provide a profit

In your example above, it would be a hard argument to make that people would be stepping in to buy USDT after a 2% drop if it was found it only has 10% of the collateral it states it has and regulatory bodies intervened and prevented centralized exchanges from using it.

but the 10% collateral thing is disproven fud. they've reported their treasury. the nyag went away with a little settlement. you think they would do so if they found or even remained suspicious that tether was running a massive fractional reserve scheme?

[nycEMMD]

but the 10% collateral thing is disproven fud. they've reported their treasury. the nyag went away with a little settlement. you think they would do so if they found or even remained suspicious that tether was running a massive fractional reserve scheme?

Agreed, risk is very low, just saying it's not as low as USDC or GUSD, you have to admit that

[jacoavlu]

Agreed, risk is very low, just saying it's not as low as USDC or GUSD, you have to admit that

sure

also im sure you understand, but when you buy tether youre not buying that from tether. youre buying that from some institution that bought that from tether. those institutions, some very large, dont want to be left holding the bag either

[nycEMMD]

sure

also im sure you understand, but when you buy tether youre not buying that from tether. youre buying that from some institution that bought that from tether. those institutions, some very large, dont want to be left holding the bag either

Right, they shouldn't really have any issues with selling you USDT but more so lending you USDT as they would be left holding the bag in case of a crash. I just buy and hold crypto so not sure what the interest rates are like but I would be interested to see if the the rate they charge for borrowing USDT is slightly higher than the rate for USDC/GUSD/BUSD

[xraygoggles]

I totally agree with this. Need to separate the Tether FUD from other stablecoins. GUSD and USDC are pretty safe to use.

Thoughts on UST? I think the Terra/Luna system is pretty cool

I like Terra - and not only because it's had a ridiculous return this cycle. It's actually currently being used in South Korea for payments (I think something like 5-10% rn).

Plus, the tokenomics of UST and LUNA tokens is interesting.

[Brains428]

I don't think the Tether saga is over- just on hold. COVID delays for SEC inquiry. There is something to be said about how little the fine was for previous violations. But, today's regulators are oft criticized for not laying down the hammer on anything.

There was an interesting point with what could happen to USDC dependent on what the dollar does and how it effects short term bonds. If it's assumed it's a proxy for a MMF in the cryptoverse, then "breaking the buck" would be a bad thing, right? I'm not smart enough to confirm/dispute/argue it- just one of the many times that I realize that financial expertise is different than medical expertise.

[jacoavlu]

I don't think the Tether saga is over- just on hold. COVID delays for SEC inquiry. There is something to be said about how little the fine was for previous violations. But, today's regulators are oft criticized for not laying down the hammer on anything.

There was an interesting point with what could happen to USDC dependent on what the dollar does and how it effects short term bonds. If it's assumed it's a proxy for a MMF in the cryptoverse, then "breaking the buck" would be a bad thing, right? I'm not smart enough to confirm/dispute/argue it- just one of the many times that I realize that financial expertise is different than medical expertise.

USDC is under SEC scrutiny also. but I think scrutiny is more about securities laws and who has authority to regulate and how should they be regulated. less about strong concerns that they're running some fractional reserve ponzi type scheme. obviously securities laws are complex and these are nascent products. blockfi, celsius etc are under scrutiny bc their interest products could be deemed to be securities.

[xraygoggles]

USDC is under SEC scrutiny also. but I think scrutiny is more about securities laws and who has authority to regulate and how should they be regulated. less about strong concerns that they're running some fractional reserve ponzi type scheme. obviously securities laws are complex and these are nascent products. blockfi, celsius etc are under scrutiny bc their interest products could be deemed to be securities.

I would not really trust BlockFi, Celsius, Nexo etc.

They use dubious and opaque collateralization methodologies it seems like. In fact, I believe during the large correction earlier this year, BlockFi was on the verge of potential insolvency due to the liquidation cascades and margin calls that were ongoing by the speculators/borrowers of their crypto. Very shoddy risk management.

[xraygoggles]

I don't think the Tether saga is over- just on hold. COVID delays for SEC inquiry. There is something to be said about how little the fine was for previous violations. But, today's regulators are oft criticized for not laying down the hammer on anything.

There was an interesting point with what could happen to USDC dependent on what the dollar does and how it effects short term bonds. If it's assumed it's a proxy for a MMF in the cryptoverse, then "breaking the buck" would be a bad thing, right? I'm not smart enough to confirm/dispute/argue it- just one of the many times that I realize that financial expertise is different than medical expertise.

Agree with you re: Tether. There is so much shady business going on by them, at this point, it would be shocking if it turned out they were cleared of any and all wrongdoing.

Where there's smoke there's usually fire.

[jacoavlu]

I would not really trust BlockFi, Celsius, Nexo etc.

They use dubious and opaque collateralization methodologies it seems like. In fact, I believe during the large correction earlier this year, BlockFi was on the verge of potential insolvency due to the liquidation cascades and margin calls that were ongoing by the speculators/borrowers of their crypto. Very shoddy risk management.

largely agree. if I had to bet on some catastrophic outcome coming from blockfi or celsius in the near to medium term I would probably bet on nothing happening, but for sure there is nonzero chance of such occurring. and further, btc rates have dropped to where i see no point taking the risk

[krusebear]

I would not really trust BlockFi, Celsius, Nexo etc.

They use dubious and opaque collateralization methodologies it seems like. In fact, I believe during the large correction earlier this year, BlockFi was on the verge of potential insolvency due to the liquidation cascades and margin calls that were ongoing by the speculators/borrowers of their crypto. Very shoddy risk management.

do you have any articles or sources to support your blockfi claim?

[xraygoggles]

do you have any articles or sources to support your blockfi claim?

Well no, it was more hearsay - surely you can imagine how they wouldn't really be advertising getting awfully close to blowing up, right? It's possible they have fixed those issues from the past, but I wouldn't completely rule it out...

[krusebear]

Well no, it was more hearsay - surely you can imagine how they wouldn't really be advertising getting awfully close to blowing up, right? It's possible they have fixed those issues from the past, but I wouldn't completely rule it out...

Well do you care to link to the hearsay. You’re claiming a very large company a large player in the defi space came close to insolvency earlier this year. I would like to see some evidence.

[xraygoggles]

Well do you care to link to the hearsay. You’re claiming a very large company a large player in the defi space came close to insolvency earlier this year. I would like to see some evidence.

I don't have it at the moment, but I can try to find it, sure. It was like 6 months ago... sounds like you have a lot of funds tied there - tread carefully...