Bitcoin Forum

https://decrypt.co/154580/tethers-stablecoin-usdt-has-a-peg-stability-problem-claims-analyst

In response to these findings, Carey suggested that Tether should consider removing its redemption fee and minimum requirements.

"The redemption fee is a USDT-specific problem. USDC does not have such a fee; stablecoin issuers currently make most of their money from the yield they earn on the USD deposits that they hold," Carey told Decrypt. "Given the U.S.'s high rate environment, I see no reason why USDT keeps its redemption fee intact unless it is actually intended to reduce redemptions. If that's the case, it's short-sighted because it makes USDT's peg worse."



and then this:


Another catch is that users have to pay a non-refundable amount of $150 for “verification,” which, according to Tether, “is intended to ensure that only those who are serious about establishing an account apply.”


good luck with using tether everyone. you're going to need it if this thing depegs.  :o

It's ridiculous if USDT asking for redemption fee or pay $150 for verification.

With Binance asking everyone to convert their BUSD to other stable coin, this give USDT price increase since current 24 hours BUSD trading volume, there are around 15% convert to USDT, so this give USDT price increase.

If USDT price pegged back to $1, no one will care about de-peg, centralization, not fully backed, and any other problems.

USDT price is stable thanks to big marketmakers and arbitrage traders. You can sell your USDT on almost every single crypto exchange for other stable coin or $$. There is no reason for tether to have to serve small retail investors, because all it does is increase the company's operating costs and contribute to the formation of holes in the balance sheets. For me it is completely understandable that the company, when it does not have to, avoids unnecessary costs, which would be hiring thousands of employees to handle the kyc of each investor with 100USDT in the wallet free of charge and to handle tickets created on the basis of "I sent to the wrong wallet, now what?"

the whole, both the article from the link and the entire OP, I consider nothing more than creating FUD and confusing insolvency / liquidity problems with cutting unnecessary costs. At the moment, tether FUD has been with us for years and yet, no large investor has ever had a problem with payout.

I am assuming that this has been the case whole time and i just never noticed it. I assume that most people are trading it against something else in exchanges anyway, so it doesn't really concern majority of people, and whom it concerns are so rich that they wouldn't care about 150 dollars

But just in princible this is not good. In fact how is this even legal? Imagine banks doing this? Withdrawing physical from cash from ATM would cost $150 and people would riot and lose their minds. So how is tether getting away with this crap?

I don't like Tether even before but at some point of my life, I have to use it and that had helped me a lot with my transactions and holdings as well. Some may misunderstood that this is pertaining to each user, no. Because if you don't have an account on their website, you don't have to. Please read the whole details on Tether's website.

We are not sure, Binance seems advertising this new stablecoin called FDUSD (First Digital USD) and they also open a promo for a pair of BUSD/FDUSD like converting your BUSD to FDUSD.
I agree with you that there could be some people will convert BUSD to USDT but there are lot of stablecoins now like USDC or DAI and some could start buy it with Bitcoin as Bitcoin is kinda cheap right now.

if tether is real money then you should be able to redeem it without paying any fee at all.


this seems problematic though:

“USDT has a peg stability problem. Its redemption fee and minimum means it’s often rational for USDT holders to sell the token on the market rather than redeem it for USD with Tether,” wrote Carey. “As liquidity has dwindled, the market is no longer able to absorb significant USDT selling.”

did you read the article?

yeah imagine your bank saying they won't give you your money until it reaches $100,000 amount! that would be BS.

from the article:
Currently, Tether charges a 0.1% fee for fiat withdrawals over $1,000, meaning that USDT is redeemable at $0.99, with the minimum fiat withdrawal or deposit set at $100,000.

and just imagine your bank telling you they don't want your money unless it is $100,000 or more, no deposits allowed! find some untrusted third party like FTX that you can deposit your hard earned money but not with us.  :o

this is nonesense.

1- why would a private company provide you with services for free
2- no one claims tether is real money
3- even if they do, that still doesn't mean they can't charge you for delivering the product
4- define "real money"

yes i read the article and it is nothing but FUD written to get more views.

This is not problematic at all. This is how it was invented and, as you can see, it works, because the spread between the dollar and USDT exchange rate is negligible. and this happens thanks to the fact that small amounts can be exchanged between users on centralized exchanges, which does not require tether intervention. only when sentiment pulls the price in one direction, large marketmakers and arbitrage traders start to act, for whom the $100,000 minimum transaction is like nothing. They kill the spread for small profit and everyone is happy.


Tether is not a bank. it's like saying a bicycle is worse than a tomato because you can't make ketchup out of a bicycle.

the transaction fee using Visa reaches 5%, but it is solved so cleverly that this cost is borne by the product seller not the customer. The customer lives in ignorance that the visa is free. The truth is that the entrepreneur has included this cost in the price of the product thus making it 5% more expensive. but you're right, it's better to write FUD articles that tether imposes a 0.1% fee XDXD and if its "real money" it should be free XD

"Currently, Tether charges a 0.1% fee for fiat withdrawals over $1,000, meaning that USDT is redeemable at $0.99, " this would be correct with 1% fee. With 0.1% its 0.999$ not 0.99$

For sure this will not be implemented. Thats 0.1% is really pain in the ass if someone would withdraw to fiat. Plus what this redemption fee? Im not sure everyone using or cashing out on tether would like this. They will definitely lose users once they go and try this path.

because it is my money
everyone pretends like it is including tether so yeah it is real money just as real as any printed money like the us dollar.

so it's ok for my bank to charge me a withdrawal fee just to get some of my own money? i won't do business with them if they treat me like that most likely.  :o

usdt, usdc, anything that pretends like it is backed up by the us dollar would be a good start.


then try this article instead they can't all be lying can they?
https://zycrypto.com/despite-usdts-recent-depeg-tethers-market-share-is-larger-than-its-ever-been/


it works until it doesn't work but by then it's too late to save alot of people from losing their money. so it works but that doesn't guarantee it will always work.


they are in a more powerful position than a bank. they're like the federal reserve where they can print money. out of thin air.

So use it however you want. Just don't use their service, you wont have to pay fee. USDT is not mandatory. It's just a company product. You can use or not. And you can cash out for free even 10$ just use intermediary.
If they would introduced free KYC for everyone and no minimum transactions, it would end up with high fees or balance sheet hole. What they did was nothing more than outsourcing this utility to the market and cexs. The market is known for performing such operations cheaper and better.

Once again. Tehter is not a bank. it doesn't have a 0% fractional reserve, it doesn't have infinite liquidity from the Fed, deposits are not FDIC backed, it can't generate "real" dollars out of thin air using accounting manipulations between several banks, and banks are not free too, thy charge account maintenance fees if certain criteria are not met (at least in my country).. Once again. Don't compare a tomato to a bicycle.



you are confusing money with currency. USDT, USDC, BUSD, TUSD is not money. Even US dollar is not "real money" because it does not meet the criterion of storing value over time.


welcome to the better side of the force. YES THEY ALL LY. ALL THE TIME. modern journalism means writing paid articles - $0.03 per character on a given topic by a sponsor.

Do you remember the recent Bitcoin dump from 29k to 25k? What news hit the market at a low? I will remind you:

Breaking: SpaceX Unloads $373M Worth of Bitcoin Holdings (https://coingape.com/breaking-spacex-sells-373-million-bitcoin/?utm_source=cgtelegram)

BTC it previously acquired by $373 million and sold the cryptocurrency (https://cointelegraph.com/news/bitcoin-price-falls-below-26k-in-two-month-lows-for-btc?utm_source=Telegram&utm_medium=social)

SpaceX sold $373M worth of Bitcoin acquired in 2021-2022 (https://www.investing.com/news/cryptocurrency-news/spacex-sold-373m-worth-of-bitcoin-acquired-in-20212022-report-3156924)

Elon Musk's SpaceX Liquidates Entire $373000000 Bitcoin (https://captainaltcoin.com/elon-musks-spacex-liquidates-entire-373000000-bitcoin-stash/)

Unpacking SpaceX Bitcoin 2021-2022 sales worth $373M (https://www.cryptopolitan.com/spacex-bitcoin-2021-2022-sales-worth-373m/)

Bitcoin Crashes Below $25k As SpaceX Sells All BTC (https://bitcoinist.com/bitcoin-below-25k-spacex-sells-all-btc-holdings/)

That day, it turned out that all these websites (coingape, cointelegraph, investing.com and more) were spreading fake news, because spaceX did not sell even 1 bitcoin. The only thing spaceX did was record a paper loss in its books.

I do not say I'm convinced that the tether is indestructible and that it is 100% secure. I'm just saying that the fact, that their "unit generation/burning service" is used by large players only is not evidence of any problems.


you are talking about a case in which all market makers, as one man, seeing a 5% spread between the USDT rate on the market and the USDT to USD exchange rate on the tether platform will say to themselves... screw it, I have already earned enough, I don't need more money... and no one in the world will decide to replace them, because no one will have $100,150 to earn $5,000 in 5 minutes by doing 1 simple arbitrage. If you think this crazy scenario is likely, then tether TOS may actually be problematic.



XDXDXD

how is someone going to earn $5000 in 5 minutes without someone else losing it? that's the problem. so yeah the whole thing is problematic about losing peg. whether it goes down to $0.95 or up to $1.05 neither is good and somebody is going to lose money.  if it's worth $0.95 then obviously people holding tether are getting screwed. if it's worth $1.05 well then guess what? no one wants to buy their tether from them at $1.05 because guess why not. they can't sell it to tether for that.

No one in crypto will be safe if Tether depegs... the ramifications will be bad for every single coin, including Bitcoin. Tether's market cap is twice as large as all other stablecoins put together:

https://coinmarketcap.com/view/stablecoin/

Some precedence for this lies in what happened with Luna's stablecoin, TUSD. The failure of LUNA/TUSD had far-reaching effects that culminated in the insolvency of FTX. While a lot of systemic risk was exposed last year, the negative effects of a USDT depeg would be far greater in magnitude.

So what? my example was to prove to you that the fact that you need to have $100,000 to work with tether is not a "Peg Stability Problem", because there will always be a big arbitrage trader who will bring the USDT price very close to the USD value as long as tether is solvent. Arbitrage traders have huge competition and fight each other for hundredths of a cent. So you started the entire thread to warn people (or rather create FUD) that USDT on the market may temporary drop to USD 0.998, i.e. by 0.2%. and you tell this to people who put their life savings into meme coins that can drop by 99% in one day.

Tether may have many problems, such as insolvency in the way singature bank turned out to be insolvent (bank run combined with a temporary paper loss on bonds becasue of rising interest rates). Situation when they will be forced to sell bonds on loss even though it would bring guaranteed profits in a few months/years (guaranteed by the US government). It would be good to discuss this topic, rather than tether small clients policy - outsourcing them to CEXs and arbitrageurs.

i'm not sure there is a huge difference between tether and luna but i guess some people would disagree. they were both depending on companies. sure tether has a longer stronger track record "seems" more competent but no one really knows for sure what's going on behind the scenes.

i don't know that tether is "solvent". so i think you're making an assumption. i also don't know how long the company behind tether will last. could be a long time might not be we don't know do we? but one thing is for sure which is that it won't last as long as bitcoin.

Luna and TUSD was an algorithmic stablecoin that was not backed by any deposits from the real world. TUSD volatility (deviation from the value of $1) was stabilized by transferring volatility from TUSD to LUNA, through the TUSD burning and LUNA minting system and vice versa. So basically the stability of BUSD depended on the stability of the protocol and the collapse was caused by fragility on a black swan event (bear market combined with bank run). There was not a single dollar backing TUSD.

USDT works completely differently and its stability depends on the amount of reserves in the vault.



I agree here, but I would like to point out that the fact that tether does not support small customers and forces people to pay for KYC is not an indicator of problems that may or may not exist.

ok then i guess a better thing to compare tether to would be usdc then.

https://forkast.news/circle-customers-could-redeem-all-usdc-in-one-day/

I wonder if tether could say the same. saying and doing is 2 different things but if you can't even say it then you probably can't do it at all! at least usdc is saying it.

it also depends on a group of people, namely the people running tether. they can do whatever they want to. hopefully they always do the right things.


well the $150 for kyc is really not the big barrier as compared to the $100,000 minimum withdrawal/deposit is it? what if they upped the kyc fee to $100,000 and the minimum withdrawal/deposit to $1,500,000? at what point does it become a scam? and who makes that determination.

Another scary cautionary tale about Tether? Except history shows that USDT has the ability to recover quickly from all sorts of de-pegs, and it doesn't have much impact on its capitalization and level of dominance among other stablecoins. History shows us that no matter how bad things are said about USDT, it still shows much better reliability than USDC, BUSD, TUSD, etc.

why does a company need to be involved in tether though. people have to trust a company! isn't that like the antithesis of bitcoin? you would think with all the high tech blockchain stuff we wouldn't have to rely on a company. even relying on a government would be an improvement over that, i would think. but who wants to rely on a government. so it's really bad. bad all around.

tether could just stop redeeming tethers and the value of usdt would go to 0. because no one else redeems it except tether!

More realistic to this story would be that you see things like trading btc/food, water, fire, cigarettes, electricity,... but no it's not happening like that and what people is using and the desire I see here is harmony from bitcoin, not isolation from theory. The terms decentralization, or centralization label many things. I see sometimes people just want to prove a stance on an issue they support, the general view here is that Tether is still very important anyway. In this market and in the future after all the FUD or negative opinions from someone, it is still the main choice of users.

I'm just saying, something a big as a fiat backing of bitcoin should be highly regulated by the government to make sure it's not some big ponzi scheme or something.

https://cryptoslate.com/global-stablecoins-need-governing-body-pose-risk-to-financial-stability-says-imf-fsb-in-g20-report/

Notice the title of the article: Global Stablecoins need governing body, pose risk to financial stability says IMF, FSB in new G20 report

I think alot more needs to be done to bring these type of things like Tether under a very strict compliance maybe even outlaw them. But I know the report didn't go that far.

I haven't come across any information about a $150 verification fee. Is this information accurate, or is it just a rumor? I have heard speculation about USDT potentially losing its peg, but nothing has materialized thus far. I have been using USDT for a while, and I haven't encountered any issues. Additionally, the transaction fees associated with USDT are considerably lower than those of other stable currencies, so I intend to keep using it.

Where have you seen any major projects comply with the basic covenants of cryptocurrencies? It's impossible in the current regulatory environment. You either accept the rules of this game and use liquid products that are widely distributed on the network, or you stick to the crypto covenants and wander somewhere in the crypto underground, using products that almost no one knows about and few people use.

that's because you're a small potato and tether doesn't want anything to do with you. as long as you are a good little boy or girl and don't bother tether you won't have to pay that fee.

of course it is. why would someone make that up?

of course you haven't. if that happened then tether would be bankrupt. and it would be all over.

i dont get why people don't just keep their money in fiat. that's safer than something like usdt. because its backed by the government. then if you really want bitcoin you buy bitcoin with fiat. simple as that. but don't pretend like tether is decentralized or something. if the us dollar went to zero so would tether.

Because unlike pure USD that trading pairs are based on at some exchanges, USDT can be withdrawn to a cryptocurrency wallet for safe-keeping, moved around to other exchanges, used in something like Uniswap or whatever. This gives it a distinct advantage over USD. To be fair I've never tried to move USD from one exchange to another, or even withdraw it to a bank account (not since 2016 or so anyway), but USDT comes with the distinct advantages of being a cryptocurrency.

if you like burning money you can move it around and pay $10 everytime you withdraw from an exchange  :o average fee is about $11 usd right now it looks like https://withdrawalfees.com/coins/tether


well uniswap and things have even more fees. the only people making money is the exchanges. most people probably losing money. not a zero sum game unfortunately... but we all understand that i guess.

i don't even think its possible to move USD around from one crypto exchange to another they don't want to deal with fiat at all so yea, i understand usdt and things like it get around that issue.

It can even go to 10 000 000$ or 50 000 000$ and it probably won't cause the USDT exchange rate to detach from the dollar anyway, because its a penny for binance, huobi, coinbase, kucoin, bybit and several unknown large market makers and arbitrageurs, that will create liquidity for every single smaller trader. Tether will simply cooperate with several large institutions that will create liquidity for smaller players.
Write an e-mail to a sheikh in Abu Dhabi and ask him to sell you 30 liters of fuel for your Opel Corsa. He sells oil by the tonne to companies that then sell it to retailers. Nothing strange here. Tether stays at $1 and will achieve this by being solvent. It doesn't matter whether they decide on wholesale or retail.


Full KYC on exange also means connecting a specific bank account and proving that it belongs to you. All withdrawals can only go to this specific account. So is it possible to transfer usd from 1 exchange to another? yes but only when the bank account of the second exchange is yours (you are the second exchange), or you use will your bank account as an intermediary (making 2 transfers and probably losing 4 business days). Transfering value in USDT takes 5 min.

I don't think you can freely move your stablecoins between exchanges. If you transfer more than $10,000 to an exchange, then the exchange employees will most likely ask you for confirmation of the KYC procedure and many other documents about where you got these stablecoins. And then you won’t even be able to sue the exchange.

After such blocking, you will understand that it is better to pay more commission and not use centralized exchanges.

yeah but that's a different situation. people that buy oil in quantity turn around and sell it for a higher price per barrel because they're getting a volume discount. you can't do that with tether. because tether then might not have the money to redeem. unless their investments were paying back more than the discount they were giving to volume purchasers.

it doesn't make sense then how or why a company would buy something in bulk from tether and sell it to their customers at the same price. there's no profit in that.

They create huge buy wall at 0.9988$ and sell wall at 1.001$. So the price stays in these ranges as long as arbitrageurs keep up with transfers and tether keeps up with transaction processing. And most often it stops in the middle (around $1), because usually in this scenario small investors trade among themselves and only when the sentiment prevails in one direction the price goes to the lower or upper ranges where arbitrageurs earn $0.0012 on every dollar ($12 on every $10,000) or $22 on every $10,000 if they have enough liquidity that they stop the price and it rebounds to the upper band after sentiment changes.

I'll tell you more. I personally had a trading bot that was buing USDT for BUSD as soon as the rate dropped to 0.9999 and selling it as soon as it went to 1.0001 (binance then had a 0 fee policy on currency pairs to BUSD). I didn't need tether, and USD to make money providing liquidity to tether (zero tether KYC fee, no 100k limit). It was possible to get around 30% APY this way.

"as long as ... tether keeps up with transaction processing" - so the larger the arbitrageurs and the fewer of them there are, the greater the chance that tether will work in critical situations. Then there is no situation in which the price of tether on the market temporary drops to $0.98 (flash crash) and tether receives spam from 10,000 small investors and each transfers $1000 that he managed to buy at $0.98 to sell for $1 and earn $20 and tether have to process 10 000 transactions.

i guess theres people that would be happy even making $22 on every $1,000,000 always people willing to pickup any free money if you consider putting your money at risk on a centralized exchange risk free.  :o

so you couldn't do it by hand? or that would be too tedious? i guess that opportunity is long gone now...

that would be a disaster if that happened!  :o

Its 2200$ on every $1,000,000 and its not so little if you consider you can use this $1,000,000 couple times a week/day. Its risk free if you are the owner of the exchange or if you hold your money on this exchange anyway (you are doing arbitrage trades on other coins, you are marketmaker, or you are an active whale daytrader that temporary does not have open possition).


it was possible to do it manually, but the 30% APY result was achieved by placing orders 24/7 and placing new order fraction of the second after previous order was filled. If you wanted to do it manually for 8 hours a day, the APY drops to 10%. If you add human mistake and human reaction time, it turns out that the APY drops to around what 10-year bonds currently pay and you do all the work for free. In my case, it looked like this: I kept my capital on the exchange and actively traded it, and every time I did not have an open position or some of the capital was free, I launched a bot to get extra yeld.


But these are all details. The main message is that the fact that tether targets the largest users and does not retail to everyone is not proof that there is a "Peg Stability Problem". This article is written to create fud and nothing more.
There are many other risks associated with tether. This one is not worth discussion.

yeah i didn't know about those things. but thanks for sharing.

i guess that's right. on the other hand, tether is probably less stable than say buying T-bills from the US government. They are less likely to default on their obligations than tether. i think we could agree on that. historically, the us government has been the gold standard for paying their obligations. they're not looking so good these days but they're still issuing T-bills. and paying the interest.

maybe part of it is? but certainly not all of it. this stuff here has nothing to do with the particular author of the story. he's just reporting what i would assume to be facts:

The International Monetary Fund (IMF) and the Financial Stability Board (FSB) published a report commissioned by G20 under India’s leadership, outlining a comprehensive framework for regulating crypto-assets like Bitcoin and stablecoins today, Sept. 7.

The paper synthesizes the policy recommendations from both organizations to help countries address the financial stability and integrity risks posed by the rapid growth of crypto-assets.

so i guess what you're saying he used that as a branching off point to try and make tether look bad.  :-\

you mean like them running away with the money or their investments going sour or the us dollar becomes worthless?

then lets talk about the real risks of it. i'm curious to know what they are.

It's not a tether problem and it's hard to describe it as a risk from tether exposure because in this case they will do their job exemplarily - they will maintain a 1:1 ratio to the dollar - what they promise. But in the event that the dollar falls to zero, the question arises - who owns the tether reserves and the profits from their investment. The risk of losses is on our side, so at least part of the profits should be on our side too, but this is probably not the case. I am writing about this because Tether's balance sheet apparently contains around 2% of bitcoin and >5% of non debt assets that will not go to zero with dollar.
But here we are talking about unlikely cases in which tether "behaviour' will be the least of our problems.

About their investment portfolio (https://tether.to/en/transparency/#reports) (if its not faked). It is set relatively safely, as according to their report, 85% is cash or cash substitutes (which in my opinion is enough to never have problems with liquidity.) Why? it is said that 30% of bitcoins are lost. someone died and didn't hand over the keys, someone lost the keys, someone regularly leaves dust on various wallets. I think it's the same with tether. Great proof of this is the busd marketcap, which needed as much as 10 months to drop by 90% after it was announced that busd was going out of business. Tether is twice as old, so the number of lost tokens is probably twice as high. I know it sounds strange, but even if the rest of investments goes to zero, i think 80% in cash is enough to be 100% backed, because during the 8 years of tether's existence, people have been "burning tokens" on a daily basis.

But looking deeper, what "Cash Equivalents" is. They are mostly U.S. Treasury Bills that expire after 4 weeks, 8 weeks, 13 weeks, 17 weeks, 26 weeks, or 52 weeks. So because they have a short expiry period, they are not that susceptible to rate changes. Its not a 20 year bond that can dump 50% in price due to rising interest rates creating temporary paper losses

if they don't lie in their reports, their wallet seems to be safe enough that tether will never have problems maintaining the $1 exchange rate. And here's the big if and the biggest risk. If they don't lie...

Another big risk may be a massive attack by regulators and freezing of funds or them running with our money.

Because all the most common crypto products are regulated and centralized. No one will allow USD to be operated anonymously and decentralized, these are utopian fantasies that are not destined to come true.


Bitcoin could also fall to 0 if all the governments of the world suddenly say they ban its use and paying with bitcoin is a criminal offense. Then we will go back to 2012, where bitcoin was used only in darknet transactions and was worth a few cents or bucks. A scenario like the fall of Tether is unlikely, just like the bitcoin scenario I described.

In addition to what, @Xal0lex has already said, the reason most of web3 or crypto startups chose to indulge in Tether or any other stablecoin project for that matter is because they need on/off fiat ramp in order to operate properly. There are laws and rules associated with the country that the company is located at. So these restrictions make Tether a viable option for use. There are operations cost to run a company including employee salaries, etc. All of these can't be done without KYC amongst a formal payment gateway for on/off ramp payments with support for crypto.


The possibility of Tether falling/going to zero is there but it won't be a likely scenerio. Tether is embedded too deep in crypto. Crazy how an independent, centralized entity has garnered so much influence in a decentralized economy.

If bitcoin can run anonymously and decentralized then a stablecoin can too. but if you're saying bitcoin can't even do that then i don't know why we're here.

i don't know if that's a fair scenario to make a conclusion about that. trying to outlaw something doesn't always make its value go to 0. so i don't think we can assume that about bitcoin.

i dont know. its hard to imagine but i don't know if that means it is unlikely. but i dont expect to see bitcoin going back to that level not ever. unless something unexpected happens.


from what i've seen tether is main use is just to serve as an opposite pair. you trade eth/usdt or btc/usdt so it's like a part of the liquidity pair. no one really has a tether wallet where they just store tether on a non-custodial wallet because it would be useless then i guess! because all you can use it for is on exchanges. so you just have to keep it on exchanges. or just pay a bunch of fees to go back and forth to your wallet. there's tether on ethereum maybe tether on other blockchains so the stuff is not even interoperable. kind of confusing.

Bitcoin is not linked to USD, it is a standalone coin on its own blockchain. If someone offers a crypto product that is backed by fiat currencies, it will never be decentralized and anonymous. Never.


Just because you can't envision such a scenario doesn't mean it can't happen in principle.

Although its not "backed" by fiat currency (merely pegged to the US dollar), MakerDAO does exactly that for their stablecoin, DAI.

https://coinmarketcap.com/currencies/maker/

All that is required to participate in the DAO is to hold MKR. You can argue it is not as decentralized as Bitcoin, and possibly not as anonymous, and you'd be right -- its not. But its an example of a stablecoin that is somewhat decentralized and anonymous.

I do not know if the problem will rise from within USDT itself and Tether as a company, or if it will be just governments doing something about them, but I am sure that there will  be an issue for them in the future. Nobody should be able to just print a fake thing and say "this is pegged to 1 dollar" and convince enough people to get tens of billions of dollars. That is literally what this is all about, they give you some digital code, that says that it's pegged to 1 dollar, and you should trust them about it.

This isn't like any other cryptocurrency, you have to trust a company for this, no other is like that, when you buy bitcoin you know the risks, but when you buy USDT you have to trust Tether is legit. So it could result with some issues in the future.

I'm not arguing about DAI, but what scares me is how DAI is losing its peg to the dollar. It has always been a common belief in the crypto community that DAI is more resistant to de-pegging from a stable exchange rate than USDT or USDC. The March events surrounding the USDC demonstrated just how much the DAI is susceptible to de-pegging. It is just as likely to lose its stability rapidly as centralized stablecoins. In March, DAI instantly lost 15% of its value and it took almost 3 weeks to stabilize its value.

DAI went down to only $0.85 i didn't know that. I bet alot of people made a killing. someone must have lost some money too though. 3 weeks you say it was at 85 cents? i'll have to look into that.  :o

Not really, it took the DAI 3 weeks to stabilize its peg to the dollar. Look at the chart of the DAI from March 12 to March 30. DAI was constantly subject to fluctuations and almost daily de-peg. This is not a good indicator for a decentralized stablecoin.

https://www.talkimg.com/images/2023/09/26/PQv1C.png

I am trying other alternatives, I am hoping $USDC and $PYUSD (massively listed and now a holding of mine on bitget waiting for trading pairs) can overtake USDT. A token that always was in the eye of Hurricane for the lack of proof to have the Reserves.

yeah i agree it's not a good looking chart but it could have been worse, it could have dipped down below 90% for days in a row. from that chart it looks like it had one spike down and then right back up above 90.

thing i don't like about usdc is how they can just freeze your usdc by pressing a button. but i guess tether could do that too? but i havent heard of tether doing it. but i think it if was me, i would hold usdc rather than tether but they both probably are bad ideas.

i guess this story was just a bunch of BS:
since it was written in 2021 and i know tether isn't protected or insured against hacks. (or depeggings)

Stablecoin insurance firm Bridge Mutual to protect against possible Tether depegging
https://cointelegraph.com/news/stablecoin-insurance-firm-bridge-mutual-to-protect-against-possible-tether-depegging