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by 35fbe7d3d5b9
1866 days ago
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> It's incredibly important for this mechanism (and the public record of assets in the basket it relies on) to be built in to the process if the price is to be truly tethered. Otherwise the tether is just an illusion and in the ETF world, ETFs which didn't have this type of mechanism went completely haywire and became defunct. This is what's so surprising to me. Markets are efficient and rational, right? (;-)) Well, we just learned a great deal. And no matter how you optimistic or pessimistically you value the ~95% of assets backing USDT that aren't cash, we should all agree on one thing: you won't value them 1:1 to the dollar. So why hasn't the peg moved? The only explanations I can think of: this risk was priced in, which seems a stretch... or that USDT:USD has never been priced based on fundamentals. |
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It's simple and easy to do this when one entity has control of both the currency minting and the market pricing mechanism.
In other words, USDT would be an ideal mechanism for perpetrating widespread fraud in the crypto marketplace, one that would likely never be tolerated in "regulated" markets.
Note that USDT is underpinning the entire crypto marketplace --- the majority of bitcoin and other crypto trades involve USDT.