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by wjohnsto 1787 days ago
DAI is backed by USDC, and USDC is a competing stablecoin. Why would a competing stablecoin want to use their own reserves to redeem USDT for you? I don't mean to be antagonistic here, but there is no safe and steady off ramp for holders of USDT if it is found to be a scam. The value of USDT will collapse, and anyone holding it will have to take a 100% loss. The only way to remedy that would be in the form of some sort of bailout from some other entity, but I don't know how or why that would happen.

I do agree that crypto has been through some issues in the past and has recovered, and I'm sure in the long run it will recover from a Tether collapse as well. In the short term the market will take a significant hit, and many of the exchanges that deal heavily in USDT could collapse because of a lack of liquidity.

EDIT: DAI is backed by USDC not USDT, terribly typo :( https://share.streamlit.io/tadzz/maker_dai_collateralization...
1 comments
eingaeKaiy8ujie 1787 days ago
DAI is not backed by USDT.
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wjohnsto 1787 days ago
My fault, I meant USDC. DAI is backed by USDC, and USDC is a competing stablecoin to USDT.

I guess an important distinction is DAI is not 100% backed by USDC, but it is backed >50% as of this time: https://share.streamlit.io/tadzz/maker_dai_collateralization...

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NicoJuicy 1785 days ago
Says who?

Tether was 100% backed by USD too, until the lawsuits.

Then it became 2,9% USD backed.

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wjohnsto 1779 days ago
Yeah I definitely don't disagree with you. The backing can change over time, and I linked to a tool that programmatically checks the backing of DAI so that's what I quoted.

In Tether's case they are backed by almost no USD and mostly short term loans to undisclosed entities... I do not think Tether is legit, and USDC is questionable as well. Without third party auditing it's hard to trust any of this stuff.

My original response was trying to highlight how DAI is mostly made up of USDC (at this time), and USDC is a direct competitor to USDT. So in what world would it make sense for USDC to bail out USDT in the event USDT is revealed as a total fraud.

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