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by bluecalm 1707 days ago
Once the peg is broken it will collapse quickly. That means it's in their interest to keep the peg. If they have enough reserves (hard to imagine they have even 5% in cash but maybe they managed to buy enough BTC with their tokens to keep afloat for a while) they can keep the facade going for a very long time (until some kind of bank run is triggered).
2 comments
humaniania 1707 days ago
Many people are also assuming that unlicensed unregulated offshore exchanges keep 100% of client funds in reserve. LOL.
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mmsmatt 1706 days ago
The last few years of BTC, ETH, and DeFi all collapse quickly if the USDT peg fails.

How much crypto is borrowed on platforms like Compound against USDT? That collateral takes a 5% haircut, we’ll see painful liquidations. 10% or 20%? Fire sale everywhere.

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yokem55 1706 days ago
> How much crypto is borrowed on platforms like Compound against USDT?

Close to zero. Compound, Aave, Maker - none of them allow folks to use USDT as collateral to borrow against. You can lend it for yield, and borrow it from others, but you can't use it as collateral.

There are some riskier protocol that allow it (rari, cream) but those are much smaller.

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