Hacker News new | ask | show | jobs
by bavell 1702 days ago
Exactly. I can't wait for the scam that is Tether to become unraveled. I always thought it was hot garbage since it first came out and I read up on it. Iirc it's totally centralized and there have always been questions over whether they had the $$$ to back up their coin.

If tether disappeared overnight I'm not sure if it'd even affect the rest of the market given that it's inevitable failure is probably baked in or at least wouldn't be a huge surprise.
2 comments
phyalow 1702 days ago
In traditional finance their is a concept of HQLA (High Quality Liquid Asset) collateral, this is mainly things like treasuries, JGB's, Gilts etc. Tether is for all intents and purposes HQLA in crypto, layers of rehypothecation and leverage are built off the back of Tether deposits, this is between exchanges, leverage/margin exchanges extend etc.

Tether suddenly becoming impaired IMO would certainly have massive effects on the rest of the market, you cannot remove ~$70b of HQLA from a system worth ~$1-2T and not have negative effects.

Following some sort of credit event, I expect a period of massive volatility (hours to days), I would expect USDC to trade at a premium for several days, ETH and BTC would whipsaw, but likely end up at higher relative levels as tether holders flee/get liquidated and in turn bid up (relative) "safe haven" assets.

10's of DEFI protocols would go bust due to the peg breaking and AMM /Yield farms would likely also see massive loss of AUM and substantial impermanent loss applied to LP positions.

It will be messy, but necessary for the long run health of the system. Anyone holding tether or who has long exposure to tether at this point is taking hefty credit risk (a risk they are not being compensated for - which is a total amateur move) with total disregard for the many blatant red flags. Their is very little opportunity cost for using something like USDC over tether, it should be a simple decision for most users...

link
lugged 1702 days ago
Usdc has the same problems as tether irrc. BUSD is almost completely dollar backed, usdc still hold a lot of paper.

https://blog.seedly.sg/best-stablecoins/

Fwiw, I still use tether daily, the markets are far more liquid. If I'm holding it overnight I convert to busd or hard currency.

link
smabie 1702 days ago
If tether majorly depegs, let's not kid ourselves, it would absolutely devestate the crypto ecosystem.
link
lugged 1702 days ago
I honestly disagree. Tether is easily replace by busd. The markets are already ready for it.
link
smabie 1701 days ago
What would happen to all the future and swap denominated USDT contracts? What would happen to all of the AMM pools? What would happen to all the firms who keep tether reserves to trade with?

It would be a blood bath. Almost everyone who works professionally in crypto agrees with this statement.

Moreover, BUSD is kind of a joke and the only thing I ever use it for is trading a couple BUSD denominated binance swap products.

link
bavell 1700 days ago
I for one can't wait to see the blood bath from crypto "professionals" who foolishly got tangled up in tether!
link