[phyalow]

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...

[lugged]

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.