[dragontamer]

> The volume on US treasuries is like half a trillion a day, so it shouldn't take very long to liquidate even large amounts of USDC's holdings..

US Treasuries are down like 10% this year.

Yes, a bank can liquidate, but at a loss, a 10% loss in this case. The bank would rather hold-onto maturity, which could be 30-days or 90-days for some of the shorter bonds.

[thebean11]

Short term US treasuries specifically. They are pretty insensitive to interest rate changes since they are close to maturity.

[dragontamer]

6-month US Treasuries were 0.36% APY on January 19th, 2022.

1-month US Treasuries are 1.13% APY today, June 14th, 2022.

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So if you had bought a 6-month US Treasury on Jan 19th, you'd have a 1-month Treasury with .36% APY.

That's worth much much less than the current 1-month US Treasuries that are available, so you'd be forced to sell at a loss if customers requested their money back.

[thebean11]

> That's worth much much less than the current 1-month US Treasuries that are available

It's not 10% less, or anywhere close to it. You are only missing out on roughly (1/12) * (0.0113 - 0.0036) * (treasury amount) vs a 1 month treasury bought today..I'm having trouble finding a price chart for 1 month treasuries.

6-month is obviously more sensitive to the rate drop than 1 month, but the 10% number you are referencing is almost certainly for long term treasuries, not short term..

[dragontamer]

BND is down 12%, BSV is down 6.5% YTD.

BND is not "just" long terms, its a mix of all kinds of bonds. BSV is a mix exclusively of short term (~5 years or less).

VBLAX, Vanguard's long-term bond ETF, is down 23% YTD.

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Given how BND is largely composed of a mix of US Treasuries (of many different maturities), I think the 10% quickie estimate I gave earlier is correct. I'm buying/selling these things in my portfolio, so I've got a good idea of how they're performing.

[thebean11]

Short term for treasuries is generally considered <= 1 year, BSV is only 1 to 5 years.

I just looked it up, Circle says they only hold treasures that mature in <= 3 months, so yeah I think even 6.5% is a massive overestimate to how volatile their treasury portfolio is..probably more like <1% which is easy to cover if they just hold a tiny bit of the deposits in cash..

[dragontamer]

> Short term for treasuries is generally considered <= 1 year, BSV is only 1 to 5 years.

BSV is literally named "Vanguard Short-Term Bond ETF".

That being said, the only "standardized" terms I'm aware of are Bills (less than 1 year), bonds (greater than 10 years), and Notes (1 to 10 years).

In any case, it is clear that BSV is considered short-term by Vanguard and its investors. So I'm more than willing to believe in Vanguard's language over yours.

[FabHK]

I'd assume short term is 3 years or less, so make it a 2y duration on average, and assume rates went up by 2%, then we are talking about a 4% loss, not 10%.

Still, previously I didn't want to hold USDT anymore; now I don't want to hold USDC anymore either.