[nl]

Why the specific criticism of stable coins?

Seems to me that Tether and USDC are both different cases for one thing, and secondly why are they specifically "gasoline" rather than the incredible (and misleading) returns advertised by some DeFi protocols?

[smoldesu]

Stablecoins have to be backed by something, and pretty much every example I've seen has zero accountability for whatever the asset is leveraged against. Anyone can make a coin that holds roughly the same value, but it's a lot harder to ensure that you have the liquidity for your users to cash out whenever they please. It's a lot easier for a government to handle that sort of thing.

[nl]

Tether reports on what it is backed by: https://tether.to/en/transparency/#reports

USDC reports on what it is backed by: https://www.circle.com/en/usdc#transparency

There is a fair argument that USDC backing assets are higher quality than Tether, but in both cases it is not reasonable to say there is "zero accountability for whatever the asset is leveraged against"

I think this is very different to algorithmic stable coins which are backed by the value of crypto assets. There are dangers there that aren't well modeled.

[smoldesu]

Transparency != accountability. These currencies can put whatever stats they want on those pages, but there's nothing holding them accountable for those figures.

[ufo]

Tether is gasoline they print new tethers out of thin air and use them to purchase bitcoin in the market, propping up the price of bitcoin.

[nl]

I think this was a fair criticism of Tether specifically a few years back (and one of the reasons I said "Tether and USDC are both different cases for one thing").

I don't think there is any evidence this is happening now.

In particular the independent reporting shows evidence of assets backing it[1][2]

[1] https://tether.to/en/transparency/#reports

[2] https://assets.ctfassets.net/vyse88cgwfbl/1np5dpcwuHrWJ4AgUg...

[rich_sasha]

The report is still quite light on details. They list "commercial paper" under cash and equivalent... Which could mean they lend money to apple short term and get 0.5% interest, or it could be highly speculative lending to Colombian agricultural companies.

Either way, what Tether does is essentially banking ("give us money, we'll hold it and, pinky promise, if you want it back, you'll get it no problem"). The bar for bank transparency and regulation is far, far higher than what Tether presents.

[ufo]

Another crucial detail is that these attestations are not an audit of assets vs liabilities. In the past, Tether has been caught borrowing money in the day of the attestation to give the impression that there's more in their bank account than there really is.