[mister_tee]

I enjoyed this meme on Twitter (saw a link to it, not familiar with any associated authors/commenters/threads): https://twitter.com/dgntec/status/1634621865485271041

Accessible description / save-you-a-click:

Left image: USDC: kitchen cabinet with a glass door; you can see on the inside a stack of dishes has mostly toppled, held up only so long as the door is closed

Right image: USDT: photo of kitchen cabinets with completely opaque wooden doors

(edit: spelling)

[wmf]

That meme is a great distillation of the cognitive bias at work here. USDC operates transparently so when there's a minor problem they admit it immediately and publicly, giving people something to overreact to. USDT is totally opaque and has outright lied in the past, so they keep saying everything is fine and people have no choice but to either trust them completely or don't touch crypto.

[drawkbox]

Same thing happens when autocracies with closed systems and closed markets who pump propaganda about Western liberalized democratic republics with open markets and open systems.

The systems that highlights and addresses problems with more transparency is the one that will be more robust and not blow up, adjustments can be made and it is a pressure release valve.

[m00dy]

I understand but as far as I know, Tether has never refused a single customer for redemption.

[lozenge]

Neither did SVB until one day, they couldn't any more.

[m00dy]

yes but crypto has had billion melt downs SVB has only one.

and the other thing is that. If I had a business like Tether, believe me I would be counting every single cent in my holdings 7/24/365.

[lokedhs]

Have they ever accepted any redemption?

[londons_explore]

They redeem via a trading bot on most of the popular markets.

That's what keeps the price 1:1.

[yieldcrv]

the trading activities are separate from the redemption window

[londons_explore]

No - thats what I'm saying. They use a bot to buy/sell USDT to keep the price 1:1... And then they redeem anything purchased by the bot.

Effectively, they will redeem only for themselves.

Could be a neat way to do no KYC or ownership verification or dealing with messy bank transfers to dodgy people, etc. Hides the location and/or existance of funds from redeemers and those able to trace money movements too.

Or could be a way to hide a delicately balanced stack of cards...

[yieldcrv]

I don’t find market making or liquidity providing to be controversial

it still requires capital from their reserves to do what you describe, purchasing USDT for $1 each

the redemption mechanism is an incentive on its own. when Tether is below $1 purchase it yourself (pushing up the price of Tether) and go to the redemption window and get $1 for it regardless.

[m00dy]

you mean arbitrage?