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55% of all Tether, $25B, were created in 2021

50 points| daolf | 4 years ago |tradingview.com

66 comments

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[+] tsujp|4 years ago|reply
1 USDT is meant to represent 1 USD in the bank in the custody of Tether.

In 2019 Tether was proven to be only 74% backed by fiat and fiat-equivalent assets: https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7... This means it's not 74 literal cents per USDT but some proportion of a liquid asset and fiat.

Tether has long since refused to release any concrete of proof of reserve and even when they were heavily pressured to only admitted to a lack thereof (74% in 2019 and that 74% isn't even fiat-only).

Tether is nothing but bad for the crypto-space as when it eventually DOES collapse a lot of people are going to find themselves holding something, USDT, which isn't as backed as they thought it was. Would you give me a dollar right now if I gave you back 74 cents?

The only sensible stable crypto asset is DAI from the MakerDAO which has been battle tested and proven under the worst possible scenarios (2017/2018 bullmarket crash) where it still held it's peg.

I don't know how this extends to USDC etc but for USDT I wouldn't touch it with a 20 foot pole.

[+] yrral|4 years ago|reply
If it was actually perceived as risky, wouldn't it be trading at a discount to USDC? However if you look, you can currently convert a billion dollars of tether into USDC with _positive_ slippage: https://1inch.exchange/#/USDT/USDC?network=1 For DAI, as of posting, you can covert 10 million.

So to answer your question, yes, I would be happy to take you tether for USDC or DAI

[+] tiborsaas|4 years ago|reply
I'm no crypto expert or remotely experienced with finance, but my understanding of USDT is that it's simply a bridge to simplify moving funds between fiat and crypto. It even simplifies converting one crypto to another where there is no direct route on exchanges.

It's much less volatile compared to other coins and if it fluctuates a bit that's not really an issue in the short timeframe I do my conversions.

[+] mantap|4 years ago|reply
74% backing sounds pretty good for a cryptocurrency. I wouldn't touch tether myself as USDC is better in every way, but I don't think there's going to be the fireworks that people predict if the peg falls only to 74 cents.
[+] postalrat|4 years ago|reply
Crypto fans will write a few articles why it doesn't matter tether is backed and suddenly it won't matter.
[+] jariel|4 years ago|reply
BTC has nothing backing it whatsoever. The crypto space doesn't seem to mind.

The minds managing the crypto space have never depended on reason or financial integrity, just a means to excite the masses onto their scheme.

[+] makomk|4 years ago|reply
I was curious how this compared with USDC, the smaller but also more reputable tokenized US Dollar service affiliated with Coinbase. It looks like 65% of that was created in 2021.
[+] PKop|4 years ago|reply
Yea I'm not sure why we should be surprised that in another bull market where BTC is well above previous all time highs and DeFi protcols have billions in deposits, that "most" of Tether would have been minted this year. It's like they haven't considered that if Tether was theoretically 100% above board that quoted statistic would still be true. "What would legitimate look like?" in other words.
[+] zilebune|4 years ago|reply
Perhaps a controversial view, but why does this matter?

I was having this debate with a friend a few weeks back.

Tether was the first crypto coin pegged to a fiat currency, but now there are so many more: USDC, BUSD, TrueUSD, DAI, GUSD...and that's just a fraction of the ones pegged to $USD.

The entire market's _daily volume_ is 5+ times the entire Tether cap. Plus you have Automated Market Makers (Uniswap & co.) where you can trade directly between crypto pairs and even Binance/Crypto.com debit cards which ensure a closed circulation loop for stablecoins within the exchanges.

If it turns out that Tether is printing USDT without backing anymore how would this impact the crypto market? I expect another USD stablecoin would just take its place and life would go on.

Crypto trading/hodling is just too irresistible at this point. The last _3 months_ saw $1Tn of new money poured into crypto from all sides.

I would be curious to know what does HN genuinely think about this USDT controversy, if possible without the shilling and emotion?

[+] ameister14|4 years ago|reply
Did you follow the archegos capital implosion? That's what happens on a smaller scale than tether. What you'll get is a price drop, a pretty significant one, because it will happen suddenly.

There is no foundation for the current prices of cryptocurrency, so if people get the impression that its propped up by frauds it runs the risk of dropping precipitously.

Also, I think you underestimate the follow-on effects of 20% of a market's daily trading volume pulled out of a market all at once.

[+] mustafa_pasi|4 years ago|reply
The dangers from Tether is as I understand it:

1. People holding USDT realize they are holding nothing. The potential losses could scare crypto holders and create a bank run to sell for FIAT.

2. The demand for BTC that drives up the price is inflated. Bitfinex does not actually have anything valuable to be exchanging for BTC. This would certainly cause the current bubble to pop.

In the end every holder wants to know when the next pop is going to happen, no?

[+] robjan|4 years ago|reply
> The last _3 months_ saw $1Tn of new money poured into crypto from all sides.

Market cap is based on the price of the last transaction multiplied by the number of coins. It's not related to the total capital flow.

[+] graeme|4 years ago|reply
> The last _3 months_ saw $1Tn of new money poured into crypto from all sides.

What’s the source on this? It seems implausible, given the commotion about Tesla’s comparatively tiny $1.5 billion entry.

[+] zilebune|4 years ago|reply
Sorry, for some reason I can't edit my own comment, so adding a new one. The $1Tn figure is Market Cap; I was looking at these charts but indeed they show market cap not capital influx:

https://coinmarketcap.com/charts/

[+] jcpham2|4 years ago|reply
It’s too far gone now to matter. Initially we cried scam but there’s too much liquidity and too many clones to stop at this point.

25 billion is a drop in the bucket. USDC pays higher interest than <insert bank name>

[+] mannykannot|4 years ago|reply
If you, personally, do not care what the exchange rate between Bitcoin and USD is, then maybe you need not be concerned over whether a Tether bubble is going cause that rate to crash. I guess, however, that a large majority of those holding Bitcoin care a good deal about that rate, and if so, then a crash in that rate will have a significant effect on how Bitcoin is viewed and used. The question for you to ask yourself, then, is whether those changes will adversely affect whatever it is about Bitcoin that you value.
[+] Geee|4 years ago|reply
That just shows how much money flows in cryptocurrencies. Tether and USDC represent tokenized dollar deposits on exchanges.
[+] heterodoxxed|4 years ago|reply
It's incumbent on them to prove that. So far, there is little evidence that they are backed by anywhere near the dollars they claim.
[+] jonplackett|4 years ago|reply
It seems to me the debate is no long whether tether is a scam, it’s just if anyone cares it’s a scam.
[+] Black101|4 years ago|reply
Almost as bad as some governments, the way they are printing money...
[+] mannykannot|4 years ago|reply
So you are suggesting that bitcoin, far from having shed the problems of government-issued currency, is going through the process by which irresponsible governments can destroy a currency.
[+] delaaxe|4 years ago|reply
Those USDTs weren't "created" per se, they were just converted from regular USD which were created out of thin air
[+] mcherm|4 years ago|reply
Do you have any evidence that they were, in fact, created from USD? Given the strong incentives to produce such evidence and the complete lack of it I am highly skeptical.
[+] geonnave|4 years ago|reply
Serious question: what happens when I buy USDT using another currency than USD? e.g. EUR or BRL. How can USDT maintain its parity with USD under such circunstances?