The big deal is that it's highly likely that Tether is backed up by way less than 83 billion in actual dollars. Let's say, for argument's sake, that they were 50% backed a week ago and had $40B in actual dollars.
If $10B was pulled out, that was into actual US dollars or equivalent, meaning they now have $70B backed up by $30B. If another $10B drains in the next week, it'll be $60B vs $20B. This incentivizes other holders of Tether to also pull out so they're not left holding the bag (= Tether's stash of dodgy loans etc), basically kicking off a slow-motion version of the same death spiral that we saw for UST/LUNA, until Tether runs out of assets and the whole crypto economy goes poof.
Just yesterday the Financial Times ran this story: "Binance promoted terraUSD as a 'safe' investment just weeks before the stablecoin and its counterpart luna collapsed in a $40bn wipeout that shook the crypto industry"[0]
thematrixturtle|3 years ago
If $10B was pulled out, that was into actual US dollars or equivalent, meaning they now have $70B backed up by $30B. If another $10B drains in the next week, it'll be $60B vs $20B. This incentivizes other holders of Tether to also pull out so they're not left holding the bag (= Tether's stash of dodgy loans etc), basically kicking off a slow-motion version of the same death spiral that we saw for UST/LUNA, until Tether runs out of assets and the whole crypto economy goes poof.
cowtools|3 years ago
logifail|3 years ago
It's not yet like Luna.
Just yesterday the Financial Times ran this story: "Binance promoted terraUSD as a 'safe' investment just weeks before the stablecoin and its counterpart luna collapsed in a $40bn wipeout that shook the crypto industry"[0]
[0] https://www.ft.com/content/d459f435-edff-412c-85a5-0961d50ab... / https://archive.ph/OQmjW