[neckardt]

My understanding is that lack of trust in Tether actually makes Tether money. First a few things to note:

- Tether sells 1 USDT for 1 USD

- Tether will buy back 1 USDT for 1 USD

- Tether is also traded on crypto exchanges

When people start to lose trust in USDT, the price of USDT on the crypto exhanges drops. Lets say 1 USDT becomes worth $0.99 on the market. Tether then buys USDT on the exchanges for $0.99, even though they had previously sold that USDT for $1. They have just earned $0.01 on every USDT bought.

This accomplishes two things:

1. This pumps the price up so Tether doesn't fully collapse on the market

2. Tether makes money

Tether doesn't need to keep one USD in reserve for every USDT out there, they just need to keep enough that if the prices start to drop they can buy back USDT for cheaper than they sold it for and prevent a full bank run.

As long as there's a cycle of people periodically losing trust in USDT, Tether skims cents off of the trading market at high enough volume to pay their employees and make a tidy profit.

[tsimionescu]

Tether loses money when buying USDT back, at whatever price. Sure, as long as they are buying it back at a smaller price than they originally sold it, they're still ok - but it's not in Tether's interest to give away its cash for USDT (since there are much better ways to make money off of cash than trading it for less than 1 cent). Especially since Tether can just print more USDT whenever they feel like it - it's not like they need to buy USDT before they can sell it again for 1$.

[fghjkjhd]

why would i sell my USDT for .99 on an exchange instead of USD1 directly to tether?!?!