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?
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.
I've only followed Archegos from afar, but I see your point.
Basically it all boils down to people's trust in Tether, which if lost could cause a ripple effect and massive dump of USDT.
I think there are just too many unknowns to predict the market-wide impact, but Archegos is a good case study (in a way so is Ripple/XRP who went through a somewhat similar dump for different reasons a few weeks ago).
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?
It's interesting to think about how in the short term at least, people would sell USDT for anything, particularly BTC, ETH and other stable coins like USDT or DAI in this scenario, so I would expect a price spike in BTC if there was some critical event where USDT collapsed.
I guess it would reflect a false value of real liquidity in the whole crypto market so would have to depress BTC price for a time after the dust settles.
Dollars simply because it is an increase in demand. Of course, the relative dollar increase would be less than the USDT denominated increase. If USDT is pennies on the dollar, but these fractional dollars are bidding for BTC, BTC will go up in dollars.
Most people don't hold a lot of tether at any given time. If you bought any tether, you probably did so with the expectation that you will sell it for some other currency, either crypto or fiat, very soon.
This isn't true because with DeFi yields averaging in double digits, many people are holding all forms of stable coins to accrue this massive yield. Some people are entering the stable coin market with fiat simply to get this yield and have no interest in buying Bitcoin with it.
It is also irrelevant to frame the situation from what "most people" do when the question is what are the people holding all the minted tether doing with it? It does not disappear; if it is not cashed in for fiat then it is still being held by someone.
It is no secret that in a crypto asset bull market, people are "shorting" fiat to leverage long rising crypto assets. Additionally, just by virtue of overall liquidity entering the space longing assets there is demand for speculation and transaction volume, thus demand for fiat, across the space.
Various protocols on ETH are providing decentralized trading (Automated Market Makers), as well as other financial primitives like lending and borrowing.
So... yields accrue to those who supply fiat liquidity to borrowers (who yes, are speculating on crypto assets; "shorting" dollars). They also accrue to suppliers of liquidity to AMM's in the form of transaction fees to the various protocols. So, "monetary velocity" is high in DeFi and crypto now, so yields go to those enabling it.
When bear market comes, it is almost certain the double digit fiat yields will decline. But will they still be higher than pitiful bank and sovereign bond yields? Maybe. Also at that point perhaps lending crypto assets to those "shorting" ETH/BTC and longing fiat will mean decent yields on that side of the trade.
Ultimately these decentralized DeFi protocols are cutting vast layers of middle men where traditional banks and monopoly players take huge cuts of the overall economic value and velocity[1]. Instead of NASDAQ or Goldman Sachs or whoever to take a tiny cut of transaction fees from financial transactions, you do by supplying liquidity to decentralized finance platforms. So there is room for some decent yield to be sustainable. We'll see.
Who? The greater fool. Why? For the hopes of being able to sell to an even bigger fool eventually.
Crypto currencies do no business, and will never pay dividends, do stock buybacks, deliver interest, or perform any other function of actually generating yield.
You realize someone holds all of the Tether outstanding at all timed, correct? It doesn’t just vanish.
Further, there are many sites paying 12+% interest for people willing to deposit their Tether. This serves as an incentive for people to keep money in Tether rather than BTC/ETH or fiat.
I assume they are conflating the $1T increase of the total crypto market cap with how much new money has been poured in, however, that's just wrong - you need much less than $1T to increase the market cap by that much.
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:
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.
How? If a USDT-denominated exchange holds a certain amount of USDT and a certain amount of other cryptocurrencies, a change in the dollar value of USDT won't make them unable to make customers whole.
I've been following Elrond's progress for a few months now, with great interest. Some key core features:
- Their blockchain application itself id written in Go
- the Smart Contracts VM can run any language that compiles to WASM
- They have an extensive Smart Contracts Rust framework
- Elrond Standard Digital Token is also live on their Testnet and will also be launched in a few weeks, an equivalent to Etereum's ERC-20
- Also, their mainnet is capable at 16k TPS in current config, but it can scale to at least 263k TPS (figure from their pre-launch public scaling tests) which is waaay more than any other blockchain can do, including estimated throughput figures for ETH2
The two most recent features they plan to introduce in the next few weeks are SC formal verifications as well as meta-transactions:
However, I find most interesting about Elrond is they are planning to launch Maiar on the 31st Jan, a non-custodial wallet to make interraction with cryotos easy for the common folk and enable the onboarding of many millions new users.
That's a good question and I've seen it partially answered on their Telegram group: Maiar offers the option to back up your private key to an off-chain location (eg. Google Drive), so if you do choose to back it up it can be used to regain control of the wallet.
However, the app is still in beta, with GA date on 31st Jan via both Google & Apple stores, so I don't know precisely if its linked to the IMEI or if it fingerprints the phone in other ways to allow recovery of said wallet & prevent SIM takeover attacks.
Looking fwd to the official docs/FAQ addressing this topic as well, which I expect the team will publish along with the app release soon...
You probably need some 'cooldown time' to take the emotion out of that selection process :)
I also take thousands of pics when travelling...well used to anyway before Covid.
Then I store them all in some cold storage, like a backup HDD so they are handy, and look at them again after 1yr or so.
By then the important memories of that trip are cemented and I can easily delete the irelevant ones. By then you will know which are important and which need to go in the bin.
To paraphrase John Maynard Keynes: If you owe the bank 1$ million, it owns you but if you owe the bank 1$ trillion, you own the bank.
My guess is all banks have invested heavily in crypto by now (either over or under the counter - by proxy) and their investments are slowly but surely becoming too large to fail. If you can't fignt them join them, right...
This is great, thanks for sharing.
It makes me think that as engineers eager to fix problems or building stuff we sometimes go for the solution we are most used to from past experiences (eg. use a huge saw to cut through) instead of thinking of the simplest & most cost-effective (eg. use a chain instead).
Also using an alternative line an abrasive cable would not make sense either. If friction causes it to tear it would need complete replacing, which would be plenty $$$.
Instead, with a chain they just replace a couple of broken links and back on track. Which is apparently what they've done:
> Unfortunately, the chain actually broke during the cutting operation. “Approximately 25 hours into the cut, the cutting chain broke,” St. Simons Incident Response writes on its website. Luckily, there were no injuries and there was no damage to the equipment. The team simply fixed the chain’s broken link, inspected the other links for signs of fatigue, and continued on.
It's not just the immense traffic throughput, but also consider that some of these routers [0] can do line-rate MACsec encryption at 400Gbps on every port.
This kind of horsepower was unthinkable even a few yrs ago...
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?