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Comment by iskander | Hacker News Reader

>a majority of exchange trading pairs are between currencies and USDT. (not financial advice)

Is that actually true? In my (limited) experience I have seen ETH and USDC much more frequently than USDT.

There also seems to be a recent migration to algorithmic stablecoins like RAI which aren't pegged to the dollar but are (supposedly) designed to limit fluctuation in value. I suspect that without regulatory action against both USDC and decentralize stable tokens that crypto would recover from a Tether collapse.

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My source was a cursory look at https://coinranking.com/markets but I admittedly could dig deeper to verify this.

I agree that prices would recover after a short term Tether-induced crash, and markets would almost certainly shift to DAI and similar decentralized stablecoins.

Wow, you're right, USDT is much more prevalent in the largest markets than I would have suspected. Is this a first mover effect? As far as I can tell USDT is the shakiest and least compelling stable.

There are a bunch of sketchy unlicensed exchanges that are heavily invested in utilizing USDT. The Tether meltdown should be quite the show. All of those outstanding balances have to be reconciled somehow. Or they'll just close up shop and disappear and years later people will maybe get a small % back, like with MTGOX.

As someone with ambivalent interest in crypto, it seems like a Tether meltdown might be healthy for the space.

It would wash out a lot of the accumulated speculative value and hopefully lead to a much more confident regulatory framework for the interface between blockchain money and real world money. It would also long-term strengthen fully decentralized aspects of the crypto ecosystem while flushing out those that don't really function independently of traditional finance but instead accumulate speculative valuation based on an unsafe interface with fiat and the financial sector.

Winners all around (except for crypto speculators)?

depends. It could ripple into the legacy financial system. If that happens, we could see some really onerous regulations that prevent innovation.

That's my worry about the integration of crypto into tradfi (via BTC ETFs, stablecoin savings accounts, &c). It's OK if crypto is a hellstorm of speculation because it rides on top of rapid experimentation. However, it's really not tolerable to have that much chaos actually affecting e.g. people's retirement funds. If crypto messes up main street then the regulatory hammer will be unfortunately well earned.

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