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Comment by tzone | Hacker News Reader

People who have no idea how crypto markets work always get riled up by these tweets. Contrary to popular belief, there is generally huge demand spike for USDT when crypto market has flash crashes, not other way around.

More USDT got issued because there was opportunity to make 0.1-0.2% on each new USDT since demand for it was that high (i.e. people were paying real USD to buy USDT at a premium, imagine that).

USDT (and USDC) demand spikes during crypto crashes because people actually cash out to these instruments because they are so widely used and trusted by actual market players. People aren't cashing out of crypto ecosystem during most crashes, money actually stays in crypto networks.

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> Contrary to popular belief, there is generally huge demand spike for USDT when crypto market has flash crashes, not other way around.

This is not contrary to popular belief at all. Tether almost always prints a few billion around large pullbacks, and the cynical view is that this is to stabilize markets by buying the dip.

> More USDT got issued because there was opportunity to make 0.1-0.2% on each new USDT since demand for it was that high (i.e. people were paying real USD to buy USDT at a premium, imagine that).

Uh yeah this is not at all how stablecoin premia get arbed. If you'd like a real answer, I'd be happy to explain. But I get the feeling that you're pretty invested in crypto and just want answers which align with your beliefs.

While I am no huge volume arbitrageour/market maker, I actually make a living running arbitrage systems and market making systems specifically for stablecoins.

I do consider to know what I am talking about, considering my systems make hefty profits and have no real exposure to volatile crypto assets (or even long term exposure to crypto in general, my profits are in real world dollars). This is why I know that USDT has actual real utility and it is currently best instrument in its category. USDT is indeed somewhat shady but it’s premise and utility are all sensible and it is hugely profitable for its founders. They have zero reasons or incentives to do suspect things that could risk its peg.

If something goes horribly wrong for USDT it is going to be due to incompetence and not because of some long term planned con.

I'm not really sure what you're getting at here. If you're generating income but arbing stablecoins, then you know exactly what I'm talking about. I can say with near certainty that you have never, and never will, directly mint or redeem Tether...which proves my point.

> This is why I know that USDT has actual real utility and it is currently best instrument in its category.

I don't disagree at all.

> If something goes horribly wrong for USDT it is going to be due to incompetence and not because of some long term planned con.

You can't be serious...

Market making on crypto exchanges is difficult because of high fees, small tick sizes, and minuscule spreads. Of course you can get volume discounts, but still.

On which exchanges do you trade and do you rely on volume discounts to make profit?

What does any of that have to do with the discussion? That doesn't in any way address the issue with Tether's lack of transparency. The issue is whether Tether actually has the capital to back up it's stablecoin.

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