FWIW, on Thursday I saw Tether (USDT) following the same pattern as TerraUSD: a small but persistent discount agains the dollar. I then sold/closed all my Tether longs. Not investment advice, DYOR.
I've been wondering, what's the downside with Tether shorts? If it remains stable, then the shorts don't move in value. USDT is unlikely to moon above $1.00. If it collapses then the shorts print money. All you pay is the fees associated with creating and maintaining the positions. Seems like it's all upside.
I'm assuming there's some counterparty risk with exchanges blocking trading of synthetic derivatives if the underlying asset is imploding?
On Compound, they have a frustratingly big collateral buffer, and have built up reserves over time from past liquidations, so it’s really hard not to get your collateral back.
(Caveat: To be sure, there could be a latent smartcontract vulnerability here.)
As in the thread, it is much harder to get a flash rally on decentralized exchanges, since you’d have to keep it up for enough blocks to trigger the Oracle.
If I were going to (further) short Tether, I would convert a bunch of USD to USDC and deposit it on Compound, then borrow ~65% of it back as Tether, which I would immediately convert to USDC then USD to invest more safely. You could also put some of than back into Compound to increase your USDC collateral buffer.