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Comment by graeme | Hacker News Reader

This is all one big crash stemming from the Luna crash. Celsius had invested in Luna, lost some there and lost investors as well in the run for the exits.

One of Celsius’ shareholders and creditors is the stablecoin Tether. This broke its peg when Luna crashed, saw billions in outflows and never regained the peg. Been around 0.9990 for a month give or take when it used to hover a bit above 1.00

Luna crash hit a bunch of balance sheets, now Celsius has to recognize losses and fold. Question is who is next to fold? Probably Nexo, a Celsius clone. And Tether itself will be under immense strain.

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This is not a risk to Tether.

They can just issue more Tethers to cover any market turbulence so that the price stays stable. You need to understand that these drawdowns cause an inflection in demand that drives monetary energy into the asset class, ultimately causing more large corporations and institutions to enter the market and driving growth in the prices. This all raises bullish sentiment.

Totally unrelated, but I was broke and homeless and I trusted all my money to this guy Mike J from a comment in the YouTube video that taught me all of the above. I haven't heard from him in a while but that just means he's busy and I'm sure it's going swell.

Sigh, it's like you technology types still don't get it after all these years.

the *clap* future *clap* of *clap* money

The first half of your post might be the median crypto twitter comment.. must admit I almost felt for it.

I think it's a mix of things in this case. They likely lost money in Luna, and there is a rumor they have some ETH deposits stored in stETH (staked ETH that won't be fully withdrawable until at least 1 hard fork after the merge, and hence trades at a slight loss right now).

That’s their most visible difficulty but the heart of their problem is they were a ponzi. They promised rates of interest they could not earn in the marketplace, so redemptions were made from new deposits.

Luna sparked a run for the exits, hence they could no longer meet withdrawals from new money.

An additional concern about their stETH is whether they generating high yields via the dubious strategy of "recursive staking": stake ETH to get back stETH, borrow ETH using your stETH as collateral, stake the borrowed ETH to get more stETH (repeat). This is very sensitive to the stETH:ETH exchange -- there's some suspicion that Celsius is (or at least was recently) in danger of mass liquidation as the stETH:ETH exchange rate drifts downwards.

> stablecoin

Wouldn't it be more accurate to call these unstablecoins?

we shouldn't. Each of them has its own characteristic therefore the risk is different.

Tether didn't depeg. Since there is a 0.1% fee when redeeming Tether redeeming Tether can only bring up the price to $0.999. You need demand for Tether to increase to bring it up to $1.

https://coinmarketcap.com/currencies/tether/ claims it hit a low of $0.97.

It was lower than that. If you click on the Historical Data tab, you'll see they report a low of $0.9485 for May 12.

However, it may well have dropped even further depending on the exchange. These aggregators aren't a reliable source generally speaking.

Tether totally depegged. During the Luna collapse, it got down to .87 in 4 pool and a couple other DEX's. Technically, There is no 'Peg', it only exists because of arbitrage.

You seem to be forgetting about an exchange. Tether themselves exchanged USDT for USD. As long as they were able to continue honoring redemptions Tether remains pegged to the dollar. If I were to decided to sell 1 USDT for $0.50 right now, that doesn't mean that Tether has depegged. Just looking at the trading prices off of random exchanges doesn't tell the whole story.

Tether's direct redemption process is thoroughly opaque, limited to the big boys, and according to their own TOS only possible when they feel like it. So the price on "random exchanges" is the real price.

Great thing they are 100% transparent about redemptions they have honored! By the way, their terms state they don’t actually need to honor their redemptions with USD.

Here, have some Evergrande debt in exchange for your USDT.

I guess you understand the concept of arbitrage, but you don't know the word. Also, do you just regurgitate information you have previously heard or have you actually tried to exchange DAI for tether? You can't... and there is no auditing mechanism for Tether. They can print as much Tether as they want with no oversight.

They normally fluctuate a bit above/below $1. Show me a one month period when they’ve been this consistently below $1.

They may have had one longer period, when they lost their bank account access….other than that this is the record. It is novel

Okay, but that doesn't means that it has depegged. The deposit / withdrawl fees try and bound the value to be within 0.1% of USD.

Much of the actual “redemptions” happen on Bitfinex. Tether and Bitfinex have the same owners and they buy Tether in open market operations. You can see the accumulations in Bitfinex USDT wallets before they move to the Tether Treasury

The 0.1% is entirely theoretical. There has never been a documented Tether redemption so we have no idea what the actual terms are. We already know in many cases Tethers are created with no dollars changing hands: Celsius admitted to giving Tether Bitcoin for USDT as a loan

So without actual proof of redemption it’s naive to merely believe the stated terms of known liars.

The exchange prices are the real prices, and they haven’t been this low this long. Accompanied by outflows that is significant.

>There has never been a documented Tether redemption

Are you sure about that? There are several people on this site who have claimed their company has successfully redeemed Tether.

Emphasis on documented. We’re dealing with liars here. Their customers, who are small in number, are insiders with incentive to keep the music playing.

And I’ve seen some of these claims. Upon pressing they got their money via Bitfinex, not Tether redemption

Are you sure? I withdrew $xxx,xxx in late May and it landed in my bank account in days.

Withdrew from Bitfinex or redeemed at Tether? My point is people make these claims but no one has documented actually redeeming via Tether

It is funny to see that people think 0.9990 is a depegged. I'm almost sure in your machine learning models, you have much worse error rate :)

I'd guess the 0.999 price just indicates more selling pressure than buying pressure. The market cap of USDT has been trending downwards over the past 2-ish months.

Bingo. Tether defends the peg on their Bitfinex exchange. Then people arb the difference.

But right now people are hesitant to arb and so need a higher premium.

In low confidence systems, 0.99 can cause a bank run and eventual death spiral.

Take a look at the 3 month or 1 year chart: https://coinmarketcap.com/currencies/tether/

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