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Comment by purpleblue | Hacker News Reader

If you own Tether right now, and you don't liquidate immediately, you 100% deserve to lose all your money. This thing is going to collapse. There's no reason why Tether would keep its holdings secret unless it's hiding a secret. So be warned, if you don't want to suffer the same fate as Terra you need to liquidate right now.

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Very few people hold Tether so it’s not a very helpful warning: most ”USDT” exists within exchanges and is used to transact.

The Luna fiasco was a consequence of Luna specifically encouraging people to hold UST, encouraged with unsustainable incentives. That dynamic doesn’t exist in the context of USDT, there’s no benefit to holding USDT.

The problem with USDT is that so much of the current cryptocurrency market has been propped up by USDT that probably isn’t backed by any real assets.

Tether print $1bn of USDT -> buy $1bn worth of BTC on an exchange that uses USDT (e.g: their own…) -> price goes up and increases the market cap by orders-of-magnitude more than $1bn.

If you have exposure to the cryptocurrency market (whether you hold USDT, or BTC or own $COIN stock) and tether blows up, you will very probably be hurt in the fallout. Buying BTC with any USDT held is a false sense of security.

If you don’t want to be exposed to the tether blowup contagion, sell everything now into cash-in-your-bank-account (not “cash” on an exchange) and wait.

Want to buy a USDT put? I'll send someone to meet you in SF. $10k min, if you're okay with in-person. Premium discussed when you suggest expiry date.

If you want the smart contract, I'll do a $25k min. Once you give me the money, I'll do this:

1. Load a smart wallet with 1.2x equivalent value of ETH (which I'm long)

2. Tie it to a smart contract using a price oracle that will liquidate the ETH if the ETH/USDC price (using some combination of high-volume exchanges) drops to 1.01x of the amount of USD you should get

3. At any point of time, you can transfer in your strike USDT to exercise the option and receive USDC in return

This way I get to be long ETH and you get to be short USDT so long as you trust USDC (which is audited)

If Tether blows up, all of the exchanges with USDT pairs will be holding bags of various sizes. Where do you expect one would be able to redeem the USDC without significant risk of the exchange folding before paying out your USDC redemption? If the past is anything to go by, in quick order, exchanges will limit withdrawls ("cash" balances included).

You could mean two things:

1. I won't be able to liquidate the ETH to USDC and transfer it to you => We can force me to liquidate using a DEX or Uniswap pool. Alternatively, if you're very worried about this, I'll just charge a higher premium and post USDC into the account. That's just a pricing problem

2. You won't be able to redeem the USDC I give you => You'll have to trust Circle here, yeah. If you don't trust their audits, we can use another stable coin, but I think USDC is more trustworthy than BUSD and there aren't pairs for ETH to very many other stable coins that have enough volume to keep the spread down so I can safely liquidate

USDC can be perfectly fine and 100% backed, but if the only places it can be redeemed at are exchanges, when shit hits the walls all withdrawls will be turned off (cash balances included). What makes you think USDC would be redeemable?

I would LOVE to buy a USDT put but I would only do it on a known exchange. Not some back-alley mechanism where I would likely get scammed. As far as I'm concerned, the entire crypto ecosystem is at risk, and all it will take is BTC below $15k to see a lot of fallout and collateral damage.

Expiry in 12 months 100K smart contract. Premium?

All right, I'm having someone price this. Want to meet in SF to chat?

It'll be in the range of $20k roughly. More if I can't find a way to do this whole thing without locking in the safe funds. If you're in and we can meet, I'll model more precisely.

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