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Comment by kasey_junk | Hacker News Reader

That’s a huge deal for something that’s supposedly pegged.

If that were to happen to a traditional money market account it would be front page financial news.

Unless it goes below 0.92 USD (all time low of USDT, in 2017-2018, which it recovered from), I'm not sure it's as big deal as you make it sound like.

It will go there. The ponzi will break sooner or later. The nice thing is, that the more it continues, the bigger the fall will be.

>The nice thing is, that the more it continues, the bigger the fall will be.

Why is that "nice"?

It's nicer than the alternative (to explode even later)

>The nice thing is, that the more it continues, the bigger the fall will be.

>It's nicer than the alternative (to explode even later)

These two outcomes are mutually exclusive. You're speaking nonsense.

Both outcomes are nicer than the alternative (all crypto-bros become billionaire and everyone else staying poor and being enslaved)

I would argue that means it’s not pegged (which is fine!). But people seem to think there is a peg on usdt and there isn’t, at least not as the term is used in traditional finance.

Going in with full naivety, assuming the company actually has enough USD to redeem every single USDT in existence, but it’s a slow, manual process only offered to big holders. Wouldn’t the peg still not always hold in a volatile situation, like the current one? All that’s required is enough people not trusting Tether Inc.

“it’s a slow, manual process only offered to big holders”

Is the most charitable reading you can give and I think it’s outside of peoples expectations of what a peg means.

I’m actually quite fine with tether having whatever redemption rules they want, but that is not the traditional definition you’d see with something like a money market. I would never say usdt is pegged to the dollar.

So instead of a peg [0], it’s kinda like a crawling peg [1], or an even better match, the linked exchange rate system in Hong Kong [2]

[0]: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system

[1]: https://en.wikipedia.org/wiki/Crawling_peg

[2]: https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in...

Money market funds sometimes are priced above or below $1 due to market conditions. It’s rare but does happen.

If a large money market fund is priced 2.5% away from peg I suspect it is either a huge arbitrage opportunity that will get arbitraged in minutes if not seconds, or a strong signal that this fund is toast. Not an expert, would be happy to be refuted.

https://www.investopedia.com/terms/b/breaking-the-buck.asp

That's precisely how you would keep a peg: let the market enforce it and bear the brunt of the speculative action, then intervene brutally to restore the peg and reward those who held the line with profits. If you do it a few times, nobody will bet against the peg ever again.

Of course, this is all predicated on you actually having the massive assets required to fight a speculative market. That shouldn't be a problem for something like USDT which should be backed 1:1. So let's sit back and enjoy some price discovery (though I wouldn't be caught dead in USDT).

> which should be backed

I think the major issue is that there seems to be a lot of evidence that it isn't.

> That shouldn't be a problem for something like USDT which should be backed 1:1.

What if we all know it’s backed 1:1 by junk bonds?

Reminded of when the UK was unable to defend the stablepound against, er, Soros: https://www.investopedia.com/terms/b/black-wednesday.asp

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