Is there a way to bet against Tether?
https://fakemoneynews.substack.com/p/shorting-tether-for-fun...
HN discussion: https://news.ycombinator.com/item?id=34299618
The only counterparty risk is the collateral that you use. Ether, BTC, usdc, etc. Some exchanges also support fiat currencies (eur, usd)
Some hedge funds have been running tether shorts for a long time, maybe they cashed out when the rates spiked, if not they're just losing money.
There's nothing new in this report. Tether/Finex's founders are well known for many years
Also FYI, tether has been able to redeem > 20 billion$ in a few days, something that I am not aware of ANY other company, not even banks, being able to do - and def without CB/govt support
That's not really painting an accurate picture. If Tether goes to 0 (you win the short) there's a strong possibility your counterparty cannot pay you. So, you're either wrong and lose it, or, you're correct and lose it. That's not the making of a good trade.
That's the only way I can think of to avoid crazy counter party risk.
What kind of an impact are we expecting on, say, Coinbase?
On top of that, Coinbase needs a stable coin to operate at any non-trivial scale.
I'd say the impact would be severe. That is unless crypto investors just pretend nothing happened, and some other bullshit stable coin immediately takes care of the liquidity issue, which I'd call likely.
As to it going up today, it's still a 20b company with huge operational costs and no profits operating in funny money world full of scams, regulatory risk and having very little growth potential (after 13 years of crypto there is still no use case other than going around or breaking the law and it already reached its Super Bowl ads state so it's not like any more adoption is likely).
Yes, you already missed the biggest gain as it's already worth about 25% of what naive public paid but there is still one way to go.
1) Deposit any other stablecoin into AAVE/(a decentralized lending platform) as collateral, borrow USDT from there, & sell USDT for another stablecoin.
This method (semi-unfortunately) allows for rehypothecation: If you're ultra-convinced USDT will fail, it makes sense to do the above sequence again, this time using the received stablecoins that you now have from selling USDT. The risk is massively increased with each iteration of that sequence.
2) Insurance contracts, wherein you deposit funds into a pool that watches USDT's price. If the peg breaks, the funds from the other pool that bet against you will be used to pay for the rewards, and vice versa.
Y2K finance has this in place, wherein there are 2 pools to choose from for each stableasset: One that pays out if the peg stays stable, and another if the peg breaks. This method is great for insuring stableasset values, & helps to provide downside protection.
The lack of a good way to short Tether with a reliable counterparty is a major reason why Tether has lasted as long as it has