USD itself is an interesting stablecoin, algorithmic in nature with a board able to make decisions to change the algorithm. It is not pegged to an asset, rather it attempts to be pegged to an economic state, primarily an inflation rate, using issuance and purchase of other assets. It has failure modes as well.

Note that algorithmic and reserve based crypto stablecoins are both exposed to this, since one is backed and the other is pegged to it.

So if you want to avoid that, you need to peg your cryptocoin to something without that, i.e not a fiat currency. This is hard to do with collateral, some gold backed coins try. Pegging a stablecoin to some commodity or asset or index or "basket" algorithmically is much easier, if somewhat less stable depending on the system that is built to do it.

Except is that really the issue? We're not trying to worried that dollar slides and hence the stablecoin is worth less. We're mostly worried that there arent dollars backing the stablecoin to begin with.

People are worried that the dollar slides, which was a big motivator for bitcoin in the first place. But my point is simply that the dollar is an algorithmic asset who's algorithm is governed by a governance body and has a targeted value based on economic factors, and if you don't want that, you should peg to an asset that does not have those properties.

If you want to do backing with dollars it's easy, just spin up a corporation, keep dollars on a balance sheet and you're done. Doing it with other assets if you want requires vaults and things, it's much easier to do it algorithmically, and the only reason reserves are easier with dollars than with other assets is that other assets actually exist, dollars are just a ledger in a computer, again, controlled algorithmically and governed by a board.

Why don’t any entities exist that do this “easy” method? Like you said, it should be straightforward. Well, because of their #3, stables want to make more money from their cash and aren’t satisfied with just tx fees.

The extent of the detail that is given in the latest report is that their backing assets are "limited to cash and short-dated U.S. government obligations".

I want a “stable token” that represents barrels of oil, wheat, etc or physical gold, silver, etc.

The argument against the gold standard is that there isn’t “enough” to represent money — but I think we’d gain a lot of stability if prices were denominated in a basket of commodities.

Maybe still less than physical commodities, but let's not pretend crypto is "free" and easy to store and takes up no space.

I literally have never heard this argument against the gold standard.

What amount of gold would be needed for it to be able to sufficiently "represent money"?

And why do you need gold to "represent money" anyway? Isn't gold itself money under the gold standard?

This is what William Jennings Bryan's "Cross of Gold" speech was about: he was pushing for the free coinage of silver at a ratio of silver to gold of 16 to 1. This would have increased the money supply (silver as well as gold would be money) and replaced a deflationary environment to an inflationary one. Now, you can argue that this proposal was a gimmick and argue about whether it would have worked. But the point remains that the gold standard as implemented in the 19th century was a disaster for debtors and farmers had to borrow every year, unless new gold was discovered somewhere recently.

https://www.publish0x.com/journey-to-the-cryptocurrency-ocea...

I hadn't heard anyone seriously say that. What amount of additional gold should be mined to fix this alleged problem?

Since there are 84M Litecoin, is LTC 4x better than BTC with 21M?

https://www.investopedia.com/articles/investing/040515/what-...

https://markets.businessinsider.com/news/currencies/tether-c...

You are probably going to respond with the "markets can stay irrational longer than you can stay solvent" meme but I don't see any downside to this trade other than the opportunity cost of investing your dollars somewhere else. There is no scenario where USDT goes to $10 and you lose your money.

Making money as a result of knowing something is fundamentally worthless is actually quite difficult.

I too encourage bearish folks to short Tether. Otherwise, there's simply nothing else to back their claim other than their uninvested belief.

You may be wondering how the price of the perp tracks the price of the asset if there is no underlying asset to moor the price to? It's done through what's called a funding rate. Basically, there are two prices relevant to a perp contract: the price of the perpetual contract on the exchange and the price of a reference index that is meant to accurately represent the price of the asset on a fiat exchange.

The price of the perp should follow the index price, but there are often deviations. That's where the funding rate kicks in. To moor the price of the perp to the price of the underlying asset, traders pay/receive a funding rate (think of it like an interest rate) every x number of hours (x is determined by the exchange).

If the contract price is higher than the index price, that indicates there is excess demand for the contract on the exchange and, thus, traders who are long the contract have to pay a funding rate to those that are short the contract. That is because the system is trying to incentivize traders to sell (short) the perp in order to move the price down, in line with the reference index. The further the perp price deviates from the index, the higher the funding rate. If the price of the perp is below the index price, the funding rate flips negative. That means that those who are short the contract have to pay a funding rate to those that are long, thereby creating incentive for people to buy the perp and raise the price.

  > FTX USD
  > FTXUS USD
  > Binance USDC
  > Binance TUSD
  > Kraken USD
  > Bittrex USD

In regards to those pairs being used as reference prices, there's no chance they freeze prices just to stabilize the derivatives. Open interest on tether is only $328m on $73b Tether outstanding

Sorry for my naive response.

Which product exactly are you speaking about? Could you link to the product and/or exchange where "USDT perpetual futures" are traded? I can see BTCUSDT futures (but then, you're taking another risk on BTC itsself sinking), is there a way to short-USDT-long-fiatUSD?

2) Use collateral to borrow 1M USDT from AAVE/Compound/whatever;

3) Trade 1M USDT for ~1M of some USD-stablecoin you trust (USDC?);

4) Wait for USDT to crash;

5) Buy 1M cheap USDT from decentralized exchanges (using the USDC you kept aside), which will cost you less than 1M USD;

6) Pay back loan (keeping the difference as profit) and get back your collateral.

Shorting comes with interest fees for the borrowed asset. If Tether holds off a collapse for a few years, that can get substantial.

No fucking thank you.

2. Counterparty risk exists in every traded market, not just crypto.

It's clear that you and most of the critics here don't even know the basics of market structure, which should cast doubt on your claims. I don't know any other field in which you can provably not know anything about a topic and yet be taken so seriously than in crypto, with both bears _and_ bulls.

The risk of a Tether collapse is knowable?

> Counterparty risk exists in every traded market, not just crypto.

Sure, and I’d avoid any of them whose daily operations are based heavily on a known fraudulent actor, too.

It is possible (even if unlikely) because cryptocurrencies backed by absolutely nothing have value - and arbitrary value at that.

To make it happen Tether could announce they are unpegging and will spend 1Bn to buy back tether at any market price on exchanges. The gambling masses join in. Suddenly Tether is another mooncoin.

On an unregulated exchange where the operator: can see your stops, knows your margin/liquidation price, and can manipulate the price/order book to liquidate you and take your money? I think I’ll pass.