As all mainstream cryptocurrencies were bleeding in the last few days, many crypto users decided to increase the share of stablecoins in their portfolios. As such, the FTX/Alameda collapse amplified all of the flaws of this very important segment of Web3.
Tether (USDT) exceeded Vitalik's expectations
For many crypto holders, U.S. Dollar Tether (USDT), the largest stablecoin by market capitalization, was a "safe haven." Users started aggressively buying USDT on centralized and decentralized exchanges. Ethereum (ETH) co-founder Vitalik Buterin appreciated the way Tether (USDT) has gone through recent cataclysms.
I have to admit, I've been very critical of @Tether_to in the past, and their transparency is still not nearly what I think an asset-backed coin should have, but especially given what's happened to so many other big-money hotshots this bear, they've exceeded my expectations!— vitalik.eth (@VitalikButerin) November 9, 2022
He admitted that USDT's transparency leaves something to be desired, but the coin and its issuer "exceeded" the expectations of the profound decentralization advocate.
It should be added that on Nov. 10, 2022, amid the market bloodbath, Tether (USDT) representatives released their periodic attestation.
New #tether attestation is out!! (As of 30 September 2022)— Paolo Ardoino 🍐 (@paoloardoino) November 10, 2022
As promised the CP reduced to 50m (0 as of now).
Increased US T-BILL.
60m more in exceeding reserves for a total of 250m.
Increased percentage of cash and cash equivalents to 82%.
Proud of the work of the team! 🔥 https://t.co/4t8UDwonHT
As highlighted by Paolo Ardoino, CTO of Tether and Bitfinex, Tether Limited increased its share of cash and its equivalents to a historical high of 82%.
Think twice before "shorting" Tether
Another Ethereum (ETH) veteran, Mikko Ohtamaa, CEO and co-founder of Trading Strategy and former LocalBitcoins CTO, admitted that it would take a massive amount of money to put Tether (USDT) in an FTX-style liquidity crunch.
1/ Based the latest Tether attestation, it holds $40B in the US Treasury bills.— Mikko Ohtamaa 🐮 (@moo9000) November 11, 2022
It would take $40B redemptions before Tether faces a liquidity crunch. pic.twitter.com/D38enMBffn
He stressed that in 2022, there are no markets in which whales can short USDT to make its issuer collapse. A well-balanced portfolio of reserves makes the entire system sustainable.
Regarding this pesky issue of transparency of Tether (USDT), its resources and operations, Mr. Ohtamaa highlighted that it increases over time:
Lying is becoming increasingly hard.
However, Tether (USDT) is still vulnerable when it comes to hypothetical regulatory attacks ("police shutdown") or potential deals between Wall Street investment banks.
"USDT is preferred by the market": Bitcoin OG Brad Mills
Bitcoiner and crypto educator Brad Mills agrees with Ethereans: Tether (USDT) looks so sustainable for him that its prolonged de-pegging from the USD price is next to impossible.
🚨USDT only dropped last night because someone attacked the peg to profit.— Brad Mills (🔑,🧀) (@bradmillscan) November 10, 2022
There’s no real risk of USDT having a sustained depeg because of these attacks.
During extreme events (Celsius, Luna, FTX) mercenaries manipulate the fungibility of USDT through DeFi pools like curve. pic.twitter.com/j3rGoE2MLf
Tether (USDT) can de-peg only briefly, being targeted by coordinated attacks. As covered by U.Today yesterday, on Nov. 10, 2022, an Alameda-tied address allegedly started to "short" Tether (USDT) through Curve and Aave pools.
However, USDT promtly recovered to its "normal" $1 level. By contrast, algorythmic stablecoins FRAX, MIM and, in particular, Tron's USDD witnessed more remarkable damage, as well as low-cap Euro-pegged stablecoin Eurocoin (EUROC).
Mr. Mills appreciate the proactive work by Tether Limited and the Q4, 2022, structure of their rebalanced portfolio of reserves:
Through this extreme contagion in both macro & crypto markets, Tether has been ahead of the curve, reducing their commercial paper & increasing their US Bonds.
As such, Tether's (USDT) operations during the ongoing market insanity are recognized by opposing groups of Web3 actors.