TetherThe world’s largest stablecoin Dollar After more than $ 3 billion of tokens leave the system in one day.
Cryptocurrency — means always worth $ 1 — Sinked to 95 cents On Thursday, I had a hard time getting back to the intended Dolpegg.
By Friday, Tether had once again traded firmly at $ 1 to ease investors’ concerns about the potential for crypto market transmission due to the collapse of the embarrassed stablecoin project Terra.
Tether has long wondered if there are enough assets to justify a peg to the dollar.
Tiffany Huggler | Bloomberg via Getty Images
TerraUSD, Or UST differs from tether in that it relies on a complex combination of code and sister tokens called luna to stabilize prices.It was also partially secured by Billions of dollars worth Of Bitcoin.
Tether, on the other hand, is to be backed by cash and short-term debt equivalent to the dollars deposited by the user. These assets are stored in reserves managed by the company of the same name.
It’s essentially like a crypto investor’s bank account, which often relies on tethers when market volatility is rising. Many Bitcoin transactions are done on tether.
Tether’s circulating supply has increased from $ 82.9 billion 24 hours ago to approximately $ 79.5 billion. It suggests that the company behind it processed more than $ 3 billion in redemptions in just one day.
Mati Greenspan, CEO of Quantum Economics, said Terra’s blunder “shook” the crypto market’s confidence in other stablecoins like tether.
“DeFi [decentralized finance] The market certainly relies heavily on the principle that Stablecoin can remain stable, so if things start to unravel, it can be devastating to the industry. “
Paolo Ardoino, Tether’s Chief Technology Officer, used Twitter to reassure investors about the health of his company’s Stablecoin.
“We had almost $ 3 billion [in] Redemptions, and they were liquidated fairly quickly through our banking channel, “Ardoino said in an hour-long Twitter Spaces live audio conversation on Thursday.
He added that reimbursement claims range from at least $ 100,000 to $ 600 million.
According to Ardoino, the question with Terra’s UST was how fast it grew.
“It’s all fun and games until you’re $ 10 billion stablecoin,” he said. “Even if you were liquidated because you were backed by a small portion of Luna and Bitcoin until you were $ 5 billion, $ 10 billion stablecoin, the current crypto market will probably do that. Can be absorbed. “
“But if we double the size to $ 20 billion stablecoin, there is no way for the market to absorb these types of clearings,” Ardoino added.
Tether has long wondered if there are enough assets to justify a peg to the dollar. The company previously stated that all tokens are backed one-on-one by the dollars held in reserves.
however, settlement Together with the Attorney General of New York, it was revealed that Tether holds a variety of other assets, including commercial paper (a form of short-term unsecured debt), to support the token.
Tether ever since Reduced the amount of commercial paper It is held and states that it will further reduce the amount over time. More than 52% of Tether’s assets are currently included in the U.S. Treasury bill, which is expected to increase the next time the company discloses a breakdown of its reserves, Aldoino said Thursday. rice field.
