Replying to Avatar S!ayer

You trade your currency for USDT so that you can do the BTC/USDT trade, however each time you trade your currency for USDT, Tether has an obligation to buy US Treasury bonds to cover the swap.

Thus when you trade your fiat in for USDT you're ultimately just buying a T bond digitized and take that inflation on board.
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Nadia 1y ago

And relying on Tether to maintain their reserves and honor the peg.

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S!ayer 1y ago

well that's the thing right; let's say holders sell all their USDT, then what happens to those T-bonds priced at 3, 5 or 10 year?

It's a balancing act, but Tether could also *not* be holding the reserves they say they do...

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Nadia 1y ago

Oooh yeah the unraveling of this in the next crisis could be horrific

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S!ayer 1y ago

yeah it's the third biggest weigh by market cap, so it would pull everything down