macrocephalopod

Serious question: what makes you think tether is trustworthy?

Thinking in terms like trust lends itself to extreme takes like it’s either 0 or 1.0, think my prior is centered closer to 1.0 than to 0.

Generally I’d agree but doesn’t the nature of a pegged stable coin force you into that binary? I struggle to see a scenario where Tether is found to be somewhat not backed and reaches equilibrium around, say, 0.8 USD

Why is that an unlikely scenario? I find it way more likely than it being completely unbacked

What is the point of a stable coin with an unreliable peg? Or I guess better put, why would I use a stable coin at 0.8 when it could go to 0.7? Potentially to your point there’s always volatility in everything, but ranging from 0.9998 to 1.0005 is imho quite a different dynamic

“Stable coin” is a red herring, it has a limit order book like any other coin and an arbitrage mechanic to redeem to USD, that arbitrage mechanic turns into an asset recovery process instead and the limit order book will reflect implied recovery

An easy way for Tether to trade to 0.8 is if it turns out it’s backed by a bunch of loans, a bunch of the loans default, and the average recovery rate is 80%

The flip side If assets are worth .8 is they’re worth 1.2. There’s a world in which they made savvy directional bets on bitcoin on the March lows and are over collateralized in which case they could do an airdrop if people were sufficiently short