>But there is a fair probability it becomes worthless, meaning that you gain from it.
>While you need to pay premiums in the interim, for something with an indefinite timeframe, that risk seems fairly minor for the potential reward.
1. the chance of collapse might be lower than you think. the "tether is going to collapse any day now" sentiment has been around for years now, but collapse has proved elusive.
2. borrowing costs are high. I searched around and it looks like the APY for lending out tether is around 9%. The cost for borrowing tether is certainly higher. If you held a $100 short position for 5 years, and there was a total collapse at the end of year 5, then you'd make $65 (factoring in interest payments). That sounds good, but chances are thether probably has more money in the bank than $0. If it only collapsed to $60 (ie. they went bankrupt but had 60 cents of real money for every dollar issued), then you'd only make $5.
3. there are rumors/conspiracy theories that tether/bitfinex/tether affiliated exchanges force USDT/USD rates up periodically to force liquidation of tether short sellers. If you're caught in one, you'd lose money and be forced to rebuy tethers at an unfavorable price.
I work with a blockchain project that lends a lot of USDT, USDC, and DAI. The cost at this moment to borrow USDT on the blockchain is 4%-5% for any amount, or 3.75% in bulk while playing defi games. The two biggest to lend it are Compound [0] and AAVE[1].
Unfortunately that scenario only works if there’s a ‘fair’ long/short game beneath the fraud, but the fraud is such that that is not the case:
Remember Folks: Don't short Tether, once the exchange leaks your position to their buddies, Bitfinex shareholders will organize to liquidate you by working with their wash trading bots.
If USDT collapses it will take out multiple exchanges with it, and the fact that you have a winning position won't matter if the the people running the exchange it was on have entirely disappeared to sandy beaches somewhere. Counterparty risk during the systemic "banking" collapse will be very high, and completely uninsured.
If you have extracted the cash in dollars somehow before the crash, then it would work, but you have to move your money out of the exchange as fast as you can.
The collapse of Tether is likely to be right in the middle of the crash and the exchanges will have suspended withdrawals already, and everyone will be looking for a lifeboat.
You have a database entry showing that you have a large amount of winnings that you can see on your screen.
You are going to have to deal with corrupt human beings on other end, who are outside of your jurisdiction, and are assuming they are just going to wire your bank account money based on that database entry, when you have no leverage over them at all, and when they will be better able to see the writing on the wall than you do.
Even within your jurisdiction, for something like Coinbase, if it becomes completely insolvent then you become an unsecured creditor in the bankruptcy liquidation process.
You'll be stuck yelling into the ether making twitter posts shaming them for not wiring you your winnings. And whatever actual cash you sent them to make those bets will be long gone and you'll lose everything.
Even assuming you could find some form of betting market outside of the crypto exchanges to place bets with other people that Tether would collapse the interest you have to pay should more than offset the eventual winnings. This is similar to how using options for portfolio insurance is a poor idea because by the time you're worried about your portfolio losing value everyone else can see the issue as well and wants a premium to write you that insurance.
And there's no sure bet that Tether/crypto collapses in the near term. I suspect that crypto will likely pop to a new bubble blow-off peak in 2022 and then 2022/2023 there will be another systemic test of crypto that could lead to its failure. But there's many billionaires with a vested interest in seeing the game continue who will do whatever they can to kick the can further down the road. I thought that it would fail in 2018 and was wrong (but the transcripts with bitfinex showed that it was probably on the brink). You could wind up betting Tether collapses for so long that by the time it finally does you've spent more on those bets than you've won back.
All exchanges require staff interaction for large withdrawals. You can be sure that in a very volatile market, friends of exchange operators will get priority.
Tether has been manipulating the market since 2018 through using wash sales to prop up the price through apparent demand.
Tether has most of its liabilities backed with unsecured commercial paper from China.
China has had issues with their real estate companies being in too much debt and offering too much commercial paper to keep them running day to day.
China also has moved against crypto currencies recently, and regulating the real estate companies to move forward to pay back their debt.
So this strikes me as systemic risk. If USDT goes, so does the Chinese Commercial Paper Market, and vice versa. Who knows what gets taken out at that point. Tesla? Coinbase? Nvidia and AMD for losing sales to mining rigs? I don't know.
It costs about 9% per year to short it on most exchanges but about 4-5% on many DeFi platforms. Since most fractional banks live off of a 10% reserve ratio, you could very well be keeping Tether alive and prevent it from ever going under by shorting it.
They are profiting from all of the tether FUD nonsense by being able to lend their coins at a higher rate.
> Since most fractional banks live off of a 10% reserve ratio, you could very well be keeping Tether alive and prevent it from ever going under by shorting it.
Some might say that FDIC made the banks super rich -- it wasn't the services that made the banks profitable, as it was the bank had a sudden and large influx of government backed cash to make loans from.
In the US, it's not just reserves it's that 95% of account holders will be FDIC insured. And because the accounts are insured, there's rigorous banking regulations around the bank so FDIC doesn't have to pay out constantly.
So at what point does a run on $USDT happen? When the Chinese commercial paper market goes belly up? When they bitfinex files for bankruptcy or is charged with RICO? Sure there's a lot of FUD but if you read the tea leaves, I think China already sees systemic risk.
For a while I had a 5x leveraged tether short (with a USDC long deposit reserve) on a decentralized exchange. I was briefly making money through this on arbitrage but it fluctuates rapidly.
The other thing is earthquake safety. Wood frame is often far more resilient to sheer stress than concrete/brick. Concrete can be reinforced to mitigate that, but I wonder how viable that is for buildings on the scale of SFH, not major developments.
Can confirm lived on tbe Big Island of Hawaii for three years. Almost all homes are made of wood with the houses literally standing on top of the volcanic rock or cement pilings. With frequent earthquakes (largest when I lived there was 6.8) the houses literally move, shake and flex.
It’s not just about reinforcement (like rebar or steel frames) but the concrete mix used. Even though it might not look it, most concrete used in buildings is flexible. The most earthquake proof building in SF is probably the Salesforce tower, which has a concrete core, not a low height timber framed house. Concrete has other great properties as well - it is waterproof, doesn’t rot, and is fireproof. On the emissions side, you can get flexibility and lower emissions by using newer air-crete mixes:
https://www.infrastructurist.com/what-is-flexible-concrete/
They started ZO back in 2018. I think the bigger concern was the amount of growth and threat Opendoor presented them. There was a vision that they will fundamentally change the sector and make Zillow an equivalent of what the White Pages is to Google.
So yes it was FOMO, but not based on quickly appreciating real estate.
6% has been the norm in the US for a long time. It is absurdly high and is why opportunities like iBuying exist.
In the UK, there is no wiggle room for such ventures, but as the transactional costs in the US is steep, the market was ripe for disruption. You can usually expect your total transaction costs to be 8-10%, so there is a lot of margin in there for Zillow/Opendoor to operate as the only intermediary (buyer & seller agent, lender, stager, etc).
Can confirm that 6% is the norm and average cut the agents take in the US. Typically 3% for seller's agent and 3% for buyer's agent. The entire commission is paid by the seller so the buyer never sees this, though technically those fees are baked into the final price they pay for the house. RedFin and others are trying to disrupt this model but made very little inroads so far.
How much growth and revenue would they have missed had they allocated more resources towards better security and recovery plans before this, instead of better features?
As a shareholder, you own the company including its problems. You don't get to complain like a customer, you did not buy any product or service from them, it's the other way around.
> As a shareholder, you own the company including its problems. You don't get to complain like a customer, you did not buy any product or service from them, it's the other way around.
Huh? So shareholders who literally own a piece of the company don't have the right to complain about poor management, operational incompetence, company strategy, etc.?
That's not how it works. Shareholders actually have greater legal rights than customers even though both, in practice, are usually fairly limited when it comes to situations like this.
I believe that in a society that has free speech, there is a duty of the member's of society to exercise their free speech and disassociate from those acting unethically. Particularly for unethical actions that cannot be prosecuted due to the rights afforded to all.
Now while there are a lot of things that facebook probably can be prosecuted for, there are many things that they probably can't be. So I think we have an obligation to shame and shun those who act in reprehensible ways. And obviously in proportion to how culpable/complicit those individuals are.
I think if you were smart enough, you may be able to mask some needed changes under some legitimate tickets. You make certain changes that you know will break stuff, but you assign a reviewer who doesn't know enough about the particular thing that they may think it seems fine.
I am talking in a very generalized sense, not for this particular issue. But I don't think the code review/deployment process is entirely safe against internal bad actors.
The whole point is to write C that appears on the level at first, but actually has a subtle exploitable flaw. The flaw is supposed to appear like a simple mistake for plausible deniability. Some of the winning responses are very devious.
Code reviews can potentially catch bugs and prevent an obvious inside attack but are mostly to keep the code-base healthy and consistent over time. Something that can take down multiple revenue streams for all customers should have some other check besides a peer code review.
Many will misinterpret it. We have seen how much the public can fundamentally misunderstand technical information over the past year.
People will just see that:
1. You can never disconnect your iPhone from the grid and stop it from being tracked. Even if you turn it off.
2. Governments, companies, and other (from the conspiracy theorist's standpoint) will be able find you whenever they want.
I am sure there are some legitimate security concerns here, but Apple seems to have taken reasonable steps to provide a pretty awesome feature which has solved a lot of risky edge cases.
> 1. You can never disconnect your iPhone from the grid and stop it from being tracked. Even if you turn it off. 2. Governments, companies, and other (from the conspiracy theorist's standpoint) will be able find you whenever they want.
Ok, I'll bite and play the conspiracy theorist. What reasonable steps prevent some three letter agency (or Apple itself for commercial reasons) from abusing the Find My network to do exactly that?
There seems to be almost no scenario where USDT becomes more valuable than the USD, and the worst case is it continues to be worth the same.
But there is a fair probability it becomes worthless, meaning that you gain from it.
While you need to pay premiums in the interim, for something with an indefinite timeframe, that risk seems fairly minor for the potential reward.