"Unkillable" USDT
Editor's Note: This article comes fromBeep News, Author: Breeze, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Beep News
, Author: Breeze, reproduced by Odaily with authorization.
Since the beginning of this year, Tether’s frequent issuance of USDT has left a deep impression on practitioners in the cryptocurrency industry. According to the incomplete statistics of Beep News, Tether was released on July 10, July 18, August 6, September 3, September 4, September 6, September 25, and October 7 respectively this year. Additional USDT will be issued to networks such as Ethereum and Tron at multiple times such as the day.
The multiple additional issuance of USDT seems to indicate the increase in market demand for USDT and the further consolidation of USDT's mainstream status.
Bloomberg wrote in the article "The World's Most Widely Used Cryptocurrency Is Not Bitcoin" that since April this year, USDT's monthly transaction volume has surpassed that of Bitcoin for the first time, and has maintained its leading position since then. USDT has become one of the most important tokens in the entire cryptocurrency ecosystem.
While the USDT was issued additionally and the transaction volume increased, Tether, its issuing entity, and its stakeholders, the cryptocurrency exchange Bitfinex, have been caught in the quagmire of regulatory and judicial disputes.
On October 6, the U.S. District Court for the Southern District of New York filed a class action lawsuit against Bitfinex and Tether. According to the documents, Roche Freedman, a New York law firm, represented David Leibowitz and other plaintiffs in accusing Bitfinex and Tether of defrauding investors through USDT, manipulating the market and hiding illegal gains.
The plaintiff believes that since 2017, the large amount of USDT currency issuance has led to the largest bubble in history, which once evaporated 450 billion US dollars in the encrypted market value within a month. The class action is huge, with defendants being ordered to pay $1.4 trillion in damages.
In June last year, John M. Griffin, a professor of finance at the University of Texas, published an article titled "Is Bitcoin Really UnTethered?" "Thesis, accusing that in 2017, the 50% increase in Bitcoin was "manipulated" by Tether.
In the eyes of investors, the credit of USDT is obviously insufficient, but every thunderstorm is not fatal to USDT, and even Tether and Bitfinex behind it.
Like an immune body that is resistant to germs, the USDT market system building does not collapse due to the emergence of negative news again and again. On the contrary, the market after the "recovery" still does not change the purchase behavior of USDT. While Tether hires the best lawyers to deal with various lawsuits, it continues to issue more USDT, and the frequency of additional issuance is getting higher and higher.
USDT multiple thunderstorms
Since the birth of USDT, there have been many thunderstorms. On the one hand, the market continues to dispute it, accusing it of centralization, opaque mortgage asset information, non-compliant operations, arbitrary misappropriation of assets, and additional issuance.
On the other hand, although there are other stablecoins that are more decentralized, more transparent, and more compliant, when the USDT building is basically in a stable state, users are still willing to choose USDT as their cryptocurrency investment medium and safe-haven assets.
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Insufficient reserve rate, modify the white paper
Although later, Tether officials and Zhao Dong came forward to clarify that "all USDT in circulation is fully backed by U.S. dollars" and "over-collateralized", but the label of "insufficient reserve ratio", whether true or not, has been difficult to get rid of. Removed from USDT. It can be said that the market has always been skeptical about whether USDT has sufficient US dollar reserves as support.
The time came to March 14 this year, and Tether was blasted to modify the content of the mortgage assets in the white paper. Previously, Tether has always claimed that 100% of the financial support behind USDT comes from U.S. dollar reserves. However, after the modification, its reserve assets can include cryptocurrencies, cash equivalents, and accounts receivable from third parties in addition to U.S. dollars.
The once-promised 100% dollar reserve has now become a 70% dollar reserve. Modifying the white paper at will has made many users dissatisfied.
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A month later, the New York State Attorney General’s Office (NYAG) released a document accusing cryptocurrency exchange Bitfinex of arbitrarily misappropriating $850 million in Tether’s reserves.
It is understood that because the funds were frozen, in order to meet the withdrawal needs of customers and its own business expenses, the Bitfinex exchange "borrowed" at least US$700 million from Tether, the issuer of USDT. At the same time, in order to conceal the use of funds, Bitfinex and Tether also carried out a series of operations to spend all USDT reserves.
In early May, Bitfinex raised $1 billion to fill this hole by issuing platform tokens, and the issue of embezzlement of funds has come to an end. The NYAG's focus on it has also shifted from misappropriating funds to conducting cryptocurrency business in the United States in violation of regulations and providing related services to American users.
Random additional issuance, sloppy operation
As mentioned above, the market has never stopped questioning the USDT reserve, but this does not affect Tether's continued "money printing".
According to Dapptotal data, the number of USDT issued on the Bitcoin network and the Ethereum network was 1.4 billion at the beginning of 2018, and by October 9 this year, this number had reached 4.13 billion. In less than two years, Tether has printed 2 times more currency, which can be seen at a fast pace.
Source of information: Dapptotal, USDT circulation curves on Bitcoin and Ethereum networks
In addition to the fast issuance speed, Tether's additional issuance of USDT seems to be particularly sloppy. On July 14, Tether issued two additional USDTs within an hour, with a total of 5.05 billion USDTs issued. This accident occurred during Tether’s transfer of USDT from the Bitcoin network to the TRON network. It should have been a transfer of 50 million US dollars, but the number was wrong due to the wrong decimal point.
The negative news of USDT continues, but these have not shaken its position in the stable currency market, or even the cryptocurrency market. Investors have always doubted the credibility and stability of USDT (USDT may collapse), but most of them still regard USDT as the first choice of stable currency.
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Why can't USDT be killed?
The impact of thunderstorms on USDT itself seems to be getting smaller and smaller. Under the cycle of negative news --> market doubts and accusations --> currency price fluctuations --> users continue to buy USDT --> price recovery and stabilization, the market sentiment has become calmer and calmer.
Users' numbness to USDT's negative news, and the fluke psychology that USDT can still heal itself after each accident, are building more and more solid walls for USDT.
mainstream and convenient
According to the "2019 Stablecoin Research Report", USDT is the most popular among mainstream stablecoins. Among the surveyed users, 75% of users will choose USDT when choosing a stable currency, followed by USDC, which is the first choice of 18% of users. In addition, the share of USDT in the stablecoin market share has also been maintained at more than 80%.
Source of information: Weibo
Although USDT has many problems, at present, it can still completely defeat other stable coins. The reason behind this may be as a netizen said, "(Compliant stablecoins) are not as common as USDT. Consensus or habit is more important than compliance. In fact, mainland users who speculate in coins use USDT and determine the price of the currency."
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Source of information: Weibo
Chinese users, as the main force of USDT, play a vital role in it. The Chinese market is the region with the highest USDT transaction volume this year, accounting for 62%. Throughout last year, the Chinese market absorbed more than 16 billion USDT in USDT. As for the overall impression of Chinese users on USDT, in addition to the insufficient reserve rate, there is another important feature-easy operation.
For example, some netizens said, "I think the entire digital currency world should be grateful to Bitfinex for creating USDT." "USDT is indeed convenient for many people to enter the market, and it also makes people believe that stablecoins can exist safely." "USDT is the world's regulatory bitcoin. It is a product of Bitcoin, so that Bitcoin can be easily converted into legal tender." "Whether other stablecoins can replace USDT depends on whether they are deep enough as a trading medium and whether they can really be freely and conveniently exchanged for other currencies."
Exchange support
Furthermore, the strong vitality of USDT is also inseparable from the help of exchanges.
According to the data disclosed by Coin Metrics at the beginning of this year, the USDT transaction volume of Huobi and Binance, the two largest cryptocurrency exchanges in the world, accounted for 40% and 80% of their total transaction volume respectively.
USDT is the key to maintaining the trading volume of many cryptocurrency exchanges. Before the second strong stable currency that can rival USDT comes out, if the USDT market collapses, then the exchange will also face serious losses. Therefore, many exchanges will not easily watch USDT being "killed", and they will bail out when necessary.
There are some voices in the market about Tether's cooperation with exchanges such as Bitfinex to manipulate currency prices.
An anonymous person once said that the price of Bitcoin mostly rose within a few hours after the new USDT was issued and sent to the Bitfinex wallet.
In addition, some media questioned Tether's use of discount arbitrage to obtain a large amount of income. After the USDT price fell, it shorted BTC and repurchased a large number of USDT to promote the rise of USDT price.
The information in the USDT blockchain browser shows that the receiving address "1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz" has received a large amount of USDT transfers in October last year, and it is said that Tether is recycling USDT. According to the data in Coinmarketcap, during this time period, the market value of USDT also decreased by 800 million US dollars accordingly.
Although these claims have not been confirmed, it can also show that through cooperation and a series of operations between the USDT issuer and the exchange, it is indeed possible to manipulate the market price and ensure that USDT is not dead.
Summarize
Of course, in addition to USDT, exchanges will also launch other stablecoins, such as PAX, GUSD, TUSD and other stablecoins with better compliance. But for exchanges, the main role of these stablecoins may be as a tool for hedging USDT risks, and the main trading volume of exchanges needs to be supported by USDT
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Summarize
