I posted a few months ago that when people realize their stablecoins are not so stable, the game's half up. usdt is also an obvious fraud, as is almost all of crypto right now.
Most people have no understanding of the hidden leverage built up in the system and how a small margin call in a negative sentiment env could easily trigger a 80-90% draw down.
You should have cashed out/been buying high quality real estate for the past 6-8 months but if you haven't been doing that, it's still not too late to get out.
The mechanism of DAI is quite a bit different. If the value of the underlying collateral crashes the created DAI is destroyed, which raises the value of DAI from its peg [1]. The only scenario in which DAI depegs in a direction against DAI holders is if the underlying collateral (i.e. Ethereum) flash crashes before anyone can liquidate the minted DAI.
Sometimes when I read these things I feel like I'm going crazy, like it sounds kinda logical at first glance but when you think about it it makes no sense. Why would destroying it automatically raise value? If demand stays and supply goes down, sure, but it's not like it's something like food or housing, which people need - why would the demand stay the same?
The demand for DAI comes people who want to repay their DAI denomonated debt to unlock their collateral or stave off liquidation, or from liquidators who need DAI to participate in a liquidation auction that happens if a vault holder's collateral falls below a target threshold. In any of those cases, when the DAI is repaid, it gets burned. As long as folks want their collateral back, or liquidators want to buy that collateral, there is demand for DAI.
How many recessions happen when a bunch of people think a recession will happen tomorrow? The Fed is trying to reduce inflation. It seems like they’ve done a pretty good job of doing so just by signaling an aggressive rate increase schedule. Once inflation is lower, they can go back to pretending stocks and real estate aren’t real inflation and start juicing the markets again.
How many times has there been one of the longest bull runs in history, bubbles all around and Russia going berserk all at the same time?
I’m not certain many people think there is one coming. For whatever it’s worth many hedgies at NYSE are still blissfully ignorant too. (I know, I work at a major public hedgefund)
USDC is fully backed by bank deposits and US treasuries, and is issued by a US financial institution (albeit not a bank, but an entity that is overseen by banking regulators).
Most people have no understanding of the hidden leverage built up in the system and how a small margin call in a negative sentiment env could easily trigger a 80-90% draw down.
You should have cashed out/been buying high quality real estate for the past 6-8 months but if you haven't been doing that, it's still not too late to get out.