COINBASE for Crypto has come

[vimothy]

Yeah they'd be lending at way higher rates, considering how high the depositor interest rates are. But yeah that makes sense to me. Nexo could be borrowing USDT at a rate of maybe 1-3%, if not even lower, depending on what the size of the loan is.

exactly it's simple really, borrow at 5% lend at 10% and profit from the spread. why wouldnt you do this?

 

[vimothy]

And so ultimately the financial growth of Nexo's business model seems predicated on A) overall appreciation of assets in the market, and/or B) the financial success of borrowers who take out a loan and manage to repay it plus interest without collateral liquidation, and/or C) leveraged borrowers getting liquidated and losing more than their initial loan value.

yes, its heavily predicated on the success of crypto as a whole. assuming that bet pays off, they can simply suck up profits for little effort

 

[Clinamenic]

in the tether papers article (did you post that, btw? it's really good), they seem to think theres some ambiguity about whether usdt is fully backed, which seems crazy to me. what tether are doing could not be more obvious.

Yeah I posted that upthread. Tether is considered a dubious enterprise throughout crypto, and to my knowledge they have not demonstrated the willingness to comply with US regulators that other US stablecoin issuers have (like Circle, which issues USDC, or Paxos, which issues USDP).

 

[Clinamenic]

Yeah I posted that upthread. Tether is considered a dubious enterprise throughout crypto, and to my knowledge they have not demonstrated the willingness to comply with US regulators that other US stablecoin issuers have (like Circle, which issues USDC, or Paxos, which issues USDP).

There was a hearing about crypto regulation that had an executive from Circle and one from Paxos, but nobody from Tether. Circle and Paxos seem willing to be regulated like banks, whereas I don't know what kind of public statements there are from Tether in this respect.

 

[vimothy]

Yeah I posted that upthread. Tether is considered a dubious enterprise throughout crypto, and to my knowledge they have not demonstrated the willingness to comply with US regulators that other US stablecoin issuers have (like Circle, which issues USDC, or Paxos, which issues USDP).

USDC are similar imo

 

[vimothy]

dont know much about paxos but I'd be surprised if they were doing something different

 

[vimothy]

There was a hearing about crypto regulation that had an executive from Circle and one from Paxos, but nobody from Tether. Circle and Paxos seem willing to be regulated like banks, whereas I don't know what kind of public statements there are from Tether in this respect.

it's a difference of degrees, at base they're all doing the same thing

 

[vimothy]

Yeah I posted that upthread. Tether is considered a dubious enterprise throughout crypto, and to my knowledge they have not demonstrated the willingness to comply with US regulators that other US stablecoin issuers have (like Circle, which issues USDC, or Paxos, which issues USDP).

it is interesting tho that they are considered dubious by he crypto community given that they are also seemingly the most important systemically

 

[Clinamenic]

Yeah Tether could be the most worrisome aspect of crypto at the moment. I haven't really dug around for any audits or financial reports or licenses or whatnot, but its true that its the highest daily trading volume stablecoin, by far.

 

[Clinamenic]

I'm kinda hoping that the other stablecoin issuers and the US federal government can form a cartel to either supplant Tether or else force it to comply somehow. I don't know in which particular ways it would need to comply, though.

 

[vimothy]

other stable coins will do the same thing eventually, or else leave free money on the table.

 

[Clinamenic]

other stable coins will do the same thing eventually, or else leave free money on the table.

Even if they end up using the same business model, to different degrees as you say, I'm inclined to prefer that they maximally comply with the government, even if that doesn't fundamentally change the business model but just introduce additional constraints. And maybe Tether is complying in ways that I'm not giving them credit for, but from where I'm standing it doesn't seem that way.

 

[Clinamenic]

If we're gonna have an economy where some central issuer has the ability to procure money from thin air, which I don't necessarily have a problem with, I'd prefer there to either be one such issuer, i.e. the Fed, or at least have every such issuer (i.e. stablecoin issuers) be on the same page about monetary policy.

 

[Clinamenic]

Whereas I suspect Tether may be more rogue than Circle or Paxos.

 

[vimothy]

for sure tether is the outer limit of what's permitted. but the basic model, creating liquidity backed with crypto assets, is not going away. its essential if crypto is going to survive as a functional marketplace

 

[Clinamenic]

for sure tether is the outer limit of what's permitted. but the basic model, creating liquidity backed with crypto assets, is not going away. its essential if crypto is going to survive as a functional marketplace

Yeah I agree, cause otherwise you just have a bunch of dollars sitting around, unutilized, as you pointed out upthread.

 

[vimothy]

If we're gonna have an economy where some central issuer has the ability to procure money from thin air, which I don't necessarily have a problem with, I'd prefer there to either be one such issuer, i.e. the Fed, or at least have every such issuer (i.e. stablecoin issuers) be on the same page about monetary policy.

what tether is doing is not so diff from what your bank is doing. all banks create money, in the broader sense.

 

[Clinamenic]

what tether is doing is not so diff from what your bank is doing. all banks create money, in the broader sense.

But is this money creation at all a function of loan collateralization? That is, is a bank "creating" more money by issuing uncollateralized loans than it is by issuing collateralized or overcollateralized loans?

 

[vimothy]

the reality is that financial institutions like banks have existed since time immemorial for a reason.

 

[vimothy]

But is this money creation at all a function of loan collateralization? That is, is a bank "creating" more money by issuing uncollateralized loans than it is by issuing collateralized or overcollateralized loans?

collateralisation limits money creation