Tether reserves should be audited 1 to 1 usd, regulation should be in place to ensure that issuers of stable coins have their collateral in usd. Until now the market is too inmature therefore room for fraud practices, not enough oversight.
USDC is the one that has better reporting of reserves due to its nature of running by companies subject to further governance controls. However still not clear to me there is 1 o 1 usd backing in USDC either. Instrument used as collateral sometimes are not liquid, others value is volatile. Therefore not really holding USD as collateral.
ETH does not work as backing due to its volatile nature, DAI is used in to many rug pulls in DEFI, you never know if the value will drop suddenly. In addition by taking DAI you are taking in additional layer of risk by using USDC backing. It is simple, stable coins should be only back by the USD, every 3 months should be audited and confirmed by third independent party that are holding the equivalent in USD, anything else is risky.
Me myself had deeply concerns about Tether since 2017 when I started to hear rumours they are insolvent and don’t have all reserves. These fears increased when Bitfinnex, the exchange close related to Tether was attack and lost around 800 million USD in crypto assets at the prices of those days. However, Bitfinnex never had an issue with withdrawals. There were the belieff that Tether just printed USDT to cover Bitfinnex losses. However, many years have passed and Tether has done little to demonstrate their reserves and still is alive and USDT is the largest stablecoin by market cap. Some crypto influencers are now stating that nothing will ever occur to USDT, others say that it’s too big to fail. Let’s just remember that Bernie Madoff managed his ponzi scam for 30 years and apparently noboy noticed.
I’m not sure if Tether poses an existential risk. Definately a Tether collapse will be catastrophic for the industry, but even if that happens BTC and all the crypto industry will survive and will come back stronger… just as what it’s currently happening after FTX, Terra, Celsius, etc. Fortunately, there are already many other options besides USDT that may hold the industry in any eventuallity.
My favourite stablecoin is DAI by far, because it’s all decentralize and all the philosofy and technology behind. It’s also my favourite because it will be our safe boat whenever the CBCDs are around. My second favourite is for now USDC, because it’s large, apparently fully back, it’s issuer company is in the USA and it’s regulated. But let’s not forget that it is becoming the CBCD de facto.
The fact that USDC is the main DAI collaterization is by no less concerning. We want a fully decentralize stablecoin but the real world has demonstrated that still that’s not possible, thus it was needed for DAI to have USDC as collateral. In case of a black swan event involving USDC it will hurt the DAI for sure. Because it will drag all the major cryptocurrencies down, there may be however some preassure on the demand for DAI in order to get a lower prices Eth and Btc. This may counter the excesive supply.
During the week that im writing my opinion about all stable coins that were mentioned. Something catastrophic happend. Silicon Valley Bank failed and caused a contagion that affected stable coins. Someone please fact-check me im not an expert. USDC de-pegged from the dollar to $0.88 and Dai becuase it’t also backed by USDC de-pegged to $0.89. Suprisingly the only relevant stable coin that was not affected was USDT. BUSD ls decreasing on market cap becuase US goverment is clamping down on Binance. TUSD de-pegged around $0.99. Also on another not UST completely failed becasue of the Terra Luna debacle which is priced at $0.22. I don’t know what to think anymore always thought USDT was a scam and that USDC would never de-peg becuase it was always backed by dollars.
DAI is my favorite stable coin because it’s decentralized which will have free stable economy, open and access anywhere in the world.
My favorite is Dai and USDC, USDT is more risky but mostly used
I don’t fully trust any stablecoin. I liked the idea of UST, but we all know what happened with that and I’m so glad I wasn’t holding any. I mostly use USDT and USDC since they are widely adopted and used for trading pairs on exchanges. But I am concerned about their reserves. I guess the one I feel is the most trustworthy at the moment is USDP. I am interested in looking into the new PYUSD since Paxos is also the issuer and Paypal is a widely recognized brand.
Tether - In 2017, USDT was in the news for printing a large amount of new coins, then the very next week BTC shot to 20K. Didn’t take a genius to see the newly minted USDT coins were used to push the BTC price up. This ~is~ a threat to crypto, in my opinion.
DAI - Being backed by a Coinbase product is not the worst case scenario, but it’s also not the best.
I don’t know how a stable coin can be paired to ETH because of its volatility…