There are 99 problems and Tether is not $ 1

We don't know why it happens but it happens. Tether, the basic liquidity mechanism of $ 83 billion for the entire cryptofinance universe, moves away from its dollar bond.

Here is a short, simplified explanation of how Tether works. The company guarantees "verified customers" one-to-one withdrawals of $ 1, with the restriction that the withdrawal could be delayed "if such a delay is necessary by illiquidity or non-availability or loss of reserves that Tether is kept to secure the tether tokens". .

Under normal circumstances, the handful of verified customer institutions that can access the primary exchange window from Tether would buy discount coins on the secondary market and then redeem them with Tether to the nominal value, which increases the price to $ 1 again.

But an ugly decline of Terra Stable Cooin has triggered a synchronized panic in the crypto room since Monday, also for assets that are marketed similarly as safe. Rumors about solvency problems are widespread coin depot banks, funds and even tradfi shops that raise known questions about the exact type of reserves of Tether and its real protection against a run. The Arb trade does not seem to have taken place in the past few hours.

Nevertheless, Paolo Ardoinino, CFO from Tether and the Bitfinex trading platform says that they have processed a rush of repayments, but there is no reason to worry:

gm
memory that Tether usdt returns to $ 1 about https://t.co/fb12xessVB.
> 300 million have been redeemed in the last 24 hours without drops of welding.

- Paolo ardoinino (@paoloardoinino) 12. May 2022