Absolutely insane and scary interview with Tether CTO yesterday. “Tether is literally not pegged to the dollar as the name and marketing suggest. It’s packed to your portfolio of assets and it’s worth is determined by what the market believes, which isn’t

Many people fail to understand that the price of USDT is close to $1 because Tether guarantee (and in fact fulfills its obligation) to buy back USDT tokens at exactly $1 price (with a fee of 0.1% typically). This drives arbitrage traders to support the price around $1.

In some cases liquidity on the market (or some exchange) is lowered and in these times the price of the USDT tokens may increase over $1 or decrease below $1. The price of USDT tokens on different exchanges can differ depending on the market conditions.

The price of $1 is not written in stone, anyone can put a limit order for a different price and eventually the order will be executed in case the liquidity dries up on that exchange.

This explains why USDT is not pegged to the dollar. This also explains why USDT appears to be pegged to the dollar in most times.

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