Tether explains why it ‘has nothing in common’ with Terra UST |

Tether has released a statement saying it ‘has nothing in common’ with Terra UST, the company behind USDT. The move comes amid concerns from investors that Tether may not be able to continue providing its token without major issues.

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Tether explains why it ‘has nothing in common’ with Terra UST. The company believes that its peg is the best option for a stable cryptocurrency. Read more in detail here: how does ust keep peg.

The collapse of Terra UST has tarnished the credibility of stablecoins and the crypto industry as a whole. Tether, on the other hand, claims to be different in an effort to disassociate itself from the aftermath.

Tether notes out in a recent blog post that, as a collateralized stablecoin, it “has nothing in common” with UST, which uses an algorithm to maintain its dollar peg. The term “collateralized” refers to a token that is backed by assets, such as dollars and cash equivalents in the case of USDT.

“While UST is referred regarded as a stablecoin, it has nothing in common with Tether USD or other collateralized stablecoins.” “UST is a cryptographic stablecoin.”

The Terra disaster cost billions of dollars, and the consequences will be felt for years. Can Tether, on the other hand, restore market confidence?

In the firing line are algorithmic stablecoins.

Tether has been the “dominant source of dollar-based liquidity” during the years of instability in cryptocurrencies, according to the blog post.

USDT holders may exchange their tokens for dollars 1:1 since it is a collateral-based stablecoin. And the corporation has always been able to pay its redemption commitments since its beginning.

“Tether has never failed to complete a USD redemption request at a value of $1 per USD token since 2015.”

While USDT exchange values may fluctuate from time to time, de-pegging is unlikely as long as Tether can redeem tokens at face value.

The essay went on to argue that algorithmic stablecoins have a bad track record and have failed on several occasions. It also highlighted a research from the University of Calgary that described them as intrinsically frail and always vulnerable.

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Tether was never de-pegged, according to Bitfinex’s CTO.

Tether deviated dramatically from its $1 peg price on May 12. The USDT price fell as low as May 12 saw Tether deviate significantly below its $1 peg price. On that day, the USDT price dropped as low as $0.9409, causing panic in the markets already reeling from the UST implosion..9409 on that day, generating fear in markets already suffering from the UST collapse.

Tether daily chartUSDTUSD on TradingView.com is the source.

Nonetheless, Bitfinex CTO Paolo Ardoino addressed the matter in a Twitter Spaces discussion later that evening, underlining the technical distinctions between collateralized and algorithmic stablecoins.

Tether, according to Ardoino, was sufficiently liquid to match redemptions at $1 even during the panic selling. As a result, notwithstanding the variations in currency rates, there was never a difficulty.

Soon after the public speech, the USDT returned to its peg price.

Tether, Stablecoins, Tether

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The “what is ust backed by” is a question that has been asked many times. Tether explains why it ‘has nothing in common’ with Terra UST.

Related Tags

  • convert wrapped ust to ust
  • is terra usd safe
  • how does ust luna work
  • ust peg
  • terra vs terra usd

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