We know it’s silly season, but seriously?! Bitfinex recently added USDT/USD margin trading.
It’s a well-known fact in the crypto world that the ‘pegged’ dollar crypto Tether (USDT) sometimes comes untethered. Sometimes badly. Back in October, for example, when the markets briefly went wild, you could pick up Tethers for less than $0.90, profiting when they gravitated back to their long-term price, which is more like $0.99. (The friction of using a dollar-pegged crypto is such that they’re not actually worth a dollar at the best of times.)
The risk, of course, is that such weird behaviour is the early signs of something more terminal: Tether imploding because it doesn’t have the cash reserves to cover all its issued USDT. You pays your money, you takes your choice.
But in this blog post, Bitfinex have not only openly admitted the utter failure of their pegged dollar crypto against the actual dollar, but they encourage their customers to trade the difference. The exchange – which is also effectively the issuer of Tethers – has launched USDT/USD margin trading. Really.
At Bitfinex we work tirelessly to ensure our platform reflects the needs of professional traders, offering market differentiating order types for unique trading strategies. Today, adding margin trading on USDT/USD pair will not only allow for more efficient price discovery, but in an important move for risk management, unlock the ability to hedge the exposure taken on stablecoins. Along with a dedicated lending market, USDT will be available as collateral for margin positions.
Erm, ‘hedge the exposure taken on stablecoins’?! The whole point is that stablecoins are a hedge. Not like crypto, so volatile that they need hedging themselves. Guys. SERIOUSLY?
If this was 1 April, we would dismiss this as a self-deprecating April Fool’s joke. But it’s not. They’re actually doing this. Which. Is. Nuts.
We at Inferno have never liked Tether much, thanks to the fact they’re about as clean and transparent as a sewer. But with this move, they take their tacit disdain of their customers and raise it to an art form.
What they’re doing here is asking their customers to gamble on the likelihood of the failure of their own product and exchange. The fact that USDT is sometimes worth more or less than a dollar should be an utter embarrassment to Bitfinex. Instead, they’re making it a feature.
We’d facepalm, but the sheer magnitude of the gesture necessary to convey our feelings on this would probably induce brain damage.
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