I fail to see the problem.
If USDT is worth $1 because everyone agrees it is, everything works fine. It's been that way for a long time and will likely continue.
If there's a run on the bank because people believe it's not worth $1, everyone tries to sell their USDT, then it is no longer worth a dollar. That's the risk of holding USDT. Everyone who takes 5 minutes to research it understands that USDT is kind of shady but has a long record of maintaining peg anyway.
This is true of every partially-backed stablecoin, of which there are many.
We have a recent example of one failing: https://news.ycombinator.com/item?id=27539368
In that case, IRON was only 75% backed, and now the price is $0.75.
There are other products, like DAI, which keeps reserves of ETH equal to 150% of the value of DAI. Occasionally liquidity becomes thin and DAI loses peg by a few cents, but it quickly returns as liquidations happen and the ETH is sold off to return DAI to peg. Synthetix does something similar with sUSD.
Gemini has GUSD, Coinbase has USDC, Binance has BUSD, all of which claim to be fully backed by USD and have audits to bolster that claim.
Here's a whole list of them, each offering various models of trust, decentralization, audits, etc: https://www.coingecko.com/en/categories/usd-stablecoin
If USDT implodes, it could cause a liquidity crisis, but it will lead to investors demanding more proof of funds before using a stablecoin, and long-term strengthen the crypto economy. If USDT fails and creates a liquidity crisis that tanks the rest of the crypto market, I'll be shopping for bargains.
If USDT is worth $1 because everyone agrees it is, everything works fine. It's been that way for a long time and will likely continue.
If there's a run on the bank because people believe it's not worth $1, everyone tries to sell their USDT, then it is no longer worth a dollar. That's the risk of holding USDT. Everyone who takes 5 minutes to research it understands that USDT is kind of shady but has a long record of maintaining peg anyway.
This is true of every partially-backed stablecoin, of which there are many.
We have a recent example of one failing: https://news.ycombinator.com/item?id=27539368
In that case, IRON was only 75% backed, and now the price is $0.75.
There are other products, like DAI, which keeps reserves of ETH equal to 150% of the value of DAI. Occasionally liquidity becomes thin and DAI loses peg by a few cents, but it quickly returns as liquidations happen and the ETH is sold off to return DAI to peg. Synthetix does something similar with sUSD.
Gemini has GUSD, Coinbase has USDC, Binance has BUSD, all of which claim to be fully backed by USD and have audits to bolster that claim.
Here's a whole list of them, each offering various models of trust, decentralization, audits, etc: https://www.coingecko.com/en/categories/usd-stablecoin
If USDT implodes, it could cause a liquidity crisis, but it will lead to investors demanding more proof of funds before using a stablecoin, and long-term strengthen the crypto economy. If USDT fails and creates a liquidity crisis that tanks the rest of the crypto market, I'll be shopping for bargains.