All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the currency right up until they buy back the last outstanding tether with their last dollar.
Of course, they didn't save every dollar; they spent some and invested some, presumably in things that have lost money recently. But they should be solid as long as they have made more money on those investments than they've spent in salaries and yachts and what-not, and Tether was already huge back when BTC was below $2k.
I know I'm leaving out a lot of detail here, but it seems like the only way Tether is not stable is if the people behind it have been wildly profligate. Is this about right, or am I off base?
All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the currency right up until they buy back the last outstanding tether with their last dollar.
Of course, they didn't save every dollar; they spent some and invested some, presumably in things that have lost money recently. But they should be solid as long as they have made more money on those investments than they've spent in salaries and yachts and what-not, and Tether was already huge back when BTC was below $2k.
I know I'm leaving out a lot of detail here, but it seems like the only way Tether is not stable is if the people behind it have been wildly profligate. Is this about right, or am I off base?