eIP20: Promote USDT to Collateral Tier

Most of the comments above are assuming that Tether manages and discloses its reserves in good faith. Unfortunately, the facts are not compatible with Tether acting in good faith. Quite frankly, at this point Tether has enough red flags to start a communist revolution.

Tether have never managed to get an audit. Instead they have irregularly produced a series of attestations. None of these attestations constitute an audit, none of them have involved the big 4 accounting firms. The fact that Tether have had to make up new groupings such as “Big 5” and “Big 12” merely emphasises the fact that the Big 4 are not prepared to touch them.

I encourage people to consider how Tether would behave if they were solvent and committed to proving it. The most plausible explanation for their misdirection and opaqueness is that are in fact insolvent.

I would support changes to USDT parameters, but those changes must be based on a careful and critical analysis of the risk of Tether. The justifications provided for this eIP do not meet that threshold.

1 Like

@monet-supply and @peterdavies raise good points and counterarguments I hadn’t fully considered to some of the main cases for elevating USDT to USDC-equivalent status.

I’m still inclined to support change in this direction, but for a proposal with such a significant impact on the protocol’s risk profile, I favor a more measured approach over the one-shot character of this proposal.

So, I will vote against this proposal but hope to support a revision that:

  • Removes the authors’ unenforceable commitment to backstop liquidations below 0.97
  • Adopts more conservative collateral and borrow factors to start, e.g. 0.80 and 0.90

More conservative collateral and borrow factors should help significantly extend the timeline / runway available for liquidators to keep the protocol solvent in the event of a catastrophic UST-style depeg as outlined by @JTraversa .

1 Like