Tony D’Addeo
@deodad
how do the major stable coins maintain their price? more specific the answer the better
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Dan Romero
@dwr.eth
USDC has regular public audits available. If you don’t believe Circle and Coinbase are able to redeem $1 for each 1 USDC, then someone who does will be willing to buy it from you at the discount essentially risk free. Thus the discount is below the clearing price for it to make sense.
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Tony D’Addeo
@deodad
makes sense but where does this play out? how do I redeem? are there specific large LPs where I can see this in action?
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Dan Romero
@dwr.eth
Literally go to Coinbase and convert to USD. It’s instant and free.
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Tony D’Addeo
@deodad
assuming Circle and Tether have private agreements with companies like Coinbase. I can't redeem directly with Circle & Tether but there is some process Coinbase has to? Circle and Tether don't need to worry about doing an arbs themselves because the market handles this sufficiently?
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carter
@carter
smaller companies can redeem directly with Circle, but they have minimum sizes (can’t remember what) they run an institutional on/offramp with a pretty stringent KYB requirements but it’s one of the easier ways to move large amounts on and offchain (if you get approved)- it’s basically ach bank to bank then you get the USDC idk if circle pays an MM directly to help maintain the price but at least a few years ago USDC crashed to 80c when circle was fully solvent implying they don’t
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Dan Romero
@dwr.eth
My sense is the arb never gets big to begin with. SVB collapse was a rare instance.
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