USDT has been always shady but now they might be closer to a collaps than anytime before, yet it was added as collaterial?

I know there has been FUD about USDT for the last 2 years. So I’ll keep it short, 2 things are different this time

  1. They have to provide all docs US authorities requested by 15th Jan and this time there is no extension
  2. They’ve been printing USDT at unprecedented scale
    (for full details read those 2 twitter threads:
    https://twitter.com/pat_jane_crypto/status/1344673896675618818
    https://twitter.com/pat_jane_crypto/status/1346118494115524609
    )

We all know they are shady and the least reliable stable coin, so I was very surprised to find out they were added as collaterial type, making the wonderfully and only decentralized DAI less so.
USDC was easier for me to swallow, but USDT? This is dissaster waiting to happen.
I can see the limit for USDT is minimal right now, but I guess this is just the start?

No, it was reduced, doubt it will be increased any time soon

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Yeah Mario, currently the limit is 3M DAI with a 150% collateralization requirement. And I also don’t see the debt ceiling for the USDT-A vault being raised anytime soon.

There is even talk about TUSD being too risky of a collateral.

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The risk of USDT has been effectively reduced. I believe that unless clear legal information is released, the current parameters of USDT will not change.

While 2,5 mln DC (less than 1% utilisation) of USDT prevents significant impact on MKR protocol even if USDT collapsed I must say that I do not understand reasoning under adding it.

It has no real impact and ads tons of bad sentiment.

It is like Kissing lion in the ass:

  • No benefit
  • No pleasure
  • Unnecesary risk
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Yeah, there is no usage. The least we should do is to enable IAM. But probably better to just set DC to 0.

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Yes exactly my thoughts.
I get it’s added with limited risk, but why add it at all?

The question to Delist USDT from the protocol was ask in October of 2020 and the Community decided to respond with a “No

I believe if USDT is labeled a “Security” by regulators, we will have plenty of time to Delist such (assuming the community has a change of heart) Court cases take years–see XRP, Bitfinex–and as many have mention here–we should take action before regulators do, IMO.

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For sure, there are a lot of negative news about USDT, most of them in the last weeks, governance should consider to bring USDT DC to 0 in the near future !

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