It’s hard to trade futures without USDT, but many people haven’t stopped to think about why it’s worth $1.
【How it works】A stablecoin is operated by an issuer: you give it $1, it gives you 1 USDT, and it puts
the dollars (and equivalent assets) into reserves. Anyone in the market who wants to exchange USDT back for dollars can go to the issuer and
redeem it. This “mint-and-redeem” mechanism acts like an anchor, keeping the price near $1.
If the price occasionally deviates slightly (for example, to $0.999), arbitrageurs quickly step in to bring it back in line.
【Risks to watch】Reserve transparency. USDT regularly publishes reserve reports (including assets such as U.S. Treasury securities),
But things have gone wrong in the stablecoin space before—stablecoins without sufficient reserves have depegged and collapsed, leaving holders with nothing.
So, don’t leave large sums sitting in a single stablecoin for the long term. Diversification is free insurance.
What do you think? Share your experiences in the comments.