USDT is essential for trading futures, but many people have never wondered why it is worth $1.
【How it works】A stablecoin is operated by an issuer: you give it $1, and it issues you 1 USDT, while placing
dollars (and equivalent assets) in its reserves. Anyone in the market who wants to exchange USDT back for dollars can approach the issuer
to redeem it from the issuer. This “minting-redemption” mechanism acts like an anchor, keeping the price close to $1.
If the price occasionally deviates slightly (for example, to $0.999), arbitrageurs quickly step in to bring it back in line.
【Risk to watch】Transparency of reserves. USDT regularly publishes reserve reports (including assets such as U.S. Treasuries),
But historically, things have gone wrong in the stablecoin world—stablecoins without enough reserves have lost their peg and collapsed, leaving holders
with nothing. So don’t leave large amounts of money in a single stablecoin long-term—diversification is free insurance.
What do you think? Share your experience in the comments.