Rate3 Progress Update (APRIL) – Official Rate3 – Medium
Plus our thoughts on Tether’s issues & how it affects Rate3 iStablecoin
Rate3 iStablecoin Adding Tether Support for IOST
Earlier this month we made an important mainnet product launch announcement — our Rate3 iStablecoin service. This enabled users for the first time to move ERC20 stablecoins onto the IOST blockchain.
Paired with this unveil was information from the IOST team as well — for those with keen eyes you would have caught Jimmy the CEO of IOST reveal in advance that Rate3 will eventually be bringing USDT support to IOST:N
We can now indeed confirm that adding Tether support — adding iUSDT to the IOST blockchain — for Rate3 iStablecoin has always been planned.
But what about the recent events concerning the probe led by the New York Attorney General’s office (OAG) into Bitfinex’s financial standing? Does it complicate our go-to-market for IUSDT?
This Bloomberg article (by the always excellent Matt Levine) concisely details the relevant facts behind OAG’s investigations:
- Bitfinex relies on a service provider partner — payment processor Crypto Capital Corp. — as a fiat gateway for their banking needs. OAG has reason to believe that ~USD 650M held by Crypto Capital Corp. on behalf of Bitfinex is likely not readily accessible by the latter
- To help tide through liquidity issues, Bitfinex obtained at favourable financial terms a large (~USD 700–900M) loan from Tether, an affiliate company. This likely wouldn’t have been granted had they not shared this affiliation
- The funds may either be temporarily seized (possible AML concerns) by authorities — and therefore safely accountable and returnable in future —or been stolen by Crypto Capital Corp (heist of the century!)
- Therefore the USD funds held by Tether since the loan are now no longer backing USDT in issuance on a 1:1 basis
This isn’t the first time Tether has come under negative scrutiny in recent times — its in fact a topic which we’ve previously covered just last October. Interestingly, while the OAG represents a much more authoritative instigator compared to the news reports last year, the current market reaction to this piece of negative news has been milder in this instant.
As of 30th April — just 5 days after when the initial news broke — USDT is now priced at par value again ($1.00).
One of the best ways to promote anti-fragility is by allowing for a variety of competing options to develop — and let the free market do the rest. The market is showing confidence that it thinks Bitfinex — which is a hugely profitable exchange — and Tether will be able to weather this storm and support the USDT par value peg once more. This may or may not be true, but determining sentiment is one thing which free markets specialize at doing through price discovery.
While it may have looked like a tricky decision for us at Rate3 to decide whether to proceed with our support for Tether, our desire to support the anti-fragility of the ecosystem means that we’re going ahead with our support to bring USDT on the IOST blockchain.
Our mainnet contracts have been deployed onto the IOST blockchain — see if you can spot them: