More Evidence Points to Tether's (USDT) Dollar Backing

A new Bloomberg report suggest that Tether Ltd may really have $1 for every USDT in circulation.

Published a few hours ago (Dec 18th) the report indicates that Bloomberg has documents in their possession that “offer more detail than has ever been made public”.

The documents were not shared and do not provide a complete overview of Tether’s finances. However, bank statements from four separate months reveal the amount of dollars held in Tether Ltd.’s accounts.

One statement demonstrates that on January 31, Tether held $2.2 billion in a bank account at Puerto Rico’s Noble Bank. This was exactly the same amount (2.2 billion) of USDT in circulation on that same day. The numbers also match up in both September and October of last year.

The bank statements however, do not show where the funds originated from nor their present location, as Tether Ltd. has worked with several different banks in its three-year history.

Bloomberg did not disclose who provided the documents but writes that it was someone with access to the company’s records. Bloomberg also affirms that the veracity of the documents was confirmed by a government official.

The Origins of the Tether Suspicions

Back in January, the U.S. Commodity Futures Trading Commission (CFTC) issued subpoenas to Tether Ltd. and Bitfinex, in order to determine if the companies claimed to have the necessary money to back the USDT’s in circulation. The investigation hasn’t yet produced any results and its status is as of the time of writing undetermined.

Following the subpoenas, many conspiracy theories started emerging, claiming that Tether might not have the funds it claims, and that USDT was involved in manipulating the price of bitcoin. The U.S. Justice Department is currently investigating whether the last bitcoin bull run to $20,000 was a consequence of unethical Tether trades.

Despite all the negative claims, having lost its peg by a considerable amount more than once, and the competition from several stable coins that have entered the market this year, Tether has remained somewhat resilient. In fact, just yesterday Tether briefly surpassed Stellar (XLM) as the 4th largest cryptocurrency.

Maker's MKR Token Has Risen 37% This Month, Outperforming the Crypto Market

  • MakerDAO loan payment system has performed well during extended crypto bear market.
  • This, according to market analyst, Sebastian Sinclair, who pointed out that MKR tokens are up 37% in value so far this month.

Ethereum-based token maker (MKR) has recently started outperforming the larger cryptoasset market - as MKR has recorded a 37% price rise so far this month.

Currently, MKR tokens are trading $534 after rising 3.4% in the last 24-hour period, and the market capitalization of the maker platform stands at $529.3 million - making it the 17 largest in the cryptocurrency space. On February 14, each MKR token was priced at 4.6 ETH, which is notably the token’s highest valuation since October 8, 2018.

At press time, MKR’s value against ETH has corrected back to approximately 4.16 ETH, presumably after some traders sold some of their holdings in order to take profits.

As explained on its official website, MakerDAO is a smart contract platform built on the Ethereum blockchain . The value of DAI, MakerDAO’s native stablecoin, is backed by ETH and it is also “soft-pegged” at a 1:1 ratio with the USD. DAI’s peg has been created via a system of collateralized debt positions (CDP). Functioning as a loan payment system, MakerDAO uses ETH as collateral, which is required for the governance of DAI in Maker’s ecosystem.

2% Of All ETH In Circulation Locked In MakerDAO Loans

So far this month, MKR’s value has appreciated considerably - when compared to its performance in previous months. According to Sebastian Sinclair, a market analyst and IT journalist, MKR’s recent price movements are a sign that the current bear market is “beginning to falter.”

Maker tokens are issued or burned according to DAI’s price movements - in order to maintain its peg. As Sinclair pointed out, the MakerDAO ecosystem has managed to perform relatively well during the prolonged crypto bear market - as 2% of all ETH in circulation is currently locked into MakerDAO loans.

At press time, over 1.97 million ETH have been locked up in Maker’s primary contract - which accounts for approximately 1.87% of over 104.86 million ETH in circulation. This figure is substantially higher than the 1% of ETH locked by Maker in November 2018. As Sinclair has observed, DAI is “overcollateralized” by over 200% (on average). This means that for every DAI that is issued, there is about $2-3 in ETH locked in CDPs. Because of this, when ETH’s value depreciates, more of that digital asset needs to be locked in Maker’s contracts - in order for DAI to remain collateralized.

MakerDAO Offers "Independent" And Competitive Interest Rates

Moreover, MKR tokens are used to cover transaction costs on the Maker platform and they provide investors with voting rights within MakerDAO’s “continuous approval voting system.”

Recently, MakerDAO’s management increased the platform’s stability fee from 0.5% to 1% - so that fluctuations in DAI’s price are reduced. This should (theoretically) help DAI maintain, or keep its peg close to the USD.

Commenting on the usefulness of MakerDAO, with its ability to offer “competitive” interest rates that are independent of the US Federal Reserve’s rates, Tanner Hoban, a former equity researcher and currently involved with ConsenSys, noted (via Twitter):