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Expression: I have some cash selling off my holdings, I need to deploy this cash now because it is getting eroded away by inflation, this is just a terrible time to have 4 trillion dollars in to dry powder soon. So, I got it eroded away by 8.1 percent CPI. People are waiting and they are waiting rather to deploy the capital back in to the market – the question is where? The NASDAQ is falling, Bitcoin is falling.
Alex Mashinsky: We still pay 7.1% on Stable Coins, on USDC and USDT and other coins and it is one of the best places to deploy USD. So, I think for people who are looking for a good place we have been doing it consistently now for almost 5 years.
Why USDC or USDT won’t De-peg in the same way as LUNA can?
Alex Mashinsky: Stable coins come in 3 different forms right. One is fully backed – meaning for every token there is a dollar sitting in the reserve, bank account or with the FED. There are coins like the PAXOS or USDC or 2 USD we support all of those. You can basically go and exchange your dollar for those. Put them on Celsius and earn that 7.1%
Then, the second group are over-collateralized stable coins. So, you USDT and DAI are two over-collateralized coins. So, they have reserves that are not – for examples Tether does not have reserves in Bitcoin or Ethereum most of the reserves are in cash or commercial paper or other things. DAI has Bitcoin and Ethereum has their over collateralized back up.
Anyone who want to redeem Tether got a dollar on the exchange even if it was 95 cents. Anyone who want to redeem USDC from Circle or from Coinbase got a dollar even if they got it for less than a dollar on any exchange. So, people have to understand there is a big difference between what it trades on an exchange and what you redeem it for from the issuer.
I am not providing attestations about these companies. I am just explaining. Everybody need to go and check the difference between fully backed, over collateralized, and things like synthetic coins that call themselves stable coins. Just because they call themselves a stable coin does not make them a stable coin.
