FUD reappears, how to perform USDT short hedging on the chain?
Original compilation: Kxp, BlockBeats
Original compilation: Kxp, BlockBeats
Today, I noticed that USDT accounted for more than 60% of Curve's 3 pools. This serious over-centralization has aroused great concern in the market.
Faced with this situation, I can't help but think, is this an unfounded panic or do large institutions have information that we don't know?
As a professional investor, I don't want to gamble on this matter, so I chose to conduct USDT short hedging on the chain. The following is my specific operation method.
As a major stablecoin exchange platform, Curve's protocol has the deepest liquidity. However, when there is an imbalance in Curve's 3 pools, it becomes difficult to exchange stable coins and is prone to substantial slippage risks.
Currently, this is the case as many are dumping USDT.
If you wish to convert USDT to other stablecoins, there are several options for you to consider, such as USDC, DAI, FRAX, or a decentralized stablecoin like LUSD on mainnet or VST on Arbitrum. Additionally, you can easily short USDT on-chain:
• Go to money markets like Aave or Radiant Capital
• Deposit less volatile collateral such as USDC or other non-USDT stablecoins
• Lend USDT against these collaterals
• Convert borrowed USDT to other stablecoins
• (Can also cycle for leveraged short positions if desired)
If USDT is unpegged, you can repay the loan and make a profit on it.
Note that on the Aave Ethereum mainnet, it costs about 2% APY to lend USDT, but 20% on Arbitrum; while it costs 10% to lend USDT on Radiant, but if you qualify for RDNT Rewards can be lent out for free.
Regarding whether USDT will be unanchored, I personally think it will not. However, since I have no way of knowing the truth behind the scenes, I can only hold a wait-and-see attitude.
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