Earlier this month, at the CryptoCompare Digital Asset Summit that was held in London, the CTO of Tether, Paolo Ardoino, gave a public statement about the future of DeFi. According to Arduino, the DeFi industry as a whole is facing a risk to its entire system, due to the fact that it only leverages the value from the cryptocurrency industry.
In a move that sounds suspiciously like an attempt to slander one of Tether’s rival stablecoins, the Dai, he talked about the volatility of the crypto industry as a whole. He stated that people could not have stablecoins that rely on other forms of crypto to remain stable. He noted that the entire DeFi industry is a tangled mess of complicated financial products. Thus, a stablecoin cannot be based on something as volatile as a cryptocurrency without risking it all crashing down.
Of course, he did not comment on events that mirrored this statement exactly. MakerDAO had come dangerously close to complete collapse earlier this month due to the coronavirus market crash. Due to the way that Ethereum’s value collapsed, it caused a debt bubble to come up that was worth over $4 million.
Gearing Up To Compete
Arduino stated that there could be many things said about Tether, but the coin is in and of itself resilient. Ardoino explained that a centralized collateral of USD could help provide a safe haven for the DeFi industry to rely on. Of course, it just so happens that the USDT is claimed to be backed by the USD.
Tether has already stepped into the DeFi arena, announcing back in early marched that it has partnered up with Aave, an Ethereum based lending protocol. Since it’s based in Ethereum, it will stand in direct competition of Dai, which in turn makes this not-so-subtle potshot at Dai to be all the more apparent.
Keeping This Stable
Stani Kulechov, the CEO of Aave, stated that Tether’s integration, a popular fiat gateway to various institutional clients according to him, could potentially boost the DeFi industry’s overall liquidity.
What this means for the DeFi industry is, considering that Tether is unlikely to be valued at less than a dollar a coin, it can act as solid collateral for the industry as a whole. This, in and of itself, will allow for less risk, as the USDT is far less likely to collapse in on itself.
Important Knowledge To Consider
It should be prudent to mention, considering how keen Tether is to none-too-subtly hint at its own superiority, that there are allegations abound that the famous stablecoin doesn’t back all of its USDT. Quite famously, the company’s co-founder stated that it didn’t really matter if the stablecoin was entirely backed by USD. Couple this with the latest printing spree the company has done, and questions tend to pop up.