What would happen if Tether failed?
Tether has been in the news lately because people are challenging Tether to prove that they actually have the cash reserves to give people their US Dollars if they decide to cash in their Tether. In theory, tether is kind of like a wrapped dollar like WBTC is a wrapped Bitcoin. WBTC works because you trust a contract that there is a Bitcoin waiting for you when you want to unwrap and go back to BTC. That is what keeps the value of WBTC pegged to BTC. You know it is safe and you get get Bitcoin back whenever you want.
The same is supposed to be true for Tether. It should be like a wrapped dollar where you can unwrap it at any time. Now there are two ways that Tether can fail. It can go up too far or it can go down too far or of course go to zero.
There are a lot of other cryptocurrency that isn't backed by anything so the fact that Tether is backed by something gives it value. It just might not be backed dollar for dollar. If they can remain liquid, it doesn't really matter that they can't pay back everyone. They could also create a yield farm and incentivize people to keep their tether working.
I am concerned that if Tether fails, it could lead to a whole market failure. People with Tether staked would lose their stake as it dropped in value. I could create a Ripple effect throughout the whole market. I am positive crypto will survive but it could take a while to regain values.
Let's hope the guys at Tether can manage 60 billion dollars and make enough money to eventually cover all the outstanding Tether. I hope they are using the money to make money. It would be kind of stupid to leave it all in a savings account or in cash. I think Tether should change their marketing and it will be fine. They should use mirror protocol and an oracle or create a new Dao. They just need to improve and they can keep their status as the number one stable coin.