Risk assessment of UST, USDT, USDC

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Risk assessment of UST, USDT, USDC

By Dzenana Kajtaz 11 April, 2022 on SwissBorg.com

The Risks of other Stablecoins: UST, USDT, and USDC

Given that all stablecoins bear a certain amount of risk, we decided to provide you with brief risk assessments of USDT and USDC as well, in hopes of helping you decide which stablecoin(s) and associated risks are you willing to take on.

USDT risks

USDT, better known as Tether, is a cryptocurrency pegged to the US Dollar, meaning that an equivalent amount of USD backs the circulating supply of Tether. Tether tokens, which trade under the USDT symbol, are generated by Tether Limited and then issued by Bitfinex following fiat currency deposits into its reserves.

Tech risk – low

Since its November 2014 launch as the first stablecoin in operation, USDT has accumulated 143M transactions.

USDT moved to the Ethereum network in November 2017 and now holds third place in market capitalisation. This stablecoin is, in fact, the most used one and bears a low tech risk.

Counterparty risk – medium/high

Despite its large popularity, USDT has had its fair share of controversies:

  • Alleged hack costing 31M USDT
  • Findings that the audit ensuring maintenance of the real-world reserve was never conducted
  • Accusation against iFinex Inc., stating that a loss of 850M USD in client and corporate funds had been hidden from investors
  • Accusation stating the illegal manipulation of BTC with non-backed USDT

Looking back at all the controversies surrounding USDT, it’s fair to say that it has a medium to high counterparty risk.

Market risk – low

Thanks to its wide adoption and availability on almost every crypto exchange, this stablecoin enjoys a low market risk.


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