How To Short Tether (USDT)
There are many articles about the potential issues which could affect Tether (USDT). Further to Terra's UST crash, USDT had even started to depeg from USD. There are regularly some questions about the real reserves backing USDT. Well, all that stuff is interesting literature, but if you really have doubts about USDT, why not shorting it? The risk is low since it is unlikely that its price doubles vs. USD, and on the contrary it is not impossible that it depegs again, lower than last time...
How to short USDT?
It is quite simple:
Borrow USDT, e.g., on Aave, by using a collateral like Bitcoin (BTC) or Ethereum (ETH).
Sell USDT, e.g., for USDC.
If USDT depegs, buy it back.
For instance, you borrow 100 USDT, sell it for 100 USDC. If the price of USDT decreases (i.e., loses its peg) by 50%, you can then buy back your 100 USDT for 50 USDC and repay the loan. In the end, you earn 50 USDC...
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