Thread by @patio11

Oh, to be a fly on the wall of the folks at crypto exchanges trying to conduct market stabilization warrooms right now.

"We could make a lot of money."
"You can make a lot of money by burning down a casino for the insurance IF YOU ARE STUPID."

I think this is why, when every sophisticated person in space became aware that tether was doomed back in late 2018, several firms rushed stablecoins to markets.

They're a terrible product for the issuer, but given that the system was hooked on them, great for the ecosystem.

I *think* I'm right that stablecoins are terrible for the issuer, because if you are doing them on the up-and-up you have all the fun of running a materially sized compliance department supported by principally interest revenue on your reserves.

Your costs go up with velocity-of-use but your reserves don't (that is basically the point, right), so it's basically doomed to be a loss leader. Which would be fine, if the coin got you some sort of proprietary lead on e.g. your exchange, but everyone gets to freeride off you.