Yes that is the basic structure of all crypto loans, I'm just describing a mechanism by which you could short Tether. I get what you mean that if Tether collapses, crypto assets like ETH, BTC would crash too. But you could short Tether against USDC w/ USDC as collateral too. I can definitely envision a scenario where USDC holds relatively stable even if USDT crashes.
Nearly all of the smart contract loans are over collateralized, so collateral > borrow isn't too hard to achieve...but yes, probably only likely in crash if collateral is another stable that holds peg.
Just to be clear, I think shorting Tether is a bad idea lol
Nearly all of the smart contract loans are over collateralized, so collateral > borrow isn't too hard to achieve...but yes, probably only likely in crash if collateral is another stable that holds peg.
Just to be clear, I think shorting Tether is a bad idea lol