SBF shorting USDT

Can anyone explain to me, how SBF/Alameda tried to short USDT

As far as i understood:

He lent USDT with USDC as a collateral and immediately swapped them on curve and drained the liquidity pool. But how does that impact the peg since they are stable and have no impermanent loss (price impact within the pool)

I\`d be more than happy if u correct me and/or explain me how this works

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2 thoughts on “SBF shorting USDT”

  1. Don’t know what happened, but anything in a AMM pool can have impermanent loss. That’s how someone depegged UST (which used that curve pool for an oracle). It’s up to market makers to arbitrage the price back to peg, which they won’t do if it goes too far and they get scared.

    Edit: also you usually borrow something to short it. So he probably borrowed USDT, dumped it, and hoped to create a spiral where he could buy it even cheaper than he sold it for. But trying to depeg it by dumping in the pool means you have to sell it below peg to drive the price down. If MMs arbitrage it back to peg instead, then you have to buy it back for full price to repay your loan. I didn’t read anything about what he did, but that’s how you would probably do that.

  2. USDT FUD strategies have always existed. If you create a panic on USDT, then you can borrow at $1 and hopefully repay at 98c or less.


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