Will a wrapped version always follow the price action of it’s original coin?

I’m looking at holding my stables in a wrapped version of USDT due to staking opportunities. I know USDT doens’t have the greatest reputation amongst stablecoins but lets just assume it never depegs. Could fUSDT potentially depeg from USDT or are they algorithmicly certain to match 1:1?

Just trying to understand my risks, sorry if this is a silly question.

Thanks

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5 thoughts on “Will a wrapped version always follow the price action of it’s original coin?”

  1. It’s either going to follow the original coin or you’re going to get rekt and it goes to $0. There isn’t really a middle ground. With a USDT coin you are likely safe, though I don’t know anything about fUSDT itself.

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  2. They are the same. And nothing is wrong with usdt. Only here in America fo people say that. The govt started that rumor. Usdc is capitalized at same rate.

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  3. Nothing is ever “certain” in this space. I don’t agree with Wdrosa when he says that there is no middle ground, but I think he might’ve factored in slight deviations in his answer and just didn’t mention them. The peg is not perfect and the stablecoins are more often than not slightly deviated from the perfect 1:1.

    Having a quick look at the fUSDT chart shows that it has deviated from $1 before. Now this doesn’t automatically mean that it has deviated from its peg, as it could’ve simply followed the exact USDT price, but I think the USD price is worth looking at as a base. It has been pretty stable (/USD) since february 2022.

    TLDR: dealing with multiple risk factors, seems OK at the moment, but keep an eye out.

    P.s. as I understand it, not all stablecoins are algorithmicly pegged, only some are.

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  4. Even though I understand the essence of wrapping, it can be really discomforting knowing this risk is lurking. Especially for those wrapped tokens you’re giving when you stake in some defi platforms. I really prefer truly full synthetic solutions such as the one dafi protocol provides. A pure dToken, synthetic, can only be burnt for the original token of equal value.

    >Could fUSDT potentially depeg from USDT or are they algorithmicly certain to match 1:1?

    Not sure if fUSDT is algorithimically pegged, but yes there’s always the risk of depegging.

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  5. As long as the bridge is not hacked then it will keep its peg. Even if you have a big sell-off, that just creates an arbitrage opportunity.

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