Following institutions, how to hedge USDT short positions on the chain?

Kxp

23-06-15 14:36

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Original author: Thor Hartvigsen

Translated by: Kxp, BlockBeats

Today, I noticed that the proportion of USDT in Curve's 3pool has exceeded 60%, which has caused high market attention due to the serious over-concentration.

Faced with this situation, I can't help but wonder, is this baseless panic or have large institutions gained access to information that we are unaware of?

As a professional investor, I don't want to take a gamble on this matter, so I chose to hedge my USDT short position on the chain. Here are my specific operational methods.

As a major stablecoin exchange platform, Curve has the deepest liquidity in its protocol. However, when the 3pool of Curve becomes imbalanced, stablecoin exchange becomes difficult and susceptible to significant slippage risks.

Currently, this is the situation because many people are selling USDT.

If you want to convert USDT to other stablecoins, there are several options to consider, such as USDC, DAI, FRAX, or decentralized stablecoins like LUSD on the mainnet or VST on Arbitrum. Additionally, you can easily short USDT on-chain:

• Go to currency markets like Aave or Radiant Capital.

• Deposit low-volatility collateral such as USDC or other stablecoins that are not USDT.

• Use these collateral to borrow USDT.

• Convert borrowed USDT to other stablecoins.

• (If necessary, leveraged shorting can also be performed through loop operations.)

If USDT is unanchored, you can repay the loan and profit from it.

Please note that on the Aave Ethereum mainnet, the cost of borrowing USDT is approximately 2% APY, but on Arbitrum it is 20%; while on Radiant, the cost of borrowing USDT is 10%, but if you are eligible for RDNT rewards, you can borrow for free.

Regarding whether USDT will be unanchored, I personally believe it will not. However, since I cannot know the truth behind the scenes, I can only maintain a wait-and-see attitude.

Given that I already have funds stored on Radiant, this short-selling operation is free for me, so I can profit from it.