It was at 95 cents about six hours ago.

Not entirely unexpected to see a dip of that magnitude due to limited liquidity at nighttime when most USD payment rails are offline (market makers don't have infinitely deep pockets), but also not exactly confidence-inspiring.

For the record, USDT was at its lowest point ~$0.91, sometime in April 2017, and seems to have recovered after that as well.

I'd never touch USDT for other reasons (why not use Dai?), but I won't say it doesn't seem like the money printer will go on for just a bit more.

It's like people have never heard of Dai? I don't get it.

Isn't Dai crypto-backed? That would give it a risk profile, but also not make it risk-free: Counterparty risk (Tether) vs. exchange rate risk of the backing assets (Dai).

It's multi-collateralized, so backed by crypto, but also backed by crypto that is backed by actual paper (ie. USDC counterparty risk) and is overcollateralized (so the backing is more than how much $ DAI there is by a substantial margin - ~166%). It has a number of additional clever tricks to keep the peg (burning MKR, etc.), but unlike Terra is not only clever tricks.

Lol, sounds like the mortgage backed assets before the housing crash.

"Back it up with enough securities that are backed up by enough securities that are backed up by enough securities, you will turn the literal shit the eventual security is backed up by into gold".

Most financial instruments are backed by other securities, so it "sounds like" the 2008 crash because it sounds like every financial instrument.

the problem with the crash is that the risk of the junk mortgages was not adequately assessed due to market failure.

How is it overcollateralized? If someone buys on Dai token for $1 then where do the backers of Dai get the extra $0.66?

I encourage you to do your own research, there is more than enough information out there.

The basic jist is that there are two ways of getting Dai, either

1. buying it from someone else with Dai (no extra $0.66)

2. minting it as a loan collateralized by your holdings in some other crypto (which requires $1 + X% backing) where X varies depending on the crypto. I believe you also get paid some "stability" fees for doing this, but I don't remember the detail. Because your vault gets liquidated if your collateral value goes below $1 + X%, people usually go considerably above $1 + X% in their collateral so there is no chance of that happening.

Some DAI is also minted by corporations that the DAO has voted to form a relationship with (so it's secured by actual loans into real-estate), but I believe that as of now this is a very small percentage of the whole.

All dai that you would buy from someone else is minted by #2 . You can see the backing here: https://daistats.com/#/

166% collateral doesn't seem so safe in a market where swings of 20%+ are not uncommon and 50%+ are not unheard of. Plus the value of many cryptocurrencies seem to be correlated and they will shed value together in a bad market. I think the thing that would give me the most confidence is the large portion of USDC collateral - but why not just use USDC then?

> 166% collateral doesn't seem so safe in a market where swings of 20%+ are not uncommon and 50%+ are not unheard of

If vault gets below the $1 + X%, then it is automatically auctioned. You can imagine quickly being able to switch the collateral backing to USDC by voting to raise the X for ETH while vaults are being liquidated in auction.

basically, if ETH falls like this, demand for Dai will skyrocket due to the auctions, and the only collateralization left will be the stable collateral.

The people most likely to be screwed are vault holders whose collateral is auctioned at a discount to boost the price of Dai, but the Dai will remain stable.

> why not just use USDC then?

Because being diversified is good and USDC is entirely centralized.

correction: stability fee is paid by the vault owner towards burning MKR governance token.