How to effectively hedge USDT risk on the chain when unexpected events occur?

How to hedge USDT risk on-chain during unexpected events?

USDT’s share in Curve 3pool has exceeded 70%, causing concern for some. How to minimize risks in case of emergencies? Cryptocurrency researcher Thor Hartvigsen shares his experience on hedging USDT risks through on-chain short-selling strategies. This article is translated and published by TechFlow.

If you want to convert USDT into other stablecoins, you have several options, such as USDC, DAI, FRAX, or decentralized stablecoins similar to LUSD. You can also easily short USDT on-chain: go to a money market like Aave or RDNT Capital, collateralize a less volatile asset like USDC or another stablecoin that isn’t USDT, borrow USDT, and exchange the borrowed USDT for other stablecoins. You can also use leveraged short hedging.

If USDT becomes unpegged, you can repay the loan and earn profits. On Aave on the Ethereum mainnet, the annual interest rate for borrowing USDT is about 2%, but on Arbitrum it reaches 20%. On Radiant, the borrowing fee is 10%, but it’s free if you meet the $RDNT reward criteria.

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Reference: https://www.techflowpost.com/article/detail_12192.html

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