Most of the USDT collateral comes from US Treasuries. Citing Paolo Ardoino, the company’s technical director, Bloomberg wrote that over the past six months, the issuer of stablecoin Tether has reduced its positions in commercial securities.

According to him, the share of collateral in private paper “continues to decline.” He explained that this structure of the reserve enabled the company to quickly meet USDT redemption requirements.

“The worst-case scenario is for Tether to simply shrink,” the CTO added.

Amid the cryptocurrency market crash on May 12, the price of USDT briefly lost par against the US dollar. Ardoino stressed that the company has no problems repaying its obligations – it has bought back $600 million in assets in the last 24 hours.

According to the expert, the collapse of the algorithmic stablecoin UST was caused by the extremely rapid growth of the asset. Therefore, Terra could not guarantee a refund in case of a drop in the price of cryptocurrencies.

Ardoino also noted that the UST is basically the income farming tool in the Anchor Protocol. According to him, this was another reason for the collapse of the ecosystem due to the asset’s lack of real use cases.

Recall that in March, the media reported that the American hedge fund Fir Tree Capital Management took a “significant” short position against USDT. The structure is allegedly based on the decline in the value of the securities from the stablecoin issuer’s reserves.