May 2023: Tether’s 1Q 2023 attestation report confirms the thesis that Tether operates like a hedge fund. Only ~85% are backed by USD. The remaining funds are backed by volatile assets.

Tether is hedging against the USD. About half of the remaining 15% that is non usd-denominated, (bitcoin and physical gold bars) both which is inversely related to price of USD. In the latest report, they moved about 90% of their cash deposits out of banks due to the recent bank collapses. Their play basically is not all-in USD? My point is, there is good and bad here. So pick whichever stablecoin that you are most comfortable with. On a sidenote...if the US defaults on its debt... Both usdc and usdt will probably be adversely affected as they have a very significant percentage of their assets in us treasuries(which would probably get downgraded upon us defaulting on its debt).

One alternative is also to construct a synthetic USD position, though that is quite hard to manage, through a DEX with Perps. So every 1 ETH you own, you open a short position of 1 ETH. I'm mindful of the borrow rate on short positions, but I think that's a small price to pay to really circumvent both USDC and USDT.

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Another alternative is to rely on DAI which is overcollaterised, but I don't know enough to assess the usefulness of DAI as pseudo-USD.