Tether claims to be "fully backed." But backed by what? Their reserves include commercial paper, secured loans, corporate bonds, and "other investments" - not cash in a bank.
Hypothesis HY10003
Tether claims to be "fully backed." But backed by what? Their reserves include commercial paper, secured loans, corporate bonds, and "other investments" - not cash in a bank.
Trading hypothesis
What traders get wrong
False assumption:
"USDT is fully backed by USD. Tether has the reserves."
Truth:
Tether's reserves are not USD - they're a mix of commercial paper, secured loans, and 'other investments'.
Problem for trader:
'Backed' doesn't mean 'backed by cash'. Reserve assets may not be liquid in a crisis.
Key takeaways
What you should consider as a trader
- Cash ≠ reserves - Tether's attestations show significant non-cash reserves.
- Commercial paper quality unknown - Who issued it? What rating?
- Loans to unknown parties - 'Secured loans' to whom?
- Attestations aren't audits - No major auditor has audited Tether.
- Liquidity risk is real - Selling reserves in a crisis may realize losses.
Data you need
Understand what actually backs stablecoins
Data points:
- Reserve composition breakdown
- Historical reserve changes
- Attestation timing
- Peer comparison to USDC, DAI
Comparison of data sources
Where to get crucial data feeds
| Source | Availability | Notes |
| Tether Attestations | ⚠️ Partial | Self-reported, quarterly. |
| Circle Reports | ⚠️ Partial | More transparent but still self-reported. |
| **Madjik** | ✅ Yes | 🚀 Get API Access Now |
Available metrics for this hypothesis:
| Metric | Description | Change dimensions | Time dimensions | How to use | API spec |
| `ME10001` | Stablecoin peg | • Absolute Value (value) • Relative Change (relchg) • Score 0-100 (score) | • Current (now) • Past 24 Hours (past24h) • Past 7 Days (past7d) | Example | API |
Clean data for AI, A2A, MCP, etc.
Science behind hypothesis
Research supports this hypothesis
Tether settled with NYAG for $18.5M after being found to have lied about reserves.
Bottom line
You can't assess stablecoin risk without seeing the reserves. Knowing that your 'cash' is backed by commercial paper instead of actual cash changes everything about how you should size positions. Madjik aggregates and analyzes stablecoin reserve disclosures, so you can see through the marketing to the actual backing quality.
Practical use
How to use this data in trading:
Monitor USDT/USDC peg for arbitrage opportunities, flight-to-safety signals, and counterparty risk assessment across spot, perpetuals, ETFs, and MSTR.
Detailed examples with Python code, AI agent integration (MCP/A2A), and risk analysis:
| `ME10001` | Stablecoin Peg Trading Guide | Example → |
API Documentation: docs.madjik.io
For informational purposes only. Not financial, investment, tax, legal or other advice.