Things are not looking good for Tether. It’s not so much a matter of if as it is a matter of when Tether will collapse.
And because we dont really know what a tether collapse would look like, it’s hard to predict how this will play out in the market.
Compound finance has acknowledged this vulnerability to the ecosystem by completely disallowing USDT to be used as collateral to loan other assets.
Compound’s USDT audit also references that tether has the ability to implement a fee on transfer.
I think the cream community and governance holders should strongly consider disallowing tether to be used as collateral. The defi ecosystem needs to derisk it’s self from tether .
A few references covering the current status of tether :
https://bennettftomlin.com/ - Bennet has been reporting on the tether situation for quite sometime and should be considered a SME on this topic.
CoffeeZilla recently did a video on this subject, (as a new user i can only include 2 links, search youtube for coffeezilla tether if interested)