“USDT pays you no yield - what a rip off!”

For the world’s poor, zero yield is very competitive with alternative forms of savings.

Take “deposit collectors” as an example. These are individuals who are contracted to come around daily or weekly for pick up cash savings.

At the end of the term, the lump sum is returned to the saver, minus a fee.

A woman may contract to save 10 rupees a day for 220 days. At the end of the term, the woman would have saved Rs2,200, of which Rs2,000 would be returned to her (~$25).

That’s 9% of the total paid to the deposit collector to keep the savings safe. But it’s even worse than that in APY. It works out to nearly NEGATIVE 30% yield on savings.

You can see why 0% APY USDT looks attractive. It’s still safer than storing cash at home where it could be lost or stolen. It’s still invisible to relatives who may come asking for assistance.

The rug risk by @paoloardoino is surely much lower than a local deposit collector in rural West Africa or South Asia.

It’s easy to forget that USDT’s dominance doesn’t come from trying to compete with JPM or HSBC as the most capital efficient stablecoin. They dominate because they do business in places no one else bothers to compete in.

Stablecoin issuers need to know their target market(s). Most issuers ignore the markets with weak competition - like the -30% APY savings instruments - to the detriment of their own growth and the crypto promise to bring services to the underserved.