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Tether choosing to confront S&P head-on is probably the most explosive news recently. On November 26th, S&P published a report downgrading its assessment of Tether’s asset quality from “constrained” to its lowest tier, “weak.” S&P noted that the proportion of high-risk assets backing the stablecoin has increased, including corporate bonds, precious metals, Bitcoin, and secured loans. As of the end of September, these assets accounted for 24% of total reserves, significantly higher than 17% a year earlier. From an asset allocation perspective, an excessive proportion of high-risk assets results in very low fault tolerance, especially under the current downward trend in BTC price, which may lead to under-collateralization risks for the stablecoin. What does this mean? Simply put, S&P believes Tether’s asset composition is unhealthy, with too many high-risk assets. Once something goes wrong, it becomes prone to liquidity shortages, which could affect USDT’s ability to maintain its peg to the U.S. dollar. As the world’s largest stablecoin, USDT has a circulating supply of about $184 billion. In response to such criticism, Tether’s CEO chose to confront S&P directly. Tether CEO Paolo Ardoino responded to the rating, saying the agency’s traditional models have “been hurting investors for decades,” and emphasized that Tether is well-capitalized and has “no toxic reserves.” Finally, Paolo Ardoino expressed a strong and uncompromising stance: “We wear your disgust as a badge of honor.” The cause and effect are clear, but the story is far from over. Many people’s first reaction is: USDT has never depegged in all these years—so why is S&P suddenly taking harsh action? Why Did S&P Choose to Downgrade USDT Now? On the surface it’s about reserves, but fundamentally it’s the result of long-term risk accumulation. Superficially, S&P's reasons seem straightforward: Increased proportion of high-risk assets Insufficient disclosure transparency Reserve management not aligned with traditional financial standards Lack of a clear asset segregation system Declining high-risk asset prices may cause under-collateralization But you must understand: these issues are not new in 2024—they have always existed. Then why is the downgrade happening now? 1. Global interest rates have entered a “high plateau turning point,” and stablecoin reserve risk models are being re-evaluated For institutions of this magnitude, decisions are not made based on micro-level factors—they are based on macroeconomic shifts. The biggest variable in 2024–2025: Persistent uncertainty around the Federal Reserve’s policy direction. High interest rates → U.S. Treasury yields surge → stablecoin issuers generate explosive profits. This has created a structural shift: Stablecoin profits are now tightly linked to their exposure to risk assets. In other words: Previously, stablecoin issuers could easily earn yield simply by buying short-term U.S. Treasuries. But now, issuers are holding increasing amounts of: Bitcoin Gold Corporate bonds Secured loans Non-standard assets This raises a key concern for traditional rating agencies: Have stablecoins transformed from low-risk financial tools into “unregulated shadow money” with embedded credit risk? This is the first major implication behind S&P’s downgrade: Stablecoins are no longer simple digital representations of dollars—they have become “quasi-financial institutions carrying portfolios of risky assets.” 2. After the crypto market crash, risk assessment models have tightened again Looking from a broader macro lens: The December 2025 crypto market crash forced all risk assets into a new scrutiny cycle. BTC dropped 30% in under two months. Ethereum ETF saw continuous outflows. Tech stocks faced valuation doubts. Under such conditions, rating agencies must reassess the shock absorption capacity of stablecoins. Thus, S&P’s downgrade is essentially a natural result of cyclical market behavior: When markets rise → risks are ignored When markets panic → risks are emphasized This is not about targeting Tether—it is a “risk recalibration” for the entire industry. 3. Global regulators increasingly view stablecoins as systemic financial infrastructure Regulation has always been the strongest force shaping crypto. From EU MiCA to U.S. stablecoin legislation, there is a clear trend: Stablecoins will be incorporated into formal financial regulation. Under this trend, rating agencies must release early warning signals: “Stablecoins must reach banking-level standards for transparency and reserve structure.” Thus, this downgrade is a signal flare announcing the arrival of the “fully regulated stablecoin era.” The Real Risk of USDT Is — It’s Too Important, Too Systemically Critical to Fail Many people ask after seeing the downgrade: Will USDT depeg? To answer this, one must understand a crucial premise:USDT’s biggest risk is not a small deviation from $1—Its biggest risk is systemic contagion. Here’s USDT’s role in crypto: Largest stablecoin globally Over $184 billion in market cap Almost all DeFi architecture relies on it OTC desks, market makers, exchanges use it as settlement base Even functions as a “shadow dollar replacement” in several countries So the real danger is not price fluctuation—It’s that if USDT faces a confidence crisis, the liquidity backbone of the entire crypto market collapses. That is why this downgrade has an impact 10× larger than normal. Below are the key risk points the industry is concerned about—exactly what S&P targeted. 1. Higher proportion of high-risk assets → more volatile collateral quality Industry data estimates: 2023: 7% 2024: 17% 2025: 24% In under two years, the high-risk asset share tripled. With U.S. Treasury yields already lucrative, why does Tether hold high-volatility assets? There is only one reason: to expand profits. But higher profits = higher risks.Especially with BTC:If BTC drops by 20–30%, collateral coverage deteriorates rapidly.And the more fearful the market becomes, the greater the redemption pressure on USDT.The greater the redemption, the larger the liquidity stress.This becomes a systemic feedback loop. This is one of S&P’s core reasons for rating USDT as “weak.” 2. No banking-level asset segregation mechanism Traditional finance requires: Asset segregation Independent custody Counterparty risk disclosure Transparent risk exposure But Tether’s structure is: Reserves managed internally Custodians not fully disclosed Risk appetite determined internally Disclosure not aligned with traditional auditing frameworks Meaning:If Tether encounters corporate-level issues, its reserves may not necessarily prioritize protecting USDT holders.This is unacceptable in traditional financial systems. 3. Transparency remains insufficient — reports are not full audits Tether releases quarterly “Reviews,” not “Audits.” The difference: Review: checks whether numbers appear reasonable Audit: rigorously verifies authenticity of every number and process This is why institutions have long questioned:If the data is fine, why not do a full audit?Transparency remains USDT’s biggest vulnerability. What Chain Reactions Will the Downgrade Trigger in the Crypto Market? 1. USDT’s status as the “strong dollar substitute” weakens Over the years, in: High-inflation countries like Argentina, Turkey, Nigeria OTC and exchange liquidity DeFi settlement GameFi and derivatives USDT has functioned as the de facto dollar.But with the downgrade:Institutions, custodians, exchanges, cross-chain bridges.will be forced to reassess USDT’s risk profile. This could lead to: Some institutions reducing exposure Other stablecoins gaining market share USDC, FDUSD, etc., will likely grow over time.It won’t happen overnight, but it will happen. 2. USDC, FDUSD, PYUSD and other “regulated stablecoins” will accelerate market share growth The stablecoin market will likely evolve into:“Regulation-backed vs. Market-consensus-backed” dual competition. This downgrade could be a strong boost for USDC: U.S. regulatory alignment Strict auditing High transparency Conservative reserve structure In Ethereum and DeFi ecosystems, USDC’s acceptance will continue rising. 3. Crypto liquidity models must be rebuilt USDT is the largest “USD entry point” in crypto. If trust weakens: Liquidity decreases Market-making depth declines Volatility increases Cross-chain bridge TVL drops Derivatives depth weakens This means the market’s medium-term volatility may increase, not decrease. 4. Exchanges will face stronger pressure to diversify stablecoin offerings Three categories of exchanges will form: ● Category A: USDT-dependent exchanges Common in Asia and Latin America — difficult to escape reliance. ● Category B: Risk-diversified multi-stablecoin exchanges Binance, OKX, Bybit already adding FDUSD, FDX, USDC, etc. ● Category 😄 Exchanges issuing their own stablecoins In-house stablecoins will become part of their liquidity pools. After the S&P downgrade, Category B and C exchanges will grow faster. 5. DeFi protocols must recalibrate risk models USDT plays a critical role in DeFi infrastructures like: MakerDAO Aave Curve Uniswap Lido GMX When stablecoin risk ratings drop, they must adjust: Lower leverage ratios for USDT collateral Recalculate liquidation curves Update risk parameters Add alternative stablecoin pools This reduces systemic risk but also reduces capital efficiency. 6. Bitcoin may face short-term “sell pressure contagion” This is a widely overlooked point. If USDT redemptions surge, Tether may need to: Sell BTC Sell gold Sell corporate bonds Meaning:BTC may face downward pressure due to stablecoin redemption, not because of its own fundamentals.S&P explicitly highlighted this:BTC price decline → USDT under-collateralization risk.This is one of the first times a major institution has directly linked “BTC downside risk” with “stablecoin systemic risk.” 7. Regulators will use this event to accelerate stablecoin legislation This downgrade gives regulators strong justification. In the future, stablecoins may be required to: Use banking-level audits Adopt asset segregation Disclose custodians Provide daily reserve transparency Cap high-risk asset ratios Participate in cross-border regulatory frameworks Regulatory pressure on USDT will only increase. Summary S&P downgrading USDT essentially signals:The stablecoin industry is moving out of its “wild growth era” into an era of regulatory restructuring.Then, market liquidity structures must evolve, and high-risk reserve models will not remain viable. Investors will need to reassess systemic risks. Tether will remain strong, but it must adapt to the new rules.What this event truly changes is not USDT itself —but how the global crypto market understands safety, transparency, and trust.This will become one of the most important long-term themes in the future crypto industry.
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Oracle is something everyone is familiar with. In previous educational articles, we have already explained the concept and logic of oracles in detail. So now, as the tool that connects the real world and the crypto world, what happens if the oracle gets manipulated? Have you ever thought about this question: Is the price you are seeing actually the real price? Did that question give you chills? If an oracle gets manipulated, DeFi, lending, derivatives, trading markets, and even NFT valuation systems will all become extremely fragile in the very same second. And this happens far more often — and is far more dangerous — than you might imagine. https://news.superex.com/articles/19313.html Why Is Oracle Manipulation the Most “Invisible” Systemic Risk in the Entire Crypto Industry? This involves another question: Where do prices in the real world come from? For example: Stock prices come from the stock market; GDP data comes from national statistical offices; Bank interest rates come from central banks. This is the core advantage of centralized systems — every piece of data comes from an authoritative centralized institution. But this is exactly what the crypto world lacks. There is no authoritative data source, and all prices are synchronized by the component known as the oracle. In other words, every DeFi protocol entrusts its life to a “price feeding system.” So the problem is: If this price feeding system gets attacked, what will happen to all the funds on-chain? The answer is brutal: the protocol will execute smart contracts based on wrong prices, and attackers can complete zero-risk arbitrage and take away hundreds of millions within seconds. Why Is Oracle Manipulation So Terrifying? Because: It does not show obvious signs like a 51% attack. It does not require many victims to cooperate like phishing attacks. It does not require a code vulnerability like contract exploits. It attacks systemic design, not individual projects. In other words, it allows a single attacker to influence the economic system of an entire chain. Nearly all top-tier DeFi protocols have suffered from this type of attack, including: Curve Finance bZx Mango Yearn Synthetix Harvest Cream The structural mispricing system of LUNA–UST This is exactly why more and more security organizations believe that oracle manipulation is the biggest black swan in DeFi. To Understand Oracle Manipulation, We Must First Understand the Essence of Oracles In earlier educational articles, we built a basic understanding of oracle frameworks and logic. Today, we’ll go deeper. Conceptually, an oracle is the bridge between off-chain and on-chain information. It is responsible for transmitting data from the external world into the blockchain, allowing smart contracts to operate with reliable prices. Common data types include: Asset prices (BTC, ETH, BNB, etc.) Commodity prices (gold, oil) Interest rates Volatility NFT floor prices Sports results Weather data KYC information The valuation of RWAs (real-world assets) The primary mission of an oracle is simple: Provide accurate, timely, and manipulation-resistant data.If an oracle’s anti-manipulation capability is weak: DeFi = the attacker’s cash machine. The Nature of Oracle Manipulation: Altering Prices While Smart Contracts Execute Unconditionally One major trait of smart contracts is that they trust only on-chain data and do not trust the external world. This gives attackers an opening. When an oracle delivers incorrect data: Smart contracts automatically treat it as the only correct price. Thus, all on-chain behaviors execute based on wrong prices, including: Liquidation of collateral Borrowing capacity adjustments Perpetual funding rate distortions Incorrect staking reward calculations Faulty AMM curve behavior Overvaluation or undervaluation of RWA collateral Huge swings in NFT floor prices This is exactly what attackers exploit: once they can manipulate the oracle, they can manipulate the protocol’s entire pricing logic. DeFi becomes blind — and attackers hold the radar. Oracle Attack Categories: Four Core Methods + Advanced Composite Attacks Oracle manipulation is not a single technique — it is a complete system of attack methods. Although there are many classification systems, here we reorganize them based on “attack path + economic model,” which is more useful for developers and investors. Category 1 | Thin Liquidity Pool Price Manipulation Attack process: Attacker borrows huge capital via flash loans Executes extreme trades on a DEX (e.g., Uniswap) AMM pool is thin → price moves dramatically DeFi protocols using DEX prices as oracles are misled Attacker exploits wrong prices for high-leverage arbitrage Repays flash loan → keeps profit This mechanism is the root cause behind attacks on bZx, Harvest, Value DeFi, and many others. Why is this attack so classic? Low cost Extremely fast (completed within hundreds of milliseconds) High returns No need for a code vulnerability Fully permitted by public protocol mechanisms If a project uses DEX price as an oracle — it is a massive design risk. Category 2 | Oracle Node Corruption Attackers directly compromise oracle nodes so the nodes submit wrong data. This happens especially in centralized or low-node-count oracle systems. Typical methods: Bribing node operators Controlling oracle decisions via governance tokens Hijacking nodes through network attacks This type of attack is hidden but extremely destructive. Category 3 | Price Update Delay Attacks Some protocols delay oracle updates to save gas. Attackers take advantage of this: Execute arbitrage using outdated prices Profit during highly volatile markets Exploit delayed RWA valuations This attack requires no direct price manipulation — merely exploiting stale prices.Many RWA protocols in 2022–2023 suffered from this. Category 4 | Cross-Chain Oracle Synchronization Attacks As cross-chain systems grow, more projects rely on the same oracle across multiple chains. Attackers exploit different update speeds between chains for arbitrage. Example: Chain A price updates fast Chain B price updates slowly Attacker arbitrages lending protocol through the timing difference These attacks are complex but extremely profitable. Advanced Attacks | Composite Manipulation Top attackers no longer use single attack vectors. Instead, they combine multiple methods: Examples: AMM manipulation + stale prices + governance attack Flash loan + oracle corruption + NFT floor price manipulation Cross-chain timing differences + structural collateral valuation confusion Mango and multiple Cream attacks belong to this category.Composite attacks will become the biggest systemic threat to DeFi. Why Is Oracle Manipulation So Persistent? Understanding Its Underlying Logic To fix oracle manipulation, we must understand why attackers can conduct “legitimate arbitrage within a reasonable framework.” Note — this is legitimate arbitrage, fundamentally different from hacks like cross-chain bridge exploits. Oracle manipulation succeeds due to three core reasons: AMM Models Are Naturally Manipulable (Mathematically Determined) AMM = automated market maker based on math, not order books. In AMM models, if an attacker executes extremely large single-sided trades, prices will shift violently. In the Uniswap v2 x*y=k model, this distortion is very obvious. This is not a bug — it is the mechanism itself. Smart Contracts Cannot “Question” Prices — They Must Accept Them Smart contracts cannot distinguish real vs. manipulated data. They simply accept oracle prices as the absolute truth. Thus, oracle manipulation is a financial attack, not a technical hack. Attacks Can Be Completed in a Single Transaction (Flash Loans) Flash loans reduce: Attack cost → to zero Attack risk → to zero This makes oracle manipulation extremely attractive for attackers. Real Case Studies: Understanding Multi-Million-Dollar Oracle Failures Below are the most representative cases to help you understand these mechanisms clearly. Case 1: Mango Markets Attack (100 million USD) Attacker steps: Artificially pumped the MNGO price Mango lending system relied on this price Price became massively inflated Attacker borrowed huge sums using overvalued collateral Price collapsed → lending pool failed This is the classic “pump oracle price → borrow maximum capital” attack. Case 2: Harvest Finance (24 million USD) Attacker exploited thin liquidity in Curve pools. Flash loans distorted the pool price. Harvest’s oracle lacked protection → entire pool suffered pricing collapse. Case 3: bZx (multiple attacks, total 8 million USD) bZx was not attacked once but several times with similar methods. This proves: If a project uses the wrong oracle architecture, it will NEVER be secure. Impact of Oracle Manipulation on the Entire Crypto Market The impact isn’t limited to a single protocol. It affects: On-chain credit systems RWA legitimacy Lending system stability Reliability of perpetual markets TVL and liquidity inflows Institutional trust toward DeFi An oracle is equivalent to: on-chain central bank statistical bureau + Nasdaq price source + settlement system If oracles are unreliable, DeFi cannot become a real financial ecosystem. How Can Normal Users Avoid Becoming Victims? Just remember these three rules: 1. Do NOT use any borrowing protocol that relies on DEX spot prices This is the number one source of risk. 2. Do NOT collateralize assets in protocols with low TVL and unclear oracle mechanisms If TVL < 20 million USD → high risk. 3. Do NOT participate in borrowing/leveraging long-tail assets Every protocol exploited by oracle attacks shared one trait: They used long-tail assets. SuperEx Perspective: Why We Emphasize This Risk As a global exchange, SuperEx highlights oracle manipulation because: It is the most overlooked black swan in crypto It can destroy a project in 1 second It damages the entire industry’s trust It directly affects user asset safety and on-chain experience It influences exchange listing evaluation policies Oracle manipulation is not a code bug — it is a systemic threat. With the rise of RWAs, on-chain lending, Layer 2 expansion, and cross-chain bridges, this type of attack will only become more complex. SuperEx will continue to monitor and educate users about these risks so more people can understand the real underlying logic of on-chain finance.
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