(Bloomberg) -- Amidst worries that Tether, the world’s biggest stablecoin, was losing its 1-to-1 peg to the dollar, Paolo Ardoino stepped in to reassure investors. Tether’s chief technology officer emphasized that the private company behind the coin that plays a critical role in the crypto ecosystem had no problem with redemptions, including even a $600-million repayment in the last 24 hours.

“Actually the peg was not broken,” Ardoino said on Twitter Spaces Thursday. “It would have been broken if Tether didn’t honor redemption at $1.” Ardoino spoke for an hour together with crypto pioneers Samson Mow, chief executive office of Jan3, and Adam Back, CEO of Blockstream.

Soon after the Twitter Spaces ended, Tether -- known as USDT -- regained its peg, which briefly dropped to 94.55 cents earlier in the day, its lowest level since December 2020. Crypto markets slumped today partly on worries about the future of Tether, where traders park their funds in times of high volatility: About half of all Bitcoin is bought with USDT, per CryptoCompare. A much smaller stablecoin, TerraUSD, known as UST, collapsed this week, and many traders worried that others may follow. Some new crypto users also may have confused UST with USDT.

“That is definitely part of the confusion,” Mow said. “There’s a lot of Tether fud flying around. There’s just a massive confusion and panic in the market.” Bitcoin is down by more than 20% in the last seven days, according to CoinMarketCap.

Much of the Spaces discussion, attended by more than 1,500 people, focused on how Tether is different from TerraUSD. UST’s peg was supposed to be maintained via algorithms and trading incentives, and partly relied on Bitcoin reserves. Tether, meanwhile, keeps more than half of its reserves in U.S. Treasuries, Ardoino said. So when many people want to redeem funds, Tether can sell the securities quickly and comply -- something that UST couldn’t do.

“The worst-case scenario, Tether just shrinks,” Ardoino said. 

Tether’s reserves management is shrouded in mystery, and it settled with New York Attorney General for making false statements about its reserves.

Read more: Bitfinex Settles New York Probe Into Tether, Hiding Losses

Ardoino said that UST’s mistake was in growing too fast to ensure reimbursements could happen even if crypto prices fell. Its usefulness was also limited to yield farming -- users invested it into decentralized finance to earn a yield of up to 20% -- and it wasn’t used in payments or trading, Ardoino said. Tether, meanwhile, is used to buy everything from everyday essentials to homes.

“There’s a real use case behind Tether, and this is missing from the other projects,” said Mow of Jan3.

Blockstream’s Back blamed venture capitalists behind Terra for causing the stablecoin’s downfall by trying to increase the price of a related token, Luna.

“What they were looking to do is push up the value of the Luna tokens,” Back said. “They use some of Luna to juice some of the interest rates to 20%, to incentivize more people to come in. It looks fun until the music stops.”

The bottom line? 

“This puts everybody on notice that you have to make safer, more robust things,” Back said. “It should impose rationality on the market.”

©2022 Bloomberg L.P.