Stablecoins in gambling: how USDT helps manage volatility

Who is this for?

This module is for crypto-curious bettors who want more control over their bankroll. If you’ve heard of stablecoins but aren’t sure how they work — or if you’re tired of BTC swings affecting your balance — this guide is for you.

What you’ll learn

By the end of this module, you’ll understand:

• What stablecoins are, and how USDT maintains a 1:1 peg with USD
• Why USDT is useful for avoiding crypto volatility in gambling
• How to bet, hold, and withdraw using USDT on Cloudbet
• The benefits and limitations of stablecoins — including issuer risk

Introduction: the challenge of crypto volatility

Cryptocurrencies like Bitcoin and Ethereum are known for their price fluctuations. While these movements create opportunities, they also introduce risk — especially for bettors. A winning bet can still lose value if the underlying currency drops in price before withdrawal.

Stablecoins offer a practical solution to this problem. In this module, we’ll explore what stablecoins are, how they work, and why USDT (Tether) is a popular option for crypto gambling on Cloudbet.

What is a stablecoin?

A stablecoin is a type of cryptocurrency that is pegged to a stable asset, most commonly a fiat currency like the US dollar. The purpose is to maintain a consistent value, typically at a 1:1 ratio.

Think of a stablecoin like a blockchain-based version of a dollar bill: it exists in the digital world but is designed to stay fixed at $1.

Stablecoins provide the benefits of crypto — speed, security, and global access — without the volatility of traditional tokens.

How USDT maintains stability

USDT (Tether) is the most widely used stablecoin in the world. It is classified as a fiat-collateralized stablecoin, meaning each token is backed by reserves held by the issuer, Tether Ltd.

Key mechanisms behind the peg:

• Collateralization: Tether holds reserves in cash, short-term U.S. treasuries, and other liquid assets.
  
• Redemption model: Authorized users can redeem USDT for USD at a 1:1 ratio, which helps maintain parity in the open market.
  
• Transparency: Tether publishes regular attestations of its reserves, though it is not subject to full regulatory audits.

It is important to note that USDT is not algorithmic and does not rely on demand-driven mechanisms alone. Its value stability is based on traditional financial structures.

Why stablecoins are useful in gambling

Scenario: betting with a volatile asset

Suppose a bettor deposits 0.01 BTC at a market price of $50,000. That deposit is worth $500 at the time of the bet. If BTC drops 15% overnight, the same amount is now worth $425 — even if no bets were placed or won.

Scenario: betting with USDT

Now consider a deposit of 500 USDT. After betting, the balance remains in USDT. Regardless of crypto market activity, the value remains approximately $500. The outcome of the bet determines gain or loss — not market volatility.

This difference makes stablecoins especially attractive to users who prioritize predictable bankroll management and reduced exposure to price fluctuations.

Use case: how to use USDT on Cloudbet

Cloudbet supports direct deposits, betting, and withdrawals in USDT. This allows users to manage funds in a stable currency without needing to convert from BTC or ETH.

Getting started with USDT on Cloudbet:

1. Select the USDT wallet: Choose ERC-20 or TRC-20 network depending on your external wallet.
2. Deposit in USDT: Transfer funds from your personal crypto wallet to your Cloudbet account.
3. Bet in USDT: All bets are placed in the currency of your wallet — no automatic conversion is applied.
4. Withdraw in USDT: Cash out directly to any compatible USDT wallet.

Each user wallet on Cloudbet is currency-specific. This means users can manage multiple crypto wallets — for example, holding both BTC and USDT — and choose which to use for each session.

Risk management: stablecoin strengths and limitations

While stablecoins reduce price volatility, they are not risk-free. Users should be aware of the following:

Advantages:

• Stability: Maintains approximate $1 value, protecting against crypto price swings
  Liquidity: Widely accepted across platforms and exchanges
• Speed: Supports fast transfers with low network fees (especially on TRC-20)

Considerations:

• Issuer risk: Tether Ltd. is a private company. Trust in its reserves is based on attestations, not regulatory audits.
• Regulatory exposure: Stablecoins may face changing regulations, particularly in jurisdictions with active crypto oversight.

While USDT is broadly trusted and battle-tested, users should understand the trade-offs involved.

Who should consider using USDT for betting?

USDT is ideal for bettors who:

• Prefer to keep value constant between sessions
• Use a defined budget and want to avoid volatility-related losses
• Want a familiar currency unit (USD equivalent) when tracking performance

It may be less appealing for users who are seeking exposure to crypto price appreciation alongside betting activity.

Did you know?

During the mid‑2022 crypto crash, Bitcoin experienced single‑day drops of 15–16% and overall declines exceeding 20% from peak levels across several days. Bettors holding BTC simply in their accounts saw fiat-equivalent balances shrink—even without betting—while USDT users avoided that kind of price volatility entirely.

Myth: “Stablecoins are completely safe”

Stablecoins are designed for price stability, but not all are created equal. Algorithmic stablecoins — such as the now-defunct TerraUSD (UST) — have failed dramatically. USDT is not algorithmic and has maintained its peg through multiple bear markets.

However, like any financial tool, stablecoins come with risks:

• Trust in the issuer’s reserves and redemption model
• Exposure to legal or regulatory shifts
• Dependency on centralized infrastructure

Understanding these risks allows users to make informed decisions, rather than assuming stability implies safety in every context.