The happening today resulted in a decline of 0.3% in the price of USDT, causing it to trade at approximately 0.997. The deviation occurred as the weightage of USDT in the Curve 3pool increased to over 70%, which is higher than the ideal distribution of 33.1%.
The 3pool of Curve is a stablecoin pool that exists within the decentralized finance ecosystem and is designed to hold a substantial amount of liquidity for the three most prominent stablecoins in DeFi, namely USDT, USDC, and DAI. When the weightage of a specific stablecoin within the Curve pool experiences a significant increase, it is indicative of a considerable amount of selling activity for that particular stablecoin.
The current weightage of USDT in the Curve pool is approximately 73.8%, which suggests that traders are progressively divesting from USDT and instead acquiring DAI or USDC. The concentration of USDT in the Curve 3pool last exceeded 50% in November 2022, which coincided with the collapse of FTX.
The primary reason behind the imbalance in the Curve pool was traced back to a whale address named CZSamSun, which borrowed 31.5 million USDT and exchanged it for Circle’s USD Coin at a rate of $1.00. This transaction resulted in a minor deviation in the dollar-peg value of USDT. The borrower utilized 17,000 ETH and 14,000 stETH as collateral to secure the loan and subsequently converted the borrowed amount into USDC using the 1inch platform.
Subsequently, the borrower proceeded to make deposits amounting to $10 million and $21 million to V2 and V3, respectively. Furthermore, the borrower obtained a USDT loan of 12 million from V3 and deposited it into V2.
Around 20 minutes after czsamsun.eth borrowed USDT, another address with the identifier 0xd2…0701 mortgaged 52,200 stETH via Aave V2, and obtained a loan of 50 million USDC. The borrower utilized the USDC to USDT de-peg mechanism and exchanged a few million USDC for USDT.
The minor deviation in the price of USDT resulted in a new yearly high of $1.0034 for the USDC/USDT trading pair on Binance. Within the Curve 3pool, USDT held a weightage of 73.79%, while DAI and USDC accounted for 13.05% and 13.16%, respectively.
Paolo Ardoino, the Chief Technical Officer of Tether, utilized Twitter to reassure the cryptocurrency community that the de-peg scare was unfounded and that they were prepared to redeem any amount. Additionally, Ardoino shared a “FUD meme” to address the market rumors regarding Tether’s depeg.
The recent scare of stablecoin de-pegging occurred mere months after the USDC de-pegging incident, which caused significant disruptions to the portfolios of several investors. In March of this year, USDC depegged and dropped below $0.9 as Circle confirmed that they had over $3 billion held with Silicon Valley Bank. While Circle was able to restore the value of USDC to the dollar within two days, the de-pegging triggered panic among traders, leading many to exit USDC at a loss.
#USDT #Stablecoin #Traders
