In response to the extraordinary USD Coin stablecoin de-pegging event caused by the collapse of its counterpart Silicon Valley Bank (SVB), cryptocurrency whales have reported severe losses and appear to have embarked on a series of capital flights to protect assets. Du Jun, co-founder of the Huobi Global cryptocurrency exchange, public:
“[Yo] I dodged, LUNA, I dodged 3AC, I even dodged FTX [y su colapso], but I couldn’t avoid Silvergate, nor SVB and USDC. I asked a few cryptocurrency veterans; the losses amounted to more than USD 1,000 million in shares and deposits, myself included. I’m very upset, and it’s time to cut my budget.”
On the same day, blockchain personality and Tron founder Justin Sun supposedly Withdrew a total of 82 million USDC from the decentralized finance (DeFi) protocol, Aave V2, in a series of transactions by converting part of its DAI stablecoin holdings. At press time, 82 million USDC is currently worth $75.26 million.
Speaking of DAI, Maker Dao, the stablecoin’s issuer, filed an emergency protocol on March 11 that, among other things, called for restrictions on DAI minting using USDC in an effort to prevent panic selling. Maker DAO is one of the largest holders of the stablecoin, with more than USDC 3.1 billion ($2.85 billion) in reserves guaranteeing the DAI peg, which also lost its peg to the dollar as a result. Subsequently, crypto projects that incorporate DAI into their tokenomics also suffered losses due to a chain reaction.
Curve Finance, a popular DeFi protocol for stablecoin conversion, reported a record daily trading volume of $5.67 billion due to the events. For context, the protocol only has a total value locked up of $3.77 billion. Some other platforms were simply unable to handle the volume of USDC related trade requests. In one case, a user received only 0.05 USDT after paying more than 2.08 million USDC in an exchange that resulted in a permanent loss. In an update, KyberSwap, the decentralized exchange responsible for facilitating the trade, said that he was “assisting with the recovery of funds”, and they are contacting the user regarding the problem.
Senpai, did you dump all your usdc already?
— Curve Finance (@CurveFinance) March 11, 2023
According to Loki Zeng, a leading DeFi analyst at New Huo Technology, Circle’s reserves are spread between $32.4 billion in treasury instruments, $3.3 billion in deposits at SVBs, and $7.8 billion in other financial institutions. zeng wrote:
“For USDC to go under, it has to meet three conditions; there are plenty of deposits at SVB, and three other banks at risk, the recovery rate on those deposits remains low, and USDC cannot mitigate those losses.”
Zeng added that his personal opinion is that “there is little chance of a problem, and even if there is, it won’t be as severe as FTX.” However, the DeFi analyst added that his estimate for the USDC net worth is “$0.885 in an extreme situation and $0.985 in a normal situation.” At press time, the USDC price has fallen 8.30% in the last 24 hours to $0.9163 per token.
Today, I finally understand the anger that led to the creation of Bitcoin.
Who do you trust with ur livelihood?
A “gov insured” bank that’s not actually insured?
An exchange that goes bust?
A stablecoin that depegs?
a currency that makes you 8% poorer every year?
— Nuseir Yassin (@nasdaily) March 11, 2023
Today I finally understand the anger that led to the creation of Bitcoin.
Who do you entrust your livelihood to?
To a “government insured” bank that isn’t really?
A bankrupt exchange?
A stablecoin that goes bankrupt?
A currency that makes you 8% poorer every year?
Alex Svanevik, CEO of blockchain analytics firm Nansen, also commented that Circle and USDC “can survive.” However, Svanevik also warned that Circle requires “top-notch execution in the days to come” such as “flawless trades” and no “publicity bailouts” being called for. In another tweet, Svanevik also revealed that a user moved 25 million USDC from his PulseX Sacrifice wallet and exchanged it for DAI.
A few hours ago, someone moved $25m USDC out of the PulseX Sacrifice wallet into a new wallet, and swapped it for DAI.
Interesting.https://t.co/c0hZkquuZb pic.twitter.com/Pg3jB4aW1n
— Alex Svanevik (@ASvanevik) March 11, 2023
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