Tether’s stablecoin USDT has recently lost its dollar peg, leading to an imbalance in major stablecoin trading pools. The shift has been triggered by traders exchanging millions of USDT for other popular stablecoins like USDC and DAI on Uniswap and Curve pools. This movement resulted in USDT balances on Curve’s 3pool rising to over 70%, suggesting trades worth tens of millions.
The intended balance for the Curve 3Pool is equally distributed, with each of the three stablecoins – USDT, USDC, and DAI – accounting for roughly 33.33% of the pool. However, the imbalance has led to a much larger USDT balance compared to USDC and DAI. Presently, the pool holds over $300 million of USDT, while only containing $55 million each for DAI and USDC.
This significant selling pressure has further caused USDT to distance from its primary peg of $1. As of now, USDT trades at $0.996788, a 0.4% drop over the past day. Tether CTO Paolo Ardoino commented on the ongoing situation, blaming edgy markets and opportunistic attackers. He assured that Tether is prepared for any outcome, and ready to redeem any amount.
It is crucial to note that the Curve 3Pool previously experienced imbalances in March when the USDC and DAI ratios rose to above 45% each. Last year’s imbalance in November stemmed from the collapse of crypto exchange FTX, while a similar situation occurred after the Terra ecosystem crash in May 2022.
Historically, Tether has been surrounded by controversies, with several people questioning the company’s claims of having enough reserves to support the one-to-one peg, as well as the quality of assets underpinning those reserves.
Despite the recent selling pressure, USDT’s market capitalization reached a record high of over $83.2 billion, recovering the $20 billion in value lost following the TerraUSD stablecoin collapse last year. In contrast, other stablecoins like USDC, which holds a market cap of around $29 billion, have not been as successful in recovery, remaining far below their all-time highs.
Currently, USDT commands a more than 65% share in the stablecoin market, while other major players like USDC, BUSD, and DAI claim market shares of around 24%, 5%, and 4%, respectively. Considering these market dynamics, it remains to be seen whether the recent imbalance in stablecoin trading pools will have lasting effects on the broader cryptocurrency landscape while Tether continues to face scrutiny about its dollar peg.
Source: Cryptonews
