On June 15, the price of USDT stablecoin deviated from its dollar peg value by 0.3% as an imbalance in the Curve 3pool caused concerns among the crypto community. The ideal weightage of USDT, USDC, and DAI in Curve’s 3pool is 33.3% each. However, that day, USDT’s weightage rose to over 70%, indicating a heavy selling of the stablecoin. This imbalance was primarily attributed to a whale address called CZSamSun that borrowed 31.5 million USDT and swapped it for Circle issued USD Coin, causing a slight deviation in USDT’s dollar-peg value.
Curve’s 3pool is a stablecoin pool for decentralized finance that holds substantial liquidity of the three top stablecoins in DeFi – USDT, USDC, and DAI. A significant rise in a particular stablecoin’s weightage in the curve pool generally suggests heavy selling of that stablecoin.
Tether’s chief technical officer Paolo Ardoino took to Twitter to reassure the crypto community that the de-peg scare was nothing to worry about, stating they were ready to redeem any amount. He later shared a “FUD meme” addressing market rumors around the Tether depeg.
This latest stablecoin de-peg scare comes within months of the USDC depeg that caused panic among investors’ portfolios. The USDC depegged below $0.9 in March earlier this year when Circle confirmed they had over $3 billion stuck with Silicon Valley Bank. Though Circle managed to gather enough capital to repeg USDC’s value to the dollar within two days, the panic set in by the de-pegging led many traders to exit USDC at a loss.
Some may argue that the recent de-peg scares highlight the volatility and uncertainty within the cryptocurrency world, where events like these can cause dramatic shifts in perceptions and value. On the other hand, several would claim that such temporary hiccups are inevitable in an emerging market finding its footing amidst the rapid growth and demand for digital currencies.
While these de-pegging incidents can understandably generate skepticism and uncertainty, the steadfast innovation in the stablecoin space and commitment from industry leaders like Tether and Circle to address such issues head-on showcase the versatility and resilience of cryptocurrencies. To navigate such challenges, the crypto community must continue to emphasize education, transparency, and security to ensure the long-term stability and success of digital currencies.
Source: Cointelegraph
