USDT’s minor deviation from the greenback sparked concerns that the world’s largest stablecoin could be under pressure.
Curve’s 3Pool – one of the top pools for stablecoin trading – was flooded with USDT sellers, which essentially indicated that traders were accumulating other stablecoins. The move imbalanced the ideal breakdown of 33.33% for each of its three stablecoins – USDT, USDC, and DAI. This subsequently led to a deviation of USDT from $1.
- In recent months, Tether managed to reclaim its dominance in the stablecoin market, especially after the banking crisis that saw investors fleeing from USDC.
- USDT hit a peak near $84 billion. Hence a de-peg event is feared to be catastrophic for the economy.
- The USDC de-peg earlier this year drew regulatory attention to the stablecoin space. Those worries will be magnified if another similar event transpires at a time when some of the crypto heavyweights are facing an intense crackdown.
- Crypto experts, however, noted that there was actually never a de-peg at all since a “stablecoin de-peg is not determined by its price on an exchange, but rather by whether you can redeem 1:1 from the source.”
- Acknowledging the FUD induced by the recent market events, Tether’s CTO, Paolo Ardoino, tweeted,
“Markets are edgy in these days, so it’s easy for attackers to capitalize on this general sentiment. But at Tether we’re ready as always. Let them come. We’re ready to redeem any amount.”
- While it’s still unclear who’s dumping USDT, the deviation has been attributed to a whale address called CZSamSun that borrowed 31.5 million USDT and swapped it for USDC.
- Using 17,000 ETH 14,000 stETH as collateral, the whale in question reportedly converted the entire borrowed stash into USDC via the 1inch Network before depositing to Aave v2 and v3 totaling $10 million and $21 million, respectively. Shortly thereafter, the borrower draw a USDT loan of 12 million from v3 and deposited it into v2.
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