Stablecoin Weightage Disproportion in Curve’s Pool Spurs Concerns
The Tether stablecoin slightly deviated from its United States dollar peg on June 15 due to an imbalance in Curve’s 3pool. The price of USDT fell by 0.3% to around 0.997 as its weightage in the curve 3pool increased to over 70% from the usual 33.1%.
Curve’s 3pool is a stablecoin pool for decentralized finance holding a massive amount of liquidity in the three top stablecoins: USDT, USD Coin, and Dai. A significant rise in the weightage of a particular stablecoin in the pool indicates heavy selling of that asset.
USDT Sells Heavy as Its Weightage Skyrockets
With USDT weightage at around 73.8%, traders are increasingly selling USDT for DAI or USDC. USDT concentration in Curve’s 3pool previously exceeded 50% in November 2022 at the time of the FTX collapse.
CZSamSun’s Whale Activity Shakes the Pool
The main cause of the imbalance was attributed to a whale address called CZSamSun that borrowed 31.5 million USDT and swapped it for USDC, leading to a slight deviation in USDT’s U.S. dollar peg value. With the help of 17,000 Ether and 14,000 staked Ether (stETH) as collateral, the address converted the borrowed sum into USDC using the 1inch Network.
The borrower then made deposits to Aave v2 and v3 totaling $10 million and $21 million, respectively. The borrower then took out a USDT loan of 12 million from v3 and deposited it into v2.
Tether’s CTO Dismisses Concerns Amid Market Jitters
Tether’s chief technology officer Paolo Ardoino took to Twitter to assure the crypto community that the depeg scare is nothing to worry about and it is ready to redeem any amount. Later, Ardoino also shared a “FUD meme” and addressed the market rumors around Tether’s depeg.
A Brief Look at the Recent USDC Depreciation Panic
The latest stablecoin depeg scare comes just a couple of months after the USDC depeg that caused havoc on many investors’ portfolios. USDC depegged below $0.90 in March as Circle confirmed it had over $3 billion stuck with Silicon Valley Bank. Although Circle managed to gather enough capital to repeg USDC to the dollar within two days, the panic triggered by the depegging led to many traders exiting USDC at a loss.
