The stability of Tether (USDT), the prominent stablecoin in the crypto market, faced a momentary disruption on June 15 as it deviated slightly from its long-standing one-to-one peg to the United States dollar. This minor fluctuation, a 0.3% decrease to approximately $0.997, was primarily caused by an imbalance in Curve’s 3pool, a decentralized finance platform that holds significant liquidity in three leading stablecoins: USDT, USD Coin (USDC), and Dai (DAI).
The Curve’s 3pool Imbalance:
Curve’s 3pool functions as a hub for stablecoins within the decentralized finance ecosystem. Recently, the weightage of USDT in the pool surged to over 70%, surpassing its usual share of 33.1%. Such an increase in USDT concentration signifies heavy selling of the stablecoin in favor of DAI or USDC. Notably, this situation had occurred previously in November 2022 during the FTX collapse, where USDT’s weightage also exceeded 50%.
The Influence of CZSamSun:
The primary cause of the imbalance in Curve’s 3pool can be attributed to a prominent whale address named CZSamSun. This address borrowed a substantial sum of 31.5 million USDT and subsequently exchanged it for USDC. By utilizing approximately 17,000 Ether and 14,000 staked Ether (stETH) as collateral, CZSamSun converted the borrowed funds into USDC through the 1inch Network. The address then made substantial deposits of $10 million and $21 million to Aave v2 and v3, respectively. Furthermore, CZSamSun took out a USDT loan of 12 million from v3 and deposited it into v2.
Additional Deviation and Trading Impact:
Around 20 minutes after CZSamSun’s borrowing activity, another address (0xd2…0701) mortgaged 52,200 staked Ether (stETH) through Aave v2 and borrowed 50 million USDC by leveraging the USDT/USDC price differential. This slight deviation in the USDT price led to an increase in the USDC/USDT trading pair on Binance, reaching a new yearly high of $1.0034. As a result, USDT accounted for 73.79% of Curve’s 3pool, while DAI and USDC accounted for 13.05% and 13.16%, respectively.
Reassurances from Tether’s CTO:
To address concerns within the crypto community regarding the depeg scare, Tether’s Chief Technology Officer, Paolo Ardoino, took to Twitter to reassure users that the situation is not a cause for worry. Ardoino emphasized Tether’s readiness to redeem any amount and shared a humorous “FUD meme” while addressing market rumors surrounding the stablecoin’s depegging.
A Recent History of Stablecoin Depegging:
This incident follows closely on the heels of the USDC depegging episode that affected numerous investors’ portfolios a couple of months ago. In March, USDC experienced a temporary depeg, dropping below $0.90, as Circle confirmed that over $3 billion was momentarily inaccessible due to issues with Silicon Valley Bank. Although Circle swiftly resolved the situation and restored USDC’s peg to the dollar within two days, the initial panic triggered many traders to exit USDC at a loss.
While Tether’s temporary deviation from its dollar peg caused a brief disturbance in the market, Tether’s leadership has reassured the community of its ability to maintain stability and redeem any outstanding amounts.
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