Silicon Valley Bank collapsed on March 10.
Circle, the issuer of USDC, announced they had $3.3B in deposits at SVB, which triggered panic among USDC holders.
It fails to reach $0.80.
Here are the factors:
DAI de-pegged because it’s 43% backed by USDC.
DAI, the 4th largest crypto stablecoin hit $0.886 during the panic, raising fears of under-collateralization.
The governance token $MKR fell by 26.1%.
FRAX, the 6th largest #stablecoin, partly backed by USDC, saw the largest de-peg at $0.877 amid USDC fears.
Governance token FXS fell 20.4%.
DeFi users pulled USDT from liquidity pools and lending, avoiding exposure to USDC or USDC-affected assets like DAI and FRAX.
They traded at premiums, with values as high as $1.08.
Both assets were utilized as safe havens, appreciated for their exclusive use of crypto collateral.
LPs fled to USDT, seeking to reduce their exposure to USDC and DAI.
The 3Pool became heavily imbalanced, holding just 1.5% USDT.
Borrow rates for USDC plummeted from 3.4% to 2.1% on Aave V2.
DAI fell from 2.9% to 0.9%.Interest rates for stablecoins like USDT, LUSD, and sUSD soared.
Borrow rates for LUSD rose as high as 75% on March 11.
Most of them exchanged their USDC funds for other assets.
Some bought in at the bottom: @VitalikButerin, @worthalter, and Taureon Capital. Read more on it, here
Even though it de-pegged, USDC remained redeemable 1 for 1 with the U.S. Dollar.
@Circle stayed true to their 1:1 promise.
Read more on it, here
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