- In one of the transactions destroyed about 723 million coins
- So, investors are massively withdrawing funds
- It is also possible that Circle is changing its custodian bank
Since the beginning of this week, the network has burned over 2.2 billion in USDC stablecoins. This is indicated by the data of the browsers. Of these, $723 million went in one transaction, according to Arkham Intelligence.
As part of other transfers, the amount of burns was slightly less, from 300 to 600 million tokens. As a result, the total volume of USDC burned exceeded $2.2 billion in just two days.
Recall that burning is the process of transferring coins to an address from which tokens can no longer be withdrawn. Thus, the issuer reduces the emission of its tokens.
Reasons for burning USDC
There are several theories about what these Circle operations are about. And most likely there are different reasons.
One of them is massive withdrawals of USDC and reduction in reserve collateral. On Tuesday, USDC net redemptions crossed the $4 billion mark. That is, clients rushed to withdraw their funds after problems with the depegging of the stablecoin and the collapse of the Silicon Valley bank. Distrust remains, despite the fact that the coin has restored its peg to the dollar. And Circle themselves returned access to their deposit in SVB.
Perhaps some of the burns are due to Circle changing banks for custodial storage. During the transfer of reserves from one bank to another, funds are not available. Since the collateral is temporarily gone, the stablecoins are subject to destruction.
