Reading 3 min Published Updated
Tether-issued USDT stablecoin (USDT) deviated slightly from its dollar peg value on June 15 due to an imbalance in the Curve 3 pool. USDT price dropped 0.3% to around 0.997 as USDT weight on the 3pool curve increased to over 70% from the ideal 33.1%.
3pool Curve is a decentralized finance stablecoin pool that holds massive amounts of liquidity from the top three stablecoins in DeFi — USDT, USDC, and DAI. A significant increase in the weight of a particular stablecoin in the curve pool indicates large sales of that stablecoin.
The weight of USDT is around 73.8%, which means that traders are increasingly selling their USDT for DAI or USDC. USDT concentration in Curve 3pool exceeded 50% for the last time in November 2022 during the FTX crash.
The main reason for the imbalance was due to the address of a whale called CZSamSun who borrowed US$31.5 million and exchanged it for a Circle-issued United States Dollar Coin (USDC), resulting in a slight deviation in the dollar peg against the US dollar. With 17,000 ETH and 14,000 stETH as collateral, and then converted the borrowed amount into USDC using 1 inch.
The borrower then made contributions to V2 and V3 totaling $10 million and $21 million, respectively. After that, the borrower took a loan of $12 million from V3 and invested it in V2.
About 20 minutes after czsamsun.eth borrowed USDT, another address (0xd2…0701) pledged 52,200 stETH via Aave V2 and borrowed $50 million. Using a USDC>USDT depeg with several million USD,
A slight USDT price deviation helped the USDC/USDT trading pair on Binance rise to a new yearly high of $1.0034. USDT accounted for 73.79% of Curve 3pool, DAI for 13.05% and USDC for 13.16%.
Related: SEC, CPI, and ‘strong bounce’ – 5 things to know about bitcoin this week
Tether CTO Paolo Ardoino took to Twitter to reassure the cryptocurrency community that concerns about depegging are nothing to worry about and they are ready to buy back any amount. Later, Ardoino also shared the “FUD meme” and also responded to market rumors about Tether depeg.
pic.twitter.com/QmHyYDNgwX
— Paolo Ardoino (@paoloardoino) June 15, 2023
The latest threat to the stablecoin depegs came just months after the USDC depegs, which hurt the portfolios of many investors. In March earlier this year, the USDC peg slipped below $0.9 as Circle confirmed they had over $3 billion stuck in Silicon Valley Bank. Although Circle managed to raise enough capital to restore USDC’s value against the dollar within two days, the panic caused by the depegging caused many traders to exit USDC with a loss.