Following the USDC depeg, the DeFi protocol on Curve Finance saw daily trade volume reach records as crypto whales competed for assets.
Since the Silicon Valley Bank (SVB) collapse sent a wave of fear through the markets and caused USD Coin (USDC $0.96) to depeg from the US dollar, Curve Finance has seen its greatest daily trading volume ever, surpassing $7 billion in the past 24 hours.
Major stablecoins including USDC, Tether ($1.01), Frax ($FRAX), Dai ($DAI $0.96), and TrueUSD (TUSD) are supported by Curve’s liquidity pools.
Throughout the recent hours, fear, uncertainty, and doubt spread throughout the cryptocurrency markets, leading to unbalanced pools on the decentralized financial platform as a result of a sell-off of USDC, causing the stablecoin to drop below its $1 peg.
With a market valuation of nearly $42 billion as of January 31, USDC is the second-largest stablecoin and is used as collateral in several stablecoin ecosystems.
Several stablecoins were quickly impacted by its depeg, including the MakerDAO-issued DAI, which was down 5% at the time of writing. On March 11, MakerDAO submitted a “urgent executive request to mitigate vulnerabilities to the protocol” asking for limitations on minting DAI using USDC in order to prevent panic selling.
One of the biggest stablecoin holders is MakerDAO, which has DAI collateralized by more than 3.1 billion USDC ($2.85 billion) in reserves. Crypto whales have reportedly suffered significant losses and appear to be liquidating their holdings in an effort to save their cash.
The USDC’s creator, Circle, said on March 11 that $3.3 billion of its $40 billion in reserves were still in the Silicon Valley Bank, which the California Department of Financial Protection and Innovation had shuttered the day before. In order to safeguard insured savings, the watchdog also named the Federal Deposit Insurance Corporation as the receiver.
Dave Weisberger, co-founder and CEO of algorithmic trading platform CoinRoutes, said in remarks that “the spark could be materializing” and that there is “fodder for a broader contagion event,” putting at risk many startups and tech firms in the nation — a crucial industry for the “sustained growth of the American economy.”
