Stablecoins: Week in Review in Charts - 6/16
It was a busy week for the stablecoin market amid a not-so-stable regulatory/macro environment. We recap the biggest stablecoin developments with supporting charts.
USDT price falls below $1 on June 15
USDT depegged slightly early on 6/15 with its price hitting a low of ~$0.995 before recovering back to $0.999 by the evening. Tether published a blog post noting peculiarities in the timing of the sell pressure, which coincided with CoinDesk’s acquisition of Tether’s historical reserve documentation from the NYAG relating to Tether’s 2021 settlement.
Increased selling pressure of USDT leads to large imbalance of Curve 3pool
Since June 12, large amounts of Tether were swapped for USDC and DAI in Curve’s 3pool, resulting in the pool becoming imbalanced. At the height of it on 6/15, USDT’s mix in the 3pool increased to over 75% while the available supply of USDC and DAI in the pool briefly dipped below $100m before partially rebalancing over the course of the day.
Borrowing demand for USDT spikes on Aave and Compound
Increased borrowing demand for USDT on Aave v2 Ethereum markets led to a brief spike in borrowing rates to over 20% on June 15.
USDT markets on Compound v2 on Ethereum also experienced increased borrowing demand as utilization rates topped 90%.
Binance swaps 750m USDT on Tron for USDT on Ethereum on June 12
Tether experiences modest redemption requests after USDT loses peg
Tether experienced redemption requests totaling $400m on June 15 after losing its peg as market participants took advantage of the arbitrage opportunity from the mispricing (as a reminder, Tether charges 0.1% of volumes to process mint/redeem requests so there is a hypothetical arbitrage window when USDT trades outside the range of $0.999 - $1.001).
TUSD mint/redeems via Prime Trust paused on 6/10; 1bn+ TUSD mint adds over 50% to supply on 6/15
TUSD mints via Prime Trust were paused on June 10 while the TUSD team tweeted, “TUSD minting and redemption services remain unaffected and will continue to operate as usual. We want to assure you that our partnerships with other banking institutions remain intact, allowing for seamless transactions.” Five days later on 6/15, over ~1.07Bn of Tron TUSD was minted to a Binance address in a single transaction, which added more than 50% to the total TUSD supply that currently sits at over 3Bn TUSD.
crvUSD supply expands to new highs while Curve founder faces new challenges
The supply of crvUSD expanded to over $35m since launching last month. Meanwhile, Curve founder Michael Egorov faces new charges from VC firms and Gauntlet advised Aave to temporarily freeze CRV markets due to Egorov’s risky position as the largest account holder.
DAI’s reliance on USDC continues to fall as MakerDAO governance approves important Protocol changes
MakerDAO passed an important executive vote on 6/15 that will implement changes to the Maker Protocol including: (i) increasing the Dai Savings Rate from 1.00% to 3.49%, (ii) increasing the Spark Protocol—Maker’s new lending platform—debt ceiling from 5m to 20m DAI, (iii) onboarding rETH as a new market into Spark, and (iv) onboarding BlockTower Andromeda as RWA015-A.
DAI finally regains #3 position among stablecoins after BUSD continues to be redeemed
On June 15, after 95m BUSD was burned by the Paxos Treasury in a single transaction, DAI regained the #3 position among stablecoins. Recall, Paxos was ordered to cease new issuance of BUSD earlier this year in February.