USDC available on centralized exchanges hit a 12-month high despite the recent disaster surrounding the Depeg event.

USDC CEX Messari
(Source: Messari)

Coinbase was forced to temporarily stop converting USDC to USD as the value of USDC deviated from its fixed price of $1.00.

As demand for USDC plummeted, its value fell sharply by 13% on March 11, hitting a low of $0.87 before Circle offered assurances that redemption operations would normalize by March 13. It has since recovered to $0.95-$0.97.

However, it wasn’t until the US government issued an official statement confirming that all SVB depositors would be refunded that the USDC price finally fully recovered and rose to $0.99. The development has eased concerns among investors previously concerned about the stability of the USDC peg and renewed confidence in the prospects of digital assets.

Curve 3 pool volatility

DeFi has exacerbated volatility caused by the depeg event triggered by concerns about USDC support. One of the largest USDC DEX pools, the Curve 3 pool, assumes that all three stablecoins in it are worth $1.00 if they deviate from this peg. Centralized liquidity mechanisms and incentives lead to further price declines.

DAI is also depeg

Elsewhere in DeFi, USDC was so trusted that it hardcoded assumptions that the protocol was $1.00, such as Maker’s Peg Stability Module (PSM) that supports the DAI peg. Maker and DAI absorbed significant risk and volatility as Bitlerger took advantage of the price discrepancy, resulting in the offloading of over $2 billion USDC to PSM, more than doubling the USDC held by Maker. I was.

Stablecoin supply

USDC’s primary ecosystem, Ethereum, dominates stablecoins with a $38 billion share of the $40 billion supply. However, after the recent USDC depeg event, Ethereum Externally Owned Addresses (EOAs) were sold in large numbers, draining over $4 billion USDC and causing another 12-month low balance held by EOAs. increase.

USDC by EOA
(Source: Messari)

By Jules

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