The stablecoin ecosystem felt an immediate effect as USD Coin (וסד) דעפּעגעד פון די יו. עס due to a subsequent sell-off after Silicon Valley Bank (SVB) did not process $.3.3 billion of Circle’s $40 million transfer request. Given USDC’s collateral influence, major stablecoin ecosystems followed suit in depegging from the dollar.
דיי (דאַי), a stablecoin issued by MakerDAO, lost 7.4% of its value as a result of USDC’s depegging. As of June 2022, $6.78 billion worth of DAI supply was collateralized by $8.52 billion worth of cryptocurrencies, confirms דאַטע from Statista.
Out of the lot, USDC represented 51.87% of DAI’s collateral, worth $4.42 billion. Other prominent cryptocurrencies include Ether (עטה) and Pax Dollar (USDP) at $0.66 billion and $0.61 billion respectively.
As a result, DAI depegged from the dollar to momentarily touch $0.897. The stablecoin recovered to trade around the $0.92 mark at the time of writing, as shown below.
USD Digital (USDD), another stablecoin issued by Tron blockchain, and fractional-algorithmic stablecoin Frax (FRAX) shared a similar fate due to negative market sentiments. USDD responded to the USDC sell-off with a nearly 7.5% drop to trade at $0.925 while FRAX dipped even further to $0.885.
Other popular cryptocurrencies, such as Tether (USDT) און Binance USD (BUSD), continue to maintain a 1:1 peg with the US dollar.
פֿאַרבונדענע: USDC ינוועסטער שעלז אויס $ 2M צו באַקומען $ 0.05 USDT טריינג צו ויסמיידן קראַך
The entire depegging ordeal started after Circle announced that $3.3 billion of its funds were not processed for withdrawal by SVB.
1/ נאָך די באַשטעטיקונג אין די סוף פון הייַנט אַז די ווירעס ינישיייטיד אויף דאנערשטאג צו באַזייַטיקן באַלאַנסעס זענען נישט נאָך פּראַסעסט, $ 3.3 ביליאָן פון די ~ $ 40 ביליאָן פון USDC ריזערווז בלייבן ביי SVB.
— קרייז (@סירקלע) מאַרץ קסנומקס, קסנומקס
SVB was ordered to shut down by the California Department of Financial Protection and Innovation for undisclosed reasons. However, the California regulator appointed the Federal Deposit Insurance Corporation as the receiver to protect insured deposits.
Source: https://cointelegraph.com/news/circle-s-usdc-instability-causes-domino-effect-on-dai-usdd-stablecoins