Stablecoin swapping pool Curve Finance has seen the highest daily trading volume in its history, surpassing $7 billion in the past 24 hours after the collapse of the Silicon Valley Bank (SVB) sparked a wave of uncertainty in the markets and the USD Coin (USDC) US Dollar depegged from peg.
Curve supports liquidity pools for major stablecoins such as USDC, Tether (USDT), Frax (FRAX), Dai (DAI), and TrueUSD (TUSD). Fear, doubt and uncertainty have swept through the crypto markets over the past few hours, leading to unbalanced pools on the DeFi platform due to a USDC sell-off, causing the price of the major stablecoin to fall below its $1 peg.
USDC is the second largest stablecoin with a market cap of over $42 billion as of January 31st and serves as collateral for many stablecoin ecosystems. Its depeg immediately impacted other stablecoins, such as DAI, issued by MakerDAO, falling 5% at the time of publication.
To prevent panic selling, on March 11, MakerDAO filed an “urgent executive proposal to mitigate risks to the protocol” addressing restrictions on minting DAI with USDC. MakerDAO is one of the largest holders of stablecoins with over USDC3.1 billion ($2.85 billion) in reserves backing DAI. Cryptowhales have reported heavy losses and appear to be fleeing their fortunes for capital, Cointelegraph reported.
Circle, the company behind USDC, announced on March 11 that $3.3 billion of its $40 billion in reserves was in Silicon Valley Bank, which was shut down by the California Department of Financial Protection and Innovation the day before. The regulator also appointed the Federal Deposit Insurance Corporation (FDIC) as receiver to protect insured deposits.
In comments to Cointelegraph, Dave Weisberger, co-founder and CEO of algorithmic trading platform CoinRoutes, said that “the fodder is there for a broader contagion event” and that “the spark could materialize,” threatening many startups and tech companies in the country — a critical sector for the “continued growth of the American economy”.
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