As USD Coin (USDC) was detached from the U.S. dollar following a sale by Silicon Valley Bank (SVB) after it failed to process $3.3 billion of Circle’s $40 million remittance request, the stablecoin ecosystem immediately I felt the effect. Given the collateral influence of USDC, major stablecoin ecosystems have followed suit with the de-pegging from the dollar.
Dai (DAI), a stablecoin issued by MakerDAO, has lost 7.4% of its value as a result of USDC depegging. As of June 2022, it has been confirmed that his DAI supply worth $6.78 billion is collateralized by his $8.52 billion worth of cryptocurrency. data From Statista.
Of the lot, USDC accounted for 51.87% of DAI’s collateral, worth $4.42 billion. Other prominent cryptocurrencies include Ether (ETH) and Pax Dollar (USDP), worth $660 million and $610 million respectively.
As a result, the DAI was unpegged from the dollar and briefly reached $0.897. As you can see below, the stablecoin has recovered to around $0.92 at the time of writing.
Another stablecoin issued by the Tron blockchain, USD Digital (USDD), and the fractional algorithmic stablecoin Frax (FRAX) suffered a similar fate due to negative market sentiment. USDD reacted to USDC’s sell-off, dropping nearly 7.5% and he traded at $0.925, while FRAX fell further to $0.885.
Other popular cryptocurrencies such as Tether (USDT) and Binance USD (BUSD) continue to maintain a 1:1 peg with the US dollar.
Related: USDC Investors Pay $2M and Receive $0.05 USDT in Trying to Avoid Crash
The whole depegging ordeal began after Circle announced that $3.3 billion of its funds had not been processed for withdrawal by the SVB.
$3.3 billion of USDC’s $40 billion reserves remain in SVB after it was confirmed at the end of today that a wire transfer initiated to remove balances on Thursday 1/ had not yet been processed .
— Circle (@circle) March 11, 2023
SVB has been ordered to close by the California Department of Financial Protection and Innovation for undisclosed reasons. However, California regulators have appointed the Federal Deposit Insurance Corporation as the beneficiary to protect insured deposits.
