USDC Down ~10%

Tether had such enormous USD inflows that it all comes down to how they played the rising interest rate environment and maaaybe exposure to Chinese bonds, not whether or not they were fraudulent even as late as a few years ago.

If they did a good job dancing to the music, even a poly-billion dollar hole in their balance sheet will rapidly heal, if it hasn't already. If they did a poor job dancing to the music (see: SVB), this sin would eclipse the comparatively small matter of shady founders pocketing a billion or three.

Lehman Brothers went down before Madoff. USDC goes down before Tether.

It is an irony that USDC is down while Tether is up. It is always good to know other opinions about this in this interesting thread.

Another example, a stable coin based on BTC collateral, Money on Chain (MoC) [1] is working fine and worked fine in the past depeg issue with DAI. This is a great test for a collateral based stable coin. This is always a warning to news addicts that should realize crypto media is not trustworthy.

It seems now that the CeFi and DeFi worlds were more interlaced than we thought before. This is a new challenge.

If Circle and its VC backers don't take the right decisions (e.g. restore the peg even with hard moves) the trust will break for the traditional financial world as well.

[1] https://moneyonchain.com/ (full disclosure: it is a customer from my company)

Yeah, it seems like the SVB reserves are being treated as lost, even though my understanding is that most of the uninsured deposits should be returned (it’s not like SVB was a scam—they had substantial assets, even if not quite enough).

This is the most tempted I’ve been to buy a stablecoin, but I will stay on the sidelines and just watch this one. Edit to clarify: USDC seems like one of the most “above board” stablecoins, but I’m still extremely skeptical stablecoins generally, given their collective history.

Edit: one issue I see is that, given herd mentality and skittishness, it is possible that > 90% of USDC gets withdrawn quickly enough that you could get left holding the bag. Even if USDC is 99% backed, that doesn’t help if you’re left with the last 1% of it (unless the backing company decides to make you whole, at their own loss). I could see that scenario playing out in the crypto world, so I’m happy with my decision to stay away.

Luckily, it's now 0%. /s

Stablecoin provider doesn’t buy up cheap stablecoin: “it’s really suspicious that they’re not buying cheap stables, something’s wrong”

Stablecoin provider buys up cheap stablecoin: “it’s really suspicious that they’re supporting the stablecoin price, something’s wrong”

Easier said than done: they don't have that many assets that are their own; the market depth at 0.9 is probably not much; and they, like everyone else, would take the risk USDC ultimately gets redeemed at 0.9 or whatever the shortfall ends up being. Plus their compliance dude is going to throw a tantrum.

Coinbase seems to be taking steps to have enough liquidity at all times. So they don't lend "or take any action" with user funds unless the user explicitly instructs them to.

> The vast majority of Coinbase client cash is stored in FDIC-insured bank accounts. When a client has a large dollar balance, Coinbase stores their cash in a U.S. government money market fund to keep it safe and liquid. Like all assets on Coinbase, we hold client cash 1:1 and your assets are your assets. We do not lend or take any action with your assets unless you specifically instruct us to.

"How is client cash stored at Coinbase?" - https://help.coinbase.com/en/coinbase/other-topics/other/cli...

Doing something like you describe what also be a huge risk, what happens if USDC falls to 0? Everyone lost their funds? I'm sure there would be countless lawsuits if that was to happen.

Many of their assets are likely in a bank - which is closed until Monday.

coinbase is not letting people buy USDC on their platform

you could buy DAI which is also trading at a discount though

Because it may go to 0

One shouldn't believe anything in finance with 100% certainty. If you think you do you are mis estimating it.

If you have other cryptocurrencies, you can use a bunch of different DEXes to purchase USDC right now.

A popular one is Uniswap, here is USDC: https://app.uniswap.org/#/tokens/ethereum/0xa0b86991c6218b36... (currently trading at 1.000 USD at Uniswap)

I believe this is more a bet on the FDIC, than circle.

Other way around. You’d be selling (or redeeming) the USDC to Coinbase.

You’d have to have assets on chain to buy them on a dex.

They paused USDC to USD conversions until Monday. At that point the arbitrageurs will determine the truth.

It is free money, even Vitalik is in on it: https://etherscan.io/tx/0x4d38e765f7cee35e84d4535d3a1f40ad45...

USDC will repeg back to $1. If it rapidly falls below 0.8, the better buy in opportunity.

Just bought a bunch of Kraken

DAI is far from it's lowest point right now.

They (stable coins) go up and down in small increments all the time, as the peg adjusts. Even Tether at one point was worth 0.91 USD but recovered. They've had a bunch of dips but somehow seem to always recover.

Until they don't, I guess. Haven't happened yet, but shouldn't say it's impossible.

Is the SVB situation a death knell for banks?

That feels like an overreaction given that DAI has only ever been 30-50% USDC and USDC lost 8% of reserves. Though there probably is a loss of trust which is harder to quantify.

That’s because DAI is just a wrapper for USDC nowadays.

Depositing pennies behind a steam roller?

If I'm understanding this correctly... You can take an interest free loan out against your Ethereum and leave your Ethereum untouched. What happens if many people do that and never repay the loan?

As soon as you tether these 0% rate markets to something else, you are suddenly dealing with real like risk that cannot be ignored.