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Comment by TekMol | Hacker News Reader

Isn't it even their duty to buy it?

I don't know how USDC is set up. But I thought stablecoins work like this: The creator sells their coins at $1.01, so it will never go beyond $1.01 as it would be cheaper to by from the creator. They buy their coin at $0.99. So it will never go below $0.99 as it would be better to sell to the creator.

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That is definitely not how USDC is set up. The creator takes 1 USD, and gives back 1 USDC and vice versa. In this case, some of the USD held at SVB disappeared, so Circle has less money for the USDC -> USD redemptions. There needs to be a 1:1 backing, otherwise a stable coin is just smoke and mirrors.

    creator takes 1 USD, and gives back 1 USDC and vice versa

How do they make money then?

Transaction fees I think?

They invest the USD. If the investments work out, they keep the profits. If they don’t, the customers just got crypto’d

Short term treasuries. They're a liquidity provider for the US government.

Yes, presumably redemptions will remain open come Monday. As far as I know Circle creates and redeems at par, they don't charge 100bps or whatever.

If they buy and sell at $1, how do they finance their operation?

They buy treasuries and collect 4.5% on $40 billion.

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