Circle CEO Jeremy Allaire is speaking out for the first time following USDC‘s depeg from the dollar, which saw over $6.3 billion disappear from the second-largest stablecoin’s market cap. In a new company update also posted to Twitter, Allaire says that USDC is still redeemable for dollars on a 1 for 1 basis. USDC lost […]
The post Jeremy Allaire Says Circle Will Use Own Resources to Cover Shortfalls As USDC Moves Closer to Peg appeared first on The Daily Hodl.
According to insiders, 50% of uninsured deposits will be paid out by next week.
According to a post on Mar. 11 by Bob Elliot, chief investment officer of Unlimited Funds, relief efforts may already be underway less than 72 hours after the collapse of prominent American tech bank Silicon Valley Bank (SVB). Elliot claimed, among many items, that "big banks actively working on buying svb business," the U.S. Federal Deposit Insurance Corporation (FDIC) is planning to cover 95% of uninsured depositors to the acquirer, and that "50pct of uninsured paid out next wk."
Hearing from some insiders:
— Bob Elliott (@BobEUnlimited) March 11, 2023
-big banks actively working on buying svb business
-fdic considering insurance / liquidity covering up to 95pct of uninsured depositors to acquirer
-Monday 250k on track
-50pct of uninsured paid out next wk
Cant confirm myself but seemed worth sharing
Cointelegraph reported earlier today that Circle, the issuer of the USD Coin (USDC) stablecoin, had over $3.3 billion in reserves stuck in the troubled bank out of a total of over $40 billion. In addition, SVB reportedly custodied an estimated $5 billion in funds for prominent blockchain venture capital firms such as a16z, Pantera Capital, and Paradigm. Earlier today, USDC depegged from its one-to-one U.S. dollar peg to trade as low as $0.87 apiece before slowly re-pegging to trade at $0.95 at the time of publication.
Although the reports are currently unverified, multiple sources confirm that many different tracks to resolution are being worked on and that depositors will get back "at least 50% of their deposits" by next week. "Long term it's likely they get 90%+ back and very possible no depositors loses a single $," Hal Press, founder of investment firm North Rock LP, stated.
On the same day, Mike Moïse, Associate DirectorAssociate Director of business advisory firm CrossCountry Consulting, also made similar comments, citing secondary sources:
"SVB's customers will have $250k unfrozen on Monday, and ~50% of the remaining balance dividended to depositers within 1-2 days of Monday (money market accounts likely to get 100%). The remainder will be dependent upon future recoveries; most recovery will be within 3-6 months."
Previously, DeFi analyst Loki Zeng estimated that the net value of USDC is "$0.885 at extreme situation and $0.985 at normal situation" and commented: "even if there is an issue, it won't be as severe as FTX." Alex Svanevik, CEO of blockchain analytics firm Nansen, also said that the Circle and USDC "can make it," so long as "top-class execution" is conducted in the next few days. Similar to USDC, the DAI stablecoin, which is itself collateralized by over 3.1 billion USDC, has paired most of its losses and is trading at $0.97 per coin at the time of publication. Earlier today, Maker DAO, DAI's issuer, filed an emergency proposal amending protocol risk parameters in wake of the USDC depegging event.
On March 11, 2023, the decentralized finance project Makerdao issued an emergency proposal following the USDC depegging incident that saw the stablecoin dip down to $0.877 per unit. At the time of writing, Makerdao commands $3.1 billion in USDC collateral that backs a portion of the project’s stablecoin, DAI. Makerdao Proposes Changes to Limit Exposure […]
The depegging of the USDC stablecoin has affected other stablecoins, which in turn wreaked havoc on crypto projects and stakeholders in a massive chain reaction.
In response to the extraordinary depegging event of the USD Coin stablecoin caused by the collapse of its counterparty Silicon Valley Bank (SVB), crypto whales have reported severe losses and appear to have embarked on a series of capital flight to protect assets. Du Jun, co-founder of cryptocurrency exchange Huobi Global, posted:
"[I] dodged, LUNA, dodged 3AC, even dodged FTX [and their collapse], but I couldn't avoid Silvergate, nor SVB and USDC. Asked a few crypto veterans; losses amounted to >$1 billion in stock and deposits, myself included. I'm very upset, and it's time to cut down on my budget."
The same day, blockchain personality and Tron founder Justin Sun reportedly withdrew a total of 82 million USDC from decentralized finance (DeFi) protocol from Aave V2 over a series of transactions and swapped from stablecoin DAI. At the time of publication, 82 million USDC is currently worth $75.26 million.
Speaking of DAI, Maker Dao, the stablecoin's issuer, filed an emergency protocol on Mar. 11 that, among many items, called for restrictions on minting DAI using USDC in an effort to prevent panic selling. Maker DAO is one of the largest holders of the stablecoin with over 3.1 billion USDC ($2.85 billion) in reserves collateralizing DAI, which also depegged as a result. Subsequently, crypto projects incorporating DAI in its tokenomics, too, suffered losses due to a chain-reaction.
Curve Finance, a popular DeFi protocol for trading stablecoins, reported a historic all-time high daily trading volume of $5.67 billion due to the events. In context, the protocol only has a total value locked of $3.77 billion. A few other platforms simply could not handle the sheer volume of trade requests relating to USDC. In one incident, a user received just 0.05 USDT after paying over 2.08 million USDC in a swap that resulted in permanent loss. In an update, KyberSwap, the decentralized exchange responsible for facilitating the swap, said it was "assisting with funds recover," and is in touch with the user regarding the issue.
Senpai, did you dump all your usdc already?
— Curve Finance (@CurveFinance) March 11, 2023
According to Loki Zeng, a prominent DeFi analyst at New Huo Technology, Circle's reserves are spread between $32.4 billion in treasury instruments, $3.3 billion in deposits at SVB, and $7.8 billion in deposits at other financial institutions. Zeng wrote:
"For USDC to go bust, it needs to satisfy three conditions; there is an abundance of deposits on SVB, and three other at-risk banks, the recovery rate for such deposits remains low, and USDC cannot mitigate such losses."
Zeng added that his personal opinion is "there is a low probability of an issue, and even if there is an issue, it won't be as severe as FTX." Nevertheless, the DeFi analyst added that his estimate for the net value of USDC is "$0.885 at extreme situation and $0.985 at normal situation." At the time of publication, the price of USDC has fallen 8.30% in the past 24 hours to $0.9163 apiece.
Today, I finally understand the anger that led to the creation of Bitcoin.
— Nuseir Yassin (@nasdaily) March 11, 2023
Who do you trust with ur livelihood?
A “gov insured” bank that’s not actually insured?
An exchange that goes bust?
A stablecoin that depegs?
Or a currency that makes you 8% poorer every year?
Alex Svanevik, CEO of blockchain analytics firm Nansen, also commented that Circle and USDC "can make it." However, Svanevik also warned that Circle requires "top-class execution over the next few days," such as "flawless redemptions," and no calls for "bailouts publicity." In another tweet, Svanevik also revealed that a user moved 25 million USDC from their PulseX sacrifice wallet and exchanged it for DAI.
A few hours ago, someone moved $25m USDC out of the PulseX Sacrifice wallet into a new wallet, and swapped it for DAI.
— Alex Svanevik (@ASvanevik) March 11, 2023
Interesting.https://t.co/c0hZkquuZb pic.twitter.com/Pg3jB4aW1n
USD Coin (USDC) is struggling to maintain its peg to the US dollar after revelations that some of the cash backing the top stablecoin is stuck in Silicon Valley Bank. The Boston-based firm says $3.3 billion of the $40 billion backing USDC is locked in the collapsed bank, which is now controlled by the FDIC. […]
The post $6,300,000,000 Erased From USDC Market Cap As Top Stablecoin Depegs From US Dollar appeared first on The Daily Hodl.
On Saturday, March 11, 2023, crypto advocates are concerned as a few stablecoin assets have depegged from their $1 parity. The second-largest stablecoin USDC, issued by Circle Financial, fell below $0.90, reaching a low of $0.877 per coin. Additionally, around five other stablecoins have dropped below the U.S. dollar parity during the early morning (ET) […]
"Proposal(s) implementing the above changes are expected to be posted in the next ~12 hours or less," says Maker.
According to a forum post from Maker DAO, issuer of the U.S. dollar-pegged DAI stablecoin, on Mar. 11, the firm requested an "urgent executive proposal to mitigate risks to the protocol." Maker said that it possessed multiple collaterals "exposed to USDC tail risk" in light of the extraordinary de-pegging of the USD Coin (USDC) stablecoin that began on Mar. 10. Maker DAO currently possesses more than 3.1 billion USDC in collateral backing its DAI stablecoin.
Firstly, Maker proposes reducing the debt ceiling of UNIV2USDCETH-A, UNIV2DAIUSDC-A, GUNIV3DAIUSDC1-A, and GUNIV3DAIUSDC2-A liquidity provider collaterals to 0 DAI. Next, Maker wants to reduce daily minting limits of its USDC peg stability module from 950 million DAI to 250 million DAI and increase the fee from 0% to 1% to prevent "excessive dumping of USDC." Another stablecoin module, GUSD, will also see its daily minting limit reduced from 50 million DAI to 10 million DAI if the proposal passes.
Maker also wants to eliminate exposure to decentralized finance protocols Curve and Aave in their entirety. According to Maker, Curve "uses a fixed $1 price for USDC," which "presents a risk of bad debt accrual and potentially bank runs with cascading market insolvency if the market price of USDC falls significantly below the current collateral factor." While Aave doesn't possess such risks, Maker nevertheless stated that its "overall risk-reward of depositing funds into the D3M are not favorable under current conditions."
Finally, Maker proposes to increase the protocol's debt ceiling to the USDP stablecoin issued by Paxos from 450 million DAI to 1 billion. The firm wrote:
"Paxos has relatively stronger reserve assets versus other available centralized stablecoins, consisting primarily of U.S. treasury bills, reverse repurchase agreements collateralized by U.S. treasury bonds. They face relatively lower potential for impairment versus other available stablecoins"
On Mar. 10, USDC depegged from the U.S. dollar after its issuer, Circle, disclosed it had $3.3 billion worth of funds collateralizing the stablecoin stuck on now-defunct Silicon Valley Bank. At the time of publication, USDC is currently trading at $0.9025. In light of the news, the DAI stablecoin has also degged to $0.9235.
Bitcoin recovers from the depegging of USDC, the second-largest stablecoin, from the U.S. dollar.
Bitcoin (BTC) refused to let $20,000 support die for good on March 11 as the weekend opened to a battle for lost ground.
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD circling $20,200 at the time of writing.
A brief dip below the $20,000 mark overnight was short lived, and the mood appeared more stable on the day as the initial wave of panic over United States bank stability subsided.
The collapse of SVB Financial, which followed Silvergate in dealing a fresh blow to some crypto firms, nonetheless continued to play out.
At the heart of the debacle this time was Circle, the Blockchain firm which overnight revealed that it had lost part of the reserve funds for its stablecoin, USD Coin (USDC) with SVB.
USDC immediately began to slide from its U.S. dollar peg, and at the time of writing was redeemable for only $0.91, while at one point making Bitcoin worth more than $26,000 in USDC terms on major exchange Kraken.
"If USDC is only 90% backed, the equilibrium price is NOT $0.90. The equilibrium price is ZERO," Cory Klippsten, CEO of Swan Bitcoin, reacted.
"Everyone has the incentive to redeem asap for $1. You don't want to be in the last 10%, with all the money already gone."
Others believed that the situation was manageable and that USDC, the second largest stablecoin by market cap, would not fail altogether.
2/ The worst has already happened
— Ignas | DeFi Research (@DefiIgnas) March 11, 2023
We now know that 8.2% ($3.3B out of $40B) is currently stuck in SVB, but it doesn't mean that the money is gone.
As Adam pointed out, in a similar FDIC recovery process, we can expect a 94% payout.
So the damage could be around $198M USD. https://t.co/xvshlKuCmZ
In a tweet, Circle itself said that it had a further five banking partners for managing its USDC cash reserves.
Beyond USDC, nerves among traders predictably remained.
Related: Circle’s USDC instability causes domino effect on DAI, USDD stablecoins
Average funding rates were at their most negative since the FTX aftermath in November 2022, indicative of a strong belief that further losses could still enter for Bitcoin.
Analyzing the implications, however, commentator Tedtalksmacro argued that overwhelming bearish bias could provide fuel for a classic "short squeeze" higher on BTC/USD.
"The market remains heavily short here, still. And that could provide fuel for BTC to test at least 21.4k short-term," part of a tweet read.
"Tedtalksmacro added that a squeeze was already "well underway" based on Bitcoin's bounce off multi-week lows beneath the $20,000 mark.
Other popular market participants favored a return to downside in the short term.
"Amongst the madness today, Bitcoin remains good. I am anticipating another drop down to the interim support zone around $19,200," Crypto Tony told followers.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Circle joined other customers and depositors in calling for the continuity of SVB in the US economy.
On March 10, Blockchain payment tech company and USD Coin (USDC) issuers Circle confirmed that wires initiated on Thursday to remove balances have not yet been processed, leaving $3.3 billion of its $40 billion USDC reserves at Silicon Valley Bank (SVB).
Concerns have been growing over USDC late this week due to Circle disclosing in its latest audit that as of Jan. 31, $8.6 billion, or roughly 20% of its reserves, was held up in several financial institutions, including the recently bankrupted Silvergate, and shuttered SVB.
In a bid to provide transparency on the matter, Circle disclosed via Twitter on March 10 that:
“Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.”
Circle said it is now joining other customers and depositors in calling for the continuity of SVB, which the company alleged is important for the U.S. economy. Circle stated on Twitter that it will follow guidance provided by state and Federal regulators.
2/ Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S. economy and will follow guidance provided by state and Federal regulators.
— Circle (@circle) March 11, 2023
Adding to Circle's statement, the firm's chief strategy officer and head of global policy emphasized that "Circle is currently protecting USDC from a black swan failure in the U.S. banking system," as he called for a SVB rescue plan from the Federal Deposit Insurance Corporation (FDIC):
Without a Federal rescue plan - will have broader implications for business, banking and entrepreneurs.
We join the calls from policymakers, regulators, investors, businesses and, most of all, people who rely on a well-functioning U.S. banking system as a condition precedent of growing an economy. We will all be smarter on Monday.
— Dante Disparte (@ddisparte) March 11, 2023
Notably, prior to the announcement USDC was sitting below its $1-peg at $0.98 as per CoinGecko data, however promptly after, the price has dropped significantly to $0.93 at the time of writing.
The statement followed news that Silicon Valley Bank, a major financial institution for venture-backed companies, was shut down by California's financial watchdog, making it the first Federal Deposit Insurance Corporation-insured bank to fail in 2023.
Although the exact reason for the closure remains unclear, the California regulator appointed the FDIC as the receiver to protect insured deposits. SVB, one of the United States' 20 largest banks by total assets, provided financial services to several crypto-focused venture firms, including Andreessen Horowitz and Sequoia.
Adding to the USDC related woes, roughly 30 minutes after Circle's latest statement, Coinbase announced that it is "temporarily pausing USDC:USD conversions over the weekend while banks are closed."
"During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions," the firm stated.
We are temporarily pausing USDC:USD conversions over the weekend while banks are closed. During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions.
— Coinbase (@coinbase) March 11, 2023
Such a move highlights the difficulty that centralized crypto companies are facing now that Silvergate is longer providing them with round the clock banking services.
On the same day, Binance also announced via Twitter that the crypto exchange has “temporarily suspended auto-conversion of USDC to BUSD due to current market conditions, specifically related to high inflows & the increasing burden to support the conversion.”
Binance has temporarily suspended auto-conversion of USDC to BUSD due to current market conditions, specifically related to high inflows & the increasing burden to support the conversion.
— Binance (@binance) March 11, 2023
This is a normal risk-management procedural step to take while we monitor the situation.
“This is a normal risk-management procedural step to take while we monitor the situation,” the firm added.
The Airborne Institute will use the generous grant to study the transmission of airborne diseases such as COVID-19.
According to a Mar. 7 announcement from the University of California San Diego (UCSD), the post-secondary institution has received a 15 million USD Coin (USDC) donation from the Balvi Filantropic Fund. The foundation is currently directed by Ethereum (ETH) co-founder Vitalik Buterin and "is a scientific investment and direct gifting fund for deploying quickly to high-value COVID projects that traditional institutional or commercial funding sources tend to overlook." As told by UCSD, the donation is the largest gift of its kind to a U.S. university and will be used to establish the Meta-Institute for Airborne Disease in a Changing Climate, "The Airborne Institute."
UCSD stated that the newly established institution would focus on the study of airborne diseases like influenza, tuberculosis, and COVID-19. Its ultimate aim is to develop new treatments, vaccines, and diagnostics for these diseases while improving understanding of how they are spread. Buterin said with regard to the development:
"I am pleased to support the creation of this new institute at UC San Diego, which will work to grow our scientific knowledge about airborne disease and share it freely, enabling changes to infrastructure and policy that benefit people around the globe."
Meanwhile, atmospheric chemist and professor at UCSD, commented:
"Working together with health care experts, [...] we will be developing state-of-the-art measurements and computational tools to study these problems. A major goal is to develop a better understanding of the production and sources of airborne bioparticles and how long they remain infectious."
The institute will be housed in the UC San Diego School of Biological Sciences. Further research conducted by The Airborne Institute will be published in open-access journals, along with other data. Intellectual property developed by The Airborne Institute will also be published in the public domain.
