- As of 15 June, stablecoin USDT witnessed a slight depegging from its 1:1 ratio with USD
- Whales dump millions of USDT causing it to account for more than 73% of the Curve 3pool
Tether’s USDT, the stablecoin with a market capitalization of $83 billion, experienced a slight de-pegging from its usual 1:1 ratio with the US dollar on the Curve DEX. This unexpected event presented a unique opportunity for quick DeFi traders to engage in arbitrage.
While there has been significant discourse surrounding #USDT, it continues to be the dominant source of stablecoin liquidity in DeFi & currently accounts for more than 70% of the liquidity in Curve’s pool. This brings it close to the peak levels observed in May. pic.twitter.com/QYQFbPfEVK
— IntoTheBlock (@intotheblock) June 15, 2023
In an unforeseen turn of events, USDT was seen to de-peg with its price falling by 0.08% in 24 hours according to CoinMarketCap. At press time, the price stood at $0.998971 USD with a 24-hour trading volume of $31,298,642.
The whales are at it again…
A close look into the cause of the downtrend revealed that whales had initiated a dumping spree of USDT. This caused the dumping to account for more than 73% of the Curve 3pool.
Furthermore, according to Lookonchain, whale”0x3356″ created a new address to deposit 52.5 million USDC and borrowed 40 million USDT on Aave and Compound protocols.
2/
About 12 hours ago, whale”0x3356″ created a new address to deposit 52.5M $USDC and borrowed 40M $USDT on #Aave and #Compound.
Then he started depositing 40M $USDT into #Coinbase and #Kraken 6 hours ago. pic.twitter.com/OKraFhRBdy
— Lookonchain (@lookonchain) June 15, 2023
Then the whale deposited the 40 million USDT into Coinbase and Kraken. This move kickstarted a series of lending in Aave V2. This led to the soaring of the USDT lending rate, the deposit rate soared by more than 20%, and the loan rate soared by more than 30%. Furthermore, after about 5 hours, 2 other whales also sold 9.6 million worth of USDT as per data from Lookonchain.
What was worth mentioning was that an Ethereum address identified as czsamsun.eth, utilized 17,400 ETH ($28 million) and 14,690 stETH ($24 million) as collateral to borrow $31.5 million USDT from Aave 2.
czsamsun.eth borrowed 31.5 million USDT from Aave V2 by using 17,000 ETH and 14,000 stETH as collateral, then exchanged all the borrowed USDT into USDC on 1inch. Afterwards, the borrower deposited 10 million USDC and 21 million USDC to V2 and V3 respectively. Then, the borrower…
— Wu Blockchain (@WuBlockchain) June 15, 2023
The address subsequently exchanged the borrowed USDT for 31.47 million USDC at a rate of $0.997 on Curve. Due to multiple FUDs, whales kept dumping USDT.
Any light at the end of this tunnel?
The sudden de-pegging of USDT from the USD provided a distinctive opportunity for these traders to engage in arbitrage. Additionally, market participants capitalized on the opportunity by significantly increasing their borrowing of USDT from Aave.
Borrowers opted to sell the devalued USDT for DAI or USDC, both of which maintained their usual 1:1 peg with the US dollar. This surge in inflows was highly abnormal and raised suspicions of either increased fear, uncertainty, and doubt (FUD) or insider knowledge.
Following this tense situation, Tether CTO Paolo Ardoino released a statement. Ardoino acknowledged the potential for attackers to take advantage of the prevailing general sentiment. However, he assured that Tether was fully prepared to withstand any potential threats.
Markets are edgy in these days, so it’s easy for attackers to capitalize on this general sentiment.
But at Tether we’re ready as always. Let them come.
We’re ready to redeem any amount.— Paolo Ardoino 🍐 (@paoloardoino) June 15, 2023
