Debtors Save $100M With USDC Depeg

The temporary decoupling of USD Coin (USDC) from the U.S. dollar is not bad news for everyone. In fact, a group of people who still had outstanding debts in USDC benefited from the misery last weekend. After the collapse of Silicon Valley Bank on March 10, USDC fell to a low of $0.87 per share.

USDC Debtor Decoupling Celebration

The decoupling of USDC is a celebration for debtors as they suddenly need less money to pay their debts. So they immediately benefit from the decoupling by buying cheap USDC to pay down their debt.

The depeg from the U.S. dollar triggered more than $2 billion in repayments on March 11 through decentralized lending protocols such as Aave and Compound. More than half of these repayments were made in USDC, showing that a large number of people have benefited from this situation.

It will be a less than pleasant development for creditors, who have seen their assets all but evaporated. Meanwhile, USDC has resumed its peg to the U.S. dollar and calm seems to be returning. However, it remains to be seen whether this will continue in the coming days.

USDC volume is slowly falling

With the relinking of USDC and DAI, the surge in the number of redemptions returned to normal at the same time. Finally, DAI also fell, as the stablecoin is largely backed by USDC. But as you can see in the chart below from analytics firm Kaiko, the number of refunds on DeFi protocols from Aave and Compound has fallen sharply again.

Blockchain analytics firm Flipside Crypto calculated that debtors who still had to repay USDC saved $84.1 million. In the case of DAI, the savings amounted to a whopping $20.8 million.

At the time of writing, USDC’s peg to the U.S. dollar has almost fully recovered. The coin is now selling for $0.9994. Tether appears to be benefiting from the disaster, as the stablecoin is currently trading at $1.01.

Source of information: Compiled from CRYPTO-INSIDERS by 0x Information.Copyright belongs to the author Thom Derks, without permission, may not be reproduced

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