Tether’s USD Peg at Risk as Bitcoin Crashes Below $25,000 – Is the Crypto Market on the Brink?

• • A noticeable imbalance in Curve’s 3pool on June 15 led to a minor deviation of Tether’s USDT from its dollar peg.
  • Despite the increase in USDT weightage within the pool, Tether CTO Paolo Ardoino assures it’s not a concern and rebuffs circulating market rumors.

On June 15, an unusual imbalance in the Curve 3pool prompted a slight detour for Tether’s USDT from its stable position pegged to the United States dollar. The price of USDT dropped by 0.3% to approximately $0.997, due to its weightage in the Curve 3pool rising significantly above its usual 33.1% to surpass 70%.

Curve’s 3pool, a key liquidity pool in decentralized finance (DeFi), accommodates significant liquidity in the top three stablecoins: USDT, USD Coin (USDC), and Dai (DAI). A noticeable surge in the weightage of a specific stablecoin within the pool typically signals a robust selling of that asset. The notable uptick in USDT’s presence within the pool, to around 73.8%, suggests traders are selling USDT in favor of DAI or USDC. The last time USDT dominated over 50% of Curve’s 3pool was during the FTX fallout in November 2022.

The primary trigger of this imbalance seems to be a single entity known as CZSamSun, which borrowed 31.5 million USDT and converted it into USDC. This large-scale swap led to a minor dip in USDT’s peg value to the dollar. Employing 17,000 Ether (ETH) and 14,000 staked Ether (stETH) as collateral, CZSamSun carried out the conversion using the 1inch Network.

Subsequently, CZSamSun deposited $10 million and $21 million into Aave’s versions v2 and v3, respectively. The borrower then obtained a USDT loan of 12 million from v3 and deposited it into v2. Roughly 20 minutes post CZSamSun’s USDT borrowing, another address engaged in a similar move, further influencing the stablecoin’s weightage within the pool.

This minor fluctuation in USDT’s value prompted the USDC/USDT trading pair on Binance to reach a fresh annual high of $1.0034. As a result, USDT represented 73.79% of Curve’s 3pool, while DAI and USDC accounted for 13.05% and 13.16%, respectively.

Responding to the slight stir in the crypto market, Tether’s Chief Technology Officer Paolo Ardoino took to Twitter to dismiss concerns, assuring the community that Tether stands ready to redeem any amount. Ardoino later refuted the market rumors surrounding Tether’s depeg by posting a “FUD meme,” demonstrating his dismissal of the circulating fears as groundless.

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