Circle’s USDC instability causes domino effect on DAI, USDD stablecoins
Following USDC’s depegging, three stablecoins — DAI, USDD and FRAX — also depegged from the dollar. The Stablecoin ecosystem felt an immediate effect as USD Coin (USDC) depegged from the US dollar due to a subsequent sell-off after Silicon Valley Bank (SVB) did not process $.3.3 billion of Circle’s $40 million transfer request. Given USDC’s collateral influence, major Stablecoin ecosystems followed suit in depegging from the dollar. Dai (DAI), a Stablecoin issued by MakerDAO, lost 7.4% of its value as a result of USDC’s depegging. As of June 2022, $6.78 billion worth of DAI supply was collateralized by $8.52 billion worth of cryptocurrencies, confirms data from Statista. Dai's total crypto assets used for on-chain collateralization as of June 27, 2022. Source: Statista Out of the lot, USDC represented 51.87% of DAI’s collateral, worth $4.42 billion. Other prominent cryptocurrencies include Ether (ETH) and Pax Dollar (USDP) at $0.66 billion and $0.61 billion respectively. As a re...