STABLE COINS DEPEGGING: Warning for the Newbies

Rikafip

legendary

Activity: 1722

Merit: 5937

Quote from: Pmalek on March 12, 2023, 03:51:12 AM

Both DAI and USDC looked like they were recovering their pegs during the night (nighttime in Europe), when the value of both assets went up to $0.98 at one point. But now they are losing some ground again and going down from $0.95 to $0.94.

Probably those who bought it for under 0.9 are taking the profit and will do it couple of times more before it goes back to $1.

Still, I wouldn't advise anyone trying to profit from it as risk to reward ratio is quite bad imho. I know some people who tried to do that with UST and it ended very badly for them and even though USDC is in better situation, if we learned something is that nothing is impossible in crypto.

Pmalek

legendary

Activity: 2730

Merit: 7065

Farewell, Leo. You will be missed!

Both DAI and USDC looked like they were recovering their pegs during the night (nighttime in Europe), when the value of both assets went up to $0.98 at one point. But now they are losing some ground again and going down from $0.95 to $0.94. It's going to be interesting to follow the development of this case and if some other crypto assets could be affected by similar crisis.

OcTradism

hero member

Activity: 1722

Merit: 801

Quote from: Pmalek on March 11, 2023, 10:36:30 AM

The de-pegging is a result of the bankruptcy of the Silicon Valley Bank that was announced yesterday I think. Some of USDC's collateral was deposited in that bunk

Silicon Valley Bank is a special bank that serves tech companies and its bankcruptcy will cause massive domino effects to many tech companies including cryptocurrency companies. In addition, this collapse and bankcruptcy show that effecfs of pandemic and rotten money printing, increasing interest rate from FED are really huge and more collapses will come.

If SVB collapse, I believe we can see more similar banks with same trouble from their investments in securities and side effecf from inverse interest curve.

TryNinja

legendary

Activity: 2758

Merit: 6830

Apparently "WAGMI" Cheesy

Circle's latest update, just released: https://www.circle.com/blog/an-update-on-usdc-and-silicon-valley-bank

The important part:

Quote

However, it is also possible that SVB may not return 100% and that any return might take some time, as the FDIC issues IOUs (i.e., receivership certificates) and advanced dividends to deposit holders.

In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.

Wost scenario: SVB goes under and Circle loses 100% = 8% loss = $0.92 usdc
Medium scenario: Circle recovers, idk, 50% of loses = 4% loss = $0.96 usdc
Good scenario: Circle recovers 90% of losses = 0.8% loss = $0.99 usdc

Then they can just cover the hole.

Pmalek

legendary

Activity: 2730

Merit: 7065

Farewell, Leo. You will be missed!

Quote from: Charles-Tim on March 11, 2023, 10:55:02 AM

USDT and USDC are backed by fiat.

They have changed their story so many times and no one really knows how and if they are backed and with what. They used to claim that every USDT is backed by $1 of fiat. This definition then changed to partial fiat backing. Then there was talk about other financial instruments, precious metals and whatnot. Their explanations became more and more vague and according to Google, they now claim they are backed by "Tether's reserves".

Quote from: https://thedefiant.io/what-is-dai#:~:text=How%20Is%20DAI%20Backed%3F,and%20dozens%20of%20other%20cryptocurrencies.

How Is DAI Backed? DAI is unique in that it is collateralized by multiple stablecoins and cryptocurrencies. By far, the biggest share of DAI's backing consists of centralized stablecoins USD Coin (USDC) and Pax Dollar (USDP), followed by Ethereum (ETH), Wrapped Bitcoin (WBTC), and dozens of other cryptocurrencies.

Lol, the stupidity of these people. Their revolutionary decentralized stablecoin doesn't want to touch the untrustworthy USD fiat. Instead, they prefer being collateralized by even worse alternatives to fiat like centralized stablecoins.

TryNinja

legendary

Activity: 2758

Merit: 6830

Quote from: Learn Bitcoin on March 11, 2023, 12:42:32 PM

Oh, Thank you for the information. I am curious how you check that information. Is it a regular google search? Or maybe there are special tools or websites or something like your Bot? I am interested to know which coins were backed by which coin. But, It would be good to learn instead of asking every time. Would you mind sharing how you do that? Someone merit his post, please. I do not have enough sMerits.

Well, I'm sure you could find out all the answers through Google. Just hop through websites until you find the answer (with simple stuff like "FEI/DAI stablecoin backing"). I already knew about this since I spent the last years playing around with DeFi farming what I could. Cheesy

Learn Bitcoin

hero member

Activity: 462

Merit: 767

#SWGT CERTIK Audited

Quote from: TryNinja on March 11, 2023, 11:30:57 AM

Quote from: Learn Bitcoin on March 11, 2023, 11:20:07 AM

What about Fei USD? https://coinmarketcap.com/currencies/fei-usd/ This stablecoin was traded for $0.89 back in 2021, and since then, it has been maintaining around $1 price. It's started losing value with DAI and USDC.

FEI is backed purely by DAI, so same issue. The depeg in 2021 was caused by a protocol flaw when it wasn't backed by DAI.

Quote from: Learn Bitcoin on March 11, 2023, 11:20:07 AM

Also, Another stablecoin USDD https://coinmarketcap.com/currencies/usdd/ joined the race with them. Maybe those are also related to USDC and bankruptcy of the Silicon Valley Bank?

And USDD is the worst of them, I don't even know how it hasn't collapsed yet... It is "backed" by a bunch of shitcoins through Justin Sun's company and it's almost as bad as UST (from TerraLuna). It was created with the word "ponzi" in mind. It's not a real stablecoin.

Oh, Thank you for the information. I am curious how you check that information. Is it a regular google search? Or maybe there are special tools or websites or something like your Bot? I am interested to know which coins were backed by which coin. But, It would be good to learn instead of asking every time. Would you mind sharing how you do that? Someone merit his post, please. I do not have enough sMerits.

mk4

legendary

Activity: 2716

Merit: 3817

Paldo.io 🤖

Quote from: Pmalek on March 11, 2023, 10:36:30 AM

The de-pegging is a result of the bankruptcy of the Silicon Valley Bank that was announced yesterday I think. Some of USDC's collateral was deposited in that bunk. Naturally, people started dumping, which led to a low of $0.88. The token is now around $0.91 and $0.92. I haven't checked (nor do I care to be honest) what USDC's relationship to DAI is and why DAI is losing its peg as well.

After all the nastiness, speculation, and negativity thrown Tether's way, they remain the most stable of the stablecoin assets. For now, at least.

DAI is backed by a basket of cryptocurrencies, and it is partially(but with a good chunk) backed by USDC. I know that having a non-custodial stablecoins partially backed by a centralized stablecoin sounds dumb as hell but yea.

TryNinja

legendary

Activity: 2758

Merit: 6830

Quote from: Learn Bitcoin on March 11, 2023, 11:20:07 AM

What about Fei USD? https://coinmarketcap.com/currencies/fei-usd/ This stablecoin was traded for $0.89 back in 2021, and since then, it has been maintaining around $1 price. It's started losing value with DAI and USDC.

FEI is backed purely by DAI, so same issue. The depeg in 2021 was caused by a protocol flaw when it wasn't backed by DAI.

Quote from: Learn Bitcoin on March 11, 2023, 11:20:07 AM

Also, Another stablecoin USDD https://coinmarketcap.com/currencies/usdd/ joined the race with them. Maybe those are also related to USDC and bankruptcy of the Silicon Valley Bank?

And USDD is the worst of them, I don't even know how it hasn't collapsed yet... It is "backed" by a bunch of shitcoins through Justin Sun's company and it's almost as bad as UST (from TerraLuna). It was created with the word "ponzi" in mind. It's not a real stablecoin.

Learn Bitcoin

hero member

Activity: 462

Merit: 767

#SWGT CERTIK Audited

Quote from: TryNinja on March 11, 2023, 11:04:38 AM

DAI is (was) ~53% wrapped USDC. Even worse that you can actually mint DAI 1:1 with USDC at anytime through their "Peg Stability Module", so people can arb the difference between the two coins.

Oh, That's the case for DAI.
What about Fei USD? https://coinmarketcap.com/currencies/fei-usd/ This stablecoin was traded for $0.89 back in 2021, and since then, it has been maintaining around $1 price. It's started losing value with DAI and USDC. Also, Another stablecoin USDD https://coinmarketcap.com/currencies/usdd/ joined the race with them. Maybe those are also related to USDC and bankruptcy of the Silicon Valley Bank?

Xal0lex

staff

Activity: 2436

Merit: 2347

It would now be utter madness to open margin positions on collapsed stablecoins. People tried to make money last year on the fall of LUNA and UST on the same principle and ended up falling into a market trap. Unfortunately, many people will begin to realize this only after they have lost their entire deposit on such a price merry-go-round. Understanding comes with experience. With sad experience.

TryNinja

legendary

Activity: 2758

Merit: 6830

Quote from: Pmalek on March 11, 2023, 10:36:30 AM

I haven't checked (nor do I care to be honest) what USDC's relationship to DAI is and why DAI is losing its peg as well.

DAI is (was) ~53% wrapped USDC. Even worse that you can actually mint DAI 1:1 with USDC at anytime through their "Peg Stability Module", so people can arb the difference between the two coins.

https://www.mkranalytics.com/vaults/USD/PSM-USDC-A

AbuBhakar

hero member

Activity: 994

Merit: 520

🇵🇭

Quote from: asawale on March 11, 2023, 10:19:53 AM

The happening in the current cryptocurrency market situation calls diligent caution for the Newbies. I have seen series of people calling for LONGING and SHORTING of coins or tokens in relation to the depegged coins. Do not fall for such call as newbies in order not to get liquidated of your hard earned funds.

Be warned,
Take caution, and
Trade responsibly.

FYI, your asset will not get liquidated when you are just holding stablecoins like USDC even if it’s depegging. The scenario of USDC to UST is far different because the current depegging due to panic sell alone but it stops immediately on 0.88$ level which is a clear sign that the sell off is already over.

The best decision for newbie if they are already on stablecoins that dumped is just hold on it because the price will start pegging again once those investors that panic sold will buy back again when the smoke clear on the circle.

Upgrade00

legendary

Activity: 2030

Merit: 2174

Professional Community manager

Quote from: Despairo on March 11, 2023, 10:49:15 AM

With the FUD around stable coin, maybe this is the strategy to launch CBDC and make people trust with CBDC.

There's lots of fud around fiat and CBDCs too and I cannot imagine people lining up to use them whether stable coins are still a thing or not.
CBDCs would also be unable to replace stable coins as they are not pegged to anything and doesn't give the illusion of stability. As the currency is traded and inflated, their value gets affected.

Charles-Tim

legendary

Activity: 1512

Merit: 4795

Quote from: Learn Bitcoin on March 11, 2023, 10:30:05 AM

The same thing happened during the FTX Fiasco. People were suggesting others open a position with terra USD. They said it's a stablecoin. It will gain $1 again. Buy more Terra USD, and you will be in profit. I lost a couple of hundred dollars. This is danger time for newbies to open positions with such coins. USDC, DAI, USDD and Fei USD are in the danger zone. I don't recommend anyone to buy those coins in hope of gain quick profit.

Fiat pegged coins are not the same as algorithmic stable coin. I wonder why algorithmic stable scams/coins are existing.

Quote from: Pmalek on March 11, 2023, 10:36:30 AM

After all the nastiness, speculation, and negativity thrown Tether's way, they remain the most stable of the stablecoin assets. For now, at least.

Non of them are stable. The safest stable of the so called stable coins are the ones that are backed by fiat, USDT and USDC are backed by fiat. If what happened to USDC happened to USDT, it would have been deppeged by now too.

Quote from: Pmalek on March 11, 2023, 10:36:30 AM

I haven't checked (nor do I care to be honest) what USDC's relationship to DAI is and why DAI is losing its peg as well.

This answers it:

Quote from: https://thedefiant.io/what-is-dai#:~:text=How%20Is%20DAI%20Backed%3F,and%20dozens%20of%20other%20cryptocurrencies.

How Is DAI Backed? DAI is unique in that it is collateralized by multiple stablecoins and cryptocurrencies. By far, the biggest share of DAI's backing consists of centralized stablecoins USD Coin (USDC) and Pax Dollar (USDP), followed by Ethereum (ETH), Wrapped Bitcoin (WBTC), and dozens of other cryptocurrencies.

Despairo

hero member

Activity: 1036

Merit: 833

Is there anyone still think stable coin is good for staking? Cheesy

they think stable coin price will always stick with $1, no way the price will de-pegging and they can easily make more money rather than save their money in bank. Since there are few stable coin lose it's value, people will panic and want to convert their token become other coins.

With the FUD around stable coin, maybe this is the strategy to launch CBDC and make people trust with CBDC.

Pmalek

legendary

Activity: 2730

Merit: 7065

Farewell, Leo. You will be missed!

The de-pegging is a result of the bankruptcy of the Silicon Valley Bank that was announced yesterday I think. Some of USDC's collateral was deposited in that bunk. Naturally, people started dumping, which led to a low of $0.88. The token is now around $0.91 and $0.92. I haven't checked (nor do I care to be honest) what USDC's relationship to DAI is and why DAI is losing its peg as well.

After all the nastiness, speculation, and negativity thrown Tether's way, they remain the most stable of the stablecoin assets. For now, at least.

Doan9269

hero member

Activity: 812

Merit: 560

You can agrees with me that stable coins has been depegged in the past and this can still happen but it's not something that is common unlike the tokens, we have to take caution of the type of coins we go for, what project are they specifically running under, who are their sponsors or developers, the research we take could also help, a d we have to look into their financial capability as well, usdt and other few are trusted but there are some stable coins that are already detestable from hearing about them.

Learn Bitcoin

hero member

Activity: 462

Merit: 767

#SWGT CERTIK Audited

The same thing happened during the FTX Fiasco. People were suggesting others open a position with terra USD. They said it's a stablecoin. It will gain $1 again. Buy more Terra USD, and you will be in profit. I lost a couple of hundred dollars. This is danger time for newbies to open positions with such coins. USDC, DAI, USDD and Fei USD are in the danger zone. I don't recommend anyone to buy those coins in hope of gain quick profit.

asawale

member

Activity: 136

Merit: 11

The happening in the current cryptocurrency market situation calls diligent caution for the Newbies. I have seen series of people calling for LONGING and SHORTING of coins or tokens in relation to the depegged coins. Do not fall for such call as newbies in order not to get liquidated of your hard earned funds.

Be warned,
Take caution, and
Trade responsibly.

Topic: STABLE COINS DEPEGGING: Warning for the Newbies (Read 156 times)