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USDC De-peg: What Happened On-Chain?
Niklas Polk
Key Takeaways
6 min read
  • "The "floor price" of USDC only applies when the supply of USDC remains constant. In extreme situations with ongoing redemptions and a hole in the balance sheet, the floor price can be as low as $0.
  • Between 10-15 March, net $4.46 billion USDC was redeemed. Daily redemptions were at yearly highs, with Coinbase the largest redeemer by far.
  • With few exceptions (like 446m USDC stuck in Voyager), the majority of USDC could likely be redeemed within a couple of days in a worst-case scenario. However, arbitrage dynamics could counteract redemptions for USDC in certain DeFi pools and vaults temporarily.
  • $2.2b USDC was deposited into Maker the maker Peg Stability Module to mint DAI 1:1, almost doubling the module’s USDC balance. This arbitrage led to DAI prices closely tracking USDC during the de-peg.


Silicon Valley Bank (SVB) collapsed on Friday, March 10, sending ripples through the financial world. As one of the main banks for tech firms and startups, SVB's collapse caused serious concern among its clients and depositors. Circle, the issuer of the USDC stablecoin, had $3.3b out of the ~$40b reserves, that are used to back USDC, with SVB as of 11 March. This raised questions about how much of the USDC stablecoin was consequently backed by dollars. In response, people began to panic and sold USDC, resulting in lows of $0.88 on most markets. This panic is somewhat understandable, due to the...