Data analysis behind USDT’s slight unanchor: 3Pool’s liquidity on Cruve has dropped significantly due to market FUD

By Joy, PANews

After every major crisis in the market, USDT will encounter an anchor break, which seems to have become an iron law of the market. Today, after Binance and Coinbase were sued by the SEC, and two South Korean encryption institutions suspended user withdrawals, USDT once again unanchored. PANews did not find the direct cause of USDT unanchoring after analysis. The biggest reason may be the lack of liquidity superimposed by FUD in the market.

At 12:00 on June 15, according to 0xScope monitoring, in the past 24 hours, a total of 99 million USDT were sold in the 3CRV pool, resulting in a net outflow of 64.4 million USD. In the past 3 days, a total of 205 million USDT were sold in the 3CRV pool, resulting in a net outflow of 130 million US dollars. Currently, USDT accounts for 54% of the 3CRV pool, which is slightly tilted. Two hours later, the USDT accounted for more than 73%, and the price of USDT dropped slightly to 0.997.

According to Delphi Digital data, the concentration of Curve 3pool USDT has recently increased to the highest level since the FTX crash in November 2022. The inflow of Cureve 3pool USDT has increased significantly in the past 48 hours.

The market once had different opinions, and they were looking for the reasons, but some analyzes and speculations were not tenable.

It is said that this is the market maker withdrawing USDT funds from Curve, but in fact, if you want to exchange them for US dollars, you can directly exchange them with Tether without converting USDT to USDC or DAI on Curve. Not to mention that DAI cannot be directly exchanged into U.S. dollars, even if USDC is converted into U.S. dollars through the USDC issuer Circle, according to a market maker told PANews, the handling fee is higher than directly exchanging USDT into U.S. dollars through Tether. So this statement is not reliable.

There is also a saying that the founder of Curve mortgaged a large amount of CRV to lend USDT, which caused dissatisfaction among some people in the community. Therefore, he wanted to attack CRV by shorting CRV while raising the USDT lending rate. There is some truth to this statement, but there is no data to support it, and the number of CRV on AAVE has not changed significantly. PANews inquired about the address of the founder of Curve, who only repaid 1.35 million USDT this afternoon to maintain the healthy value of the loan. Therefore, today's changes in the market did not have a great impact on it. On AAVE, the borrowing rates of USDC and USDT have increased significantly today, which is not a unilateral impact on USDT.

In fact, the TVL of Curve 3pool has dropped sharply from the peak of US$6 billion in January 2022 to only US$400 million at present, and the total TVL has shrunk by 93%, which also means that the liquidity of 3pool has dropped significantly.

Meanwhile, the 24-hour volume of USDT and USDC alone in Uniswap V3 was $222 million. As of 5:00 p.m. on June 15, according to CoinMarketCap data, the top USDT-related trading pairs were trading pairs with other stablecoins or fiat currencies, with a total transaction amount of US$1.7 billion. Curve 3pool can no longer be an important source of liquidity in the stablecoin market, and Curve has lost its pricing power over the market.

Market volatility has given whales and traders a signal to make money. After the unanchor occurred, the USDT lending rate in Aave V2 soared, among which the deposit rate soared by more than 20%, and the loan rate soared by more than 30%. Some large users lent USDT on Aave and sold it on DEX such as Curve. The giant whale whose address is czsamsun.eth borrowed 31.5 million USDT from Aave V2 with 17,000 ETH and 14,000 stETH as collateral, and then exchanged all of them into USDC in 1inch. Then 10 million USDC and 21 million USDC were deposited into V2 and V3 respectively, and then 12 million USDT was borrowed from V3 and deposited into V2. The massive short positions by whales may have contributed to the initial panic.

After the decoupling of USDT, the giant whale address starting with 0xD275 borrowed 50 million USDC from Aave, and began to buy USDT for arbitrage. Mortgage 52,200 stETH through Aave V2 to lend 50 million USDC, and convert USDC from Curve to USDT in batches with several million USDC at a time. In addition to the chain, many traders are also conducting arbitrage operations on centralized exchanges.

In the face of a slight unanchor, Paolo Ardoino, Tether's chief technology officer, also tweeted: "The market is volatile today, so it is easy for attackers to take advantage of this general sentiment. But Tether is ready as always, and we are ready to redeem any amount."

Therefore, the market does not have a clear and direct reason for today’s USDT’s slight de-anchoring, but the current weak liquidity and high uncertainty market status, as well as the mental state of investors’ exhaustion, have become the influencing factors of USDT’s de-anchoring.

Andrei Grachev, managing partner at DWF Labs, tweeted: “Trading activity has bottomed out, with 24-hour spot trading volume at $23 billion, the lowest since winter 2019. Even for coins with larger market caps, Can also see 20-30% price movement within 24 hours, but still vulnerable. Projects, exchanges, market makers, and other market participants are all trying to fix the market (behind the scenes), there is no 100% solution, But it will bring something to the market. We are at the bottom in terms of activity, but the price is uncertain. But at the same time, if we are lucky, our market activity should increase within a few months, along with the price.”

Regardless, caution in its current state is good for investors.