Maker

The cryptocurrency market witnessed a day of turmoil as Tether’s USD-pegged stablecoin, USDT, experienced a slight depeg against the US dollar on decentralized exchange (DEX) <a href="https://news.todayq.com/curve-pool-exploits-what-actually-happened/" rel="noopener noreferrer nofollow">Curve Finance</a>. This development sent shockwaves through the market, pushing the DEX’s main stablecoin liquidity pool (Curve 3pool) into an unprecedented imbalance. 
On Thursday, USDT reached as low as 0.998 when compared to its rivals, the USD-pegged stablecoin USDC, and the Maker protocol’s algorithmic stablecoin DAI. The depeg of USDT triggered a wave of heightened sell pressure, causing USDT’s weighting in the pool to skyrocket to 59%, equivalent to over $135 million. In contrast, USDC and DAI, competitors of USDT, lagged behind at 21% and 20%, with just under $50 million and $46 million, respectively. 
The depegging event has brought to the forefront the longstanding criticism faced by USDT’s issuer, Tether. <a href="https://news.todayq.com/jerome-powell-urges-strong-federal-oversight-for-stablecoin-regulation-as-controversial-bill-faces-scrutiny/" rel="noopener noreferrer nofollow">Concerns</a> over the lack of transparency regarding the reserves backing the stablecoin have plagued the company. Despite recent efforts to address these concerns and daily publication of the value of its reserves, investor confidence remains cautious. 
Tether’s attempt to restore faith included a $45 million investment in bitcoin during Q2 2023, further increasing its holdings to over 54,000 BTC. The company previously revealed a plan to allocate 15% of profits into bitcoin investments. 
As the <a href="https://news.todayq.com/usdt-accounts-for-70-stablecoin-market-share-on-cexs-tusd-climbs-ranks/" rel="noopener noreferrer nofollow">largest</a> existing US dollar-pegged stablecoin, with a market cap of approximately $83.8 billion, USDT’s depegging event has wider implications for the entire crypto sector. The incident has raised questions about stablecoin reliability and overall market stability. 
The impact of stablecoin depegging events has been witnessed in the past, such as with Circle’s USDC, which briefly depegged to $0.77 against the US dollar following the downfall of Silicon Valley Bank. This event caused a market <a href="https://news.todayq.com/dappradar-nft-trading-volumes-dropped-after-usdc-depeg-and-svb-collapse/" rel="noopener noreferrer nofollow">meltdown</a> and led to a dip in NFT trading volumes. 
The crypto market’s resilience is now being put to the test as investors and traders assess the consequences of Tether’s depegging incident. Volatility may increase as market participants grapple with uncertainties, and smaller projects could face challenges in the face of declining risk tolerance. 
The recent depegging of Tether’s USD-pegged stablecoin (USDT) brought instability to the cryptocurrency market, shedding light on the crucial issue of stablecoin reliability. As investors closely monitor the developments and question the transparency of stablecoin issuers, the repercussions of such events are likely to shape the future of the crypto sector. Amidst this uncertainty, cautious decision-making and a thorough understanding of the market dynamics will be essential for investors to navigate the stormy waters of the crypto landscape. 
© Todayq News

USDT’s slight depeg sparks panic in Crypto market

Todayq News

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