INTRODUCTION

The collapse of the Sillicon Valley bank sent shockwaves throughout the tech world and crypto markets in particular as the industry's most favoured bank in the US went insolvent. One of the casualties in the collapse was USDC, one of the largest stablecoins by marketcap developed by Circle. Following an anouncement by Circle confirming that the bank held $3.3bn worth of their $40bn pegged reserves of USDC at the bank, this led to the stablecoin depegging. The effect quickly spread to the Curve 3 Pool, one of the largest liquidity pools featuring USDC, on the Curve Decentralized Exchange (DEX) which suffered an imbalance as a result. The Curve 3 pool, was designed to support stablecoin trades across three tokens USDT, DAI and USDC maintained at equal balances and had a TVL valued at over $510millon before the collapse. Immediately after the announcement, the share of USDT in the pool began to drop reaching as low as $5.8million, similar to DAI holdings which initially rose before falling to as low as $29million. The combined value of the pool dropped to $380million, highlighting sudden capital flight from the pool. However, given the current state of the Curve 3Pool, the has been a reverse increase in DAI volume. this is still a developing story and it is still early to determine the longer term effects of the depeg on the broader DeFi Ecosystem.

CURVE 3-POOL COMPOSITION