Just earlier this month, Circle issued stablecoin, USDC had been hit with a brief bout of depegging thanks to the collapse of one of its key banking partners, Silicon Valley Bank in the United States. But since then, USDC has risen back up the ranks, to regain its status as the most dominant stablecoin in the decentralized finance (DeFi) sector.
According to a report by CoinDesk, USDC has regained its share in Cirve Finance's 3pool DeFi protocol, which is a very important infrastructure that provides the backbone for stablecoins trading. This could be a possible indication towards the idea that the FUD around the token and the pressures surrounding it have abated to some extent.
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3pool, a DeFi protocol that has nearly $440 million in assets is a pretty important platform within the overall DeFi ecosystem where crypto investors can exchange USDT, USDC, and DAI stablecoins. Curve pools also serve as an exit door for investors and traders who want to close their positions during times of volatility and stress in the crypto market. If fact it is only $2 million behind MakerDAO's DAI stablecoin and over $44 million ahead of the largest stablecoin by market capitalization today, USDT, issued by Tether.
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Earlier this month on March 10, USDC suffered a brief period of depegging, as a result of the sudden implosion of its key banking partner, the Silicon Valley Bank. The collapse rocked the entire stablecoin market that caused many tokens to break their peg temporarily, including others like DAI.
This is because, Circle had announced that about $3.3 billion worth of cash reserves were stuck with the defunct SVB, which caused a major panic among investors who were holding USDC. And since DAI had significant exposure to USDC, DAI stablecoin also saw its peg threatened for a while too.
This resulted in many worried traders jumping off the boat to ditch USDC and DAI stablecoins to flock to the closest alternative and the largest stablecoin by market cap, USDT. The situation had gone so far that USDC's share in the 3pool reserves had fallen to 2.4%, according to the report by CoinDesk. But as the situation was resolved, USDC jumped back up the ranks and now DAI is the largest player in the 3pool's liquidity reserves with a 37% share with USDC very close behind at 36.5%. USDT stands at a distant third with 26.5%
According to data sourced from crypto analytics firm Nansen, USDC is still a widely used trading pair in decentralized exchange pools and top USDC holders include many of the top DeFi protocols, bridges, and DAOs.
Soon after the USDC depegging incident, MakerDAO announced a proposal to reduce their exposure to the USDC token. This was in light of the brief depegging incident its own stablecoin, DAI had suffered during the SVB event.
But the community members on the platform voted to confirm USDC has a top reserve asset for its DAI stablecoin despite the incident. This is a very optimistic view for a centralized stablecoin project when it gets such support from one of the biggest DAOs in the crypto industry. Thus things look pretty well off as of now, for the second-largest stablecoin by market cap.
Values as on March 31, 2023.