USDC investor shells out $2M to receive $0.05 USDT trying to evade crash
This is truly true!
Soon after Circle revealed that Silicon Valley Bank did not transfer $3.3 billion of its USD Coin (USDC) reserves, the market responded with a massive sell-off — depegging the stablecoin from the US dollar. However, not all investors were lucky enough to walk away with their funds amid the uncertainty.
How could this happen?
Worth reading the whole thread.
the router mysteriously routed a $2M trade through a dead UniswapV2 pool with $2 of liquidity.
That is a seriously nasty attack. Looks like the trade didn't even set a max slippage. I know, in a tumbling market the price can run away beyond the set slippage, but just trade again.
In this case, a quick calculation would help. USDC market cap was about $40B, with about $3.3B seemingly stuck inside SVBank; so a 10% drop seems a cautious reaction without further knowledge of the next steps.
USDC currently trading at $0.905.
This is yet another example where Balancer weighted managed pools would algorithmically avoid such panics.
Breaking: Circle discloses $3.3B tied up at Silicon Valley Bank
wow, a Fed agency to rescue crypto!?
Note:
for reasons as yet unclear!
Back to the future, 1900s style banking contagion - by design - then it was to usher in the Fed, and now!!?
To further add more consequences...
What cannot be suspended is the frenzied panic within swap pools!
Understand how they work, and one may even be able to profit from the panic.
https://dfpi.ca.gov/2023/03/10/california-financial-regulator-takes-possession-of-silicon-valley-bank/
and
https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/DFPI-Orders-Silicon-Valley-Bank-03102023.pdf?emrc=bedc09
On March 8, 2023, the Bank announced a loss of approximately $1.8 billion from a sale of
investments (U.S. treasuries and mortgage-backed securities). On March 8, 2023, the Bank’s holding
company announced it was conducting a capital raise. Despite the bank being in sound financial
condition prior to March 9, 2023, investors and depositors reacted by initiating withdrawals of $42
billion in deposits from the Bank on March 9, 2023, causing a run on the Bank. As of the close of
business on March 9, the bank had a negative cash balance of approximately $958 million. Despite
attempts from the Bank, with the assistance of regulators, to transfer collateral from various sources,
the Bank did not meet its cash letter with the Federal Reserve. The precipitous deposit withdrawal
has caused the Bank to be incapable of paying its obligations as they come due, and the bank is now
insolvent.
Look at how pathetic and fragile the whole banking system is.
So, SVB had assets of $209B one day, then suddenly they are short just $900M. That's about 0.5% of their assets. And they couldn't raise that!!??
wow
I want to know who withdrew those $42B! Coz that's more than their own reserves, which seem to be about $34B, just from the above figures.
Peter Thiel features prominently ;-)
will he save ETH, or is that collapse also part of the plan?