In a sign that the sale of millions of dollars worth of Tether (USDT) stablecoins on popular Uniswap and Curve pools caught the attention of traders Thursday morning, the USDT balance on Curve’s famous 3pool, which includes USDT, USDC, and DAI stablecoins, increased to more than 72% in the early hours of Thursday morning.
This shows that traders are exchanging a large amount of USDT for USD Coin (USDC) and DAI stablecoins. The current status of Curve's 3pool shows more than $300 million USDT held, of which DAI and USDC hold about $55 million each. This imbalance shows that people are increasingly preferring DAI and USDC over tether.
A similar trend was observed during the fall of Terra
As CoinDesk previously reported, similar trends were observed during the Terra crisis in May and the FTX exchange crash in November. Paolo Arduino, Tether’s chief technology officer, speculated in a tweet that some traders may be trying to take advantage of the general market sentiment that has seen a drop over the past 24 hours.
Arduino acknowledged the current impatience in the market, noting that it creates opportunities for attackers to exploit the general sentiment. However, he said Tether is ready to handle such situations, stressing that they are ready to redeem any amount as needed.
After the incident, Tether’s USDT slightly deviated from its usual 1:1 ratio with the U.S. dollar on the Curve decentralized exchange. This created a temporary opportunity for DeFi traders who are good at arbitrage.
An influx of USDT sellers overwhelmed liquidity pools on Curve and Uniswap, causing USDT to briefly trade below its typical parity of $1.
In response to the decoupling, market participants quickly reacted by significantly increasing USDT borrowing from Aave, the leading decentralized lending protocol.
