Stablecoin Market Stress: Depegs, Pool Imbalances, and Borrowing Demand
Summary
This weekly market review summarizes several stablecoin developments in June 2023. It describes a brief USDT price deviation, selling pressure that left Curve’s three-asset pool heavily weighted toward USDT, and increased USDT borrowing demand on Aave and Compound. It also notes redemption requests that followed the price move and explains how issuer minting and redemption fees can create an arbitrage band around a stablecoin’s target price.
Other items include a large USDT chain swap, paused TUSD minting through one provider followed by a large issuance, growing crvUSD supply, and Maker governance changes to rates, lending capacity, and supported collateral. The review also records BUSD redemptions and DAI’s resulting relative market-cap position. These are event snapshots with selected metrics, not a systematic study of causes, market-wide liquidity, or trading performance; the reported developments should be read in their June 2023 context.
Key ideas
- USDT briefly traded below its target as selling pressure shifted the composition of Curve’s three-asset pool.
- Higher USDT borrowing demand raised rates on Aave and utilization on Compound during the episode.
- Issuer redemption fees can leave a limited arbitrage range around a stablecoin’s peg.
- Stablecoin supply can change through minting, redemptions, and transfers between blockchain networks.
- Governance and collateral changes can alter lending conditions and the composition of DeFi stablecoin markets.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.