Stablecoins During the FTX Collapse: Flows, Pegs, and Redemption Mechanics
Summary
This market update tracks stablecoin trading, supply, exchange balances, and network flows during the November 2022 FTX-Alameda crisis. It compares trading volume and turnover across USDT, BUSD, and USDC, describing how exchange quote-currency use differs from onchain transfer activity. It also reviews movements in stablecoin supply across issuers and blockchains, withdrawals from centralized exchanges, and changes in DAI borrowing and collateral behavior.
The report describes temporary pressure on USDT’s peg, large redemptions, and an imbalance in Curve’s 3pool, then explains how direct issuer issuance and redemption can create an arbitrage mechanism around the target price, subject to access requirements and fees. It also discusses Tether’s reserve attestation and the rapid expansion and subsequent outflows of GUSD around concerns involving Gemini Earn. The evidence is a contemporaneous snapshot based on cited market and onchain data, and should not be treated as current conditions. The authors note that the observed deviations were limited and temporary, while stressing transparency and counterparty risks.
Key ideas
- Stablecoin volume and turnover can rise sharply during market stress, with patterns shaped by exchange quote-currency usage.
- Trading venue activity and onchain transfer value can rank stablecoins differently.
- Issuer redemptions and direct issuance can support arbitrage when a stablecoin trades away from its peg, subject to access and fees.
- Pool composition, exchange outflows, and network-level supply changes reveal where stress is concentrated.
- Reserve disclosures and issuer or custodian exposures matter when assessing stablecoin counterparty risk.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.