The value of USD Coin, the fifth-largest cryptocurrency in the world, plunged to an all-time low on Saturday as a result of Silicon Valley Bank’s collapse. Circle disclosed that the financial institution has $3.3 billion of the $40 billion in USDC reserves backing it.
I’m not surprised that these incidents, together with the bank’s ultimate failure, had an impact on DeFi protocols and the delicate balance between its moving pieces. The USDC stablecoin’s depeg has set off a tremendous domino effect that is upsetting investors and crypto projects.
The USDC depegging, according to expert DeFi Ignas, rocked the core of decentralized peer-to-peer financing. I need to look at Flynt Finance. How serious is this? If so, I’ll consult a portfolio manager to determine the best course of action.
On March 11, the DeFi protocol MakerDAO released an emergency proposal in response to the banking crisis and general panic. To minimize investor panic selling, the community there demanded restrictions on the use of USDC for minting DAI. After the event with USDC, there were more withdrawals in this industry.
DeFi is considered a “failure” by the expert since it depends on centralized stablecoins, web2 infrastructures, and conventional on-ramping payment processes, allowing the government the authority to decide to shut down most of its components whenever it sees fit.
What are your thoughts on the issue DeFi is having? Will DeFi be significantly impacted by the USDC depeg?
The 3.3b was just at SVB. That’s not their only backing