USD Coin (USDC), a popular stablecoin pegged to the U.S. dollar, has been facing solvency concerns since March 10, leading several holders to panic sell their holdings and switch to other stablecoins. USDC's solvency fears arose after the disclosure that a portion of USDC's collateral is held at Silicon Valley Bank, which was shut down by California authorities after revealing efforts to raise extra capital. The news of the bank's closure and USDC's collateral in it caused concern among USDC holders, leading to panic selling and mass exodus.
During the panic selling, several USDC holders attempted to switch to other stablecoins, but not all of them were successful. One user lost over 2 million USDC in a failed attempt to exchange them for Tether (USDT) using KyberSwap's decentralized exchange aggregator. KyberSwap is a decentralized exchange (DEX) that aggregates liquidity from several DEXs. In the transaction, the user dumped a large amount of 3CRV (DAI/USDC/USDT) into USDT using KyberSwap's aggregation router. In a postmortem, the KyberSwap protocol team explained that «since the market was undergoing a volatile period, all routes failed at estimating gas. The rate strongly fluctuated & only 0x’s route was successful but with a very poor rate.» After confirming the swap at 0x's rate in a pop-up, a bot detected the opportunity and gained 2,085,256 USDC from that Univ2 pool. The protocol is in talks with the bot creator, the bot user, and third parties to assist with funds recovery.
Meanwhile, Tron founder Justin Sun reportedly withdrew 82 million USDC and exchanged them for Dai (DAI) using Aave v2, a decentralized finance protocol. The move came after Circle, the company behind USDC, disclosed holding $3.3 billionRead more on blockchain.news