Tether’s USDT, a stablecoin pegged to the US dollar, has seen its value slightly dip to $0.99 amid imbalances in the Curve 3Pool, one of the leading pools for stablecoin trading within the decentralized finance (DeFi) sector.
Understanding the imbalance
In an ideally balanced scenario, the Curve 3Pool should have a distribution of 33.33% each for its three stablecoins — USDT, USDC and DAI. However, in a surprising turn of events, USDT’s balance shot up to over 70%. This sudden skewing of the balance indicates that traders have been actively selling USDT in exchange for DAI or USDC, consequently causing USDT to de-peg from its $1 benchmark.
Tether’s Chief Technology Officer (CTO), Paolo Ardoino, believes that the imbalance is indicative of a broader tension within the market. Speaking to The Block, he expressed his views on the volatile situation, linking the increased outflows from Tether to the growing negativity around the crypto market.
In Ardoino’s words, “Tether is the gateway for liquidity, inbound and outbound. So when the interest in crypto grows, we see inflows; when the sentiment on the crypto market is negative, we see outflows.” He also did not rule out the possibility of a direct attack on Tether, an occurrence that was witnessed previously in 2022.
This is not the first instance of an imbalance in the Curve 3Pool. Back in March, the pool faced a similar issue when the balance of USDC and DAI exceeded 45% each. Another incident took place in November when a leading crypto exchange, FTX, collapsed. The volatility was also visible following the crash of the Terra ecosystem in May 2022, during which USDT became volatile and temporarily lost its peg.
Despite the current imbalance, Ardoino assured that the company is closely monitoring the developments and remains prepared to redeem any amount.
