Stablecoin Scare: Tether Experiences Temporary De-Pegging Amid DeFi Imbalance

Tether's stablecoin USDT/USD has experienced a slight de-pegging as the Curve 3Pool, a prominent decentralized finance pool for stablecoin trading, has become heavily imbalanced.

The ideal balance of the Curve 3Pool should be evenly distributed among its three stablecoins, USDT, USD Coin USDC/USD, and DAI DAI/USD, with each accounting for 33.33%.

However, USDT's balance has surged to over 70%, indicating a significant sell-off of USDT in favor of DAI or USDC.

This imbalance has resulted in USDT de-pegging and trading at around $0.997.

Paolo Ardoino, CTO of Tether, acknowledged the tense market environment and highlighted the influence of recent news on market sentiment.

Speaking with Benzinga, he emphasized Tether's role as a gateway for liquidity and noted that the interest and sentiment in the crypto market drive inflows and outflows.

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Ardoino also mentioned the possibility of direct attacks on Tether, as witnessed in 2022, and the involvement of whales attempting to harm Curve positions by shorting USDT on AAVE AAVE/USD, leading to interest spikes.

"Either way, Tether is solid and will demonstrate once again. These events are a good test for us and we embrace them. We'll keep monitoring the situation, Tether is ready to redeem any amount," Ardoino said.

This is not the first time the Curve 3Pool has faced an imbalance.

Similar situations occurred in March, when the balances of USDC and DAI exceeded 45% each, and in November during the collapse of the FTX FTT/USD exchange.

A comparable imbalance was also observed after the crash of the Terra LUNA/USD ecosystem in May 2022, causing USDT to lose its peg and become temporarily volatile.

While occasional price discrepancies have occurred, USDT has not sustained a prolonged de-pegging from its intended value.

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