Curve 3pool Imbalance Triggers USDT De-Pegging

Tether's CTO, Paolo Ardoino, has assured the market that Tether stands ready to redeem any amount of USDT in response to the severe imbalance in Curve's stablecoin 3pool. This announcement comes as the ratio of Curve's 3pool reveals an alarming disparity.

Ideally, the balance in Curve 3pool should be evenly distributed among its three stablecoins: USDT, USD Coin (USDC), and DAI, with each accounting for 33.33%. However, the current imbalance has seen USDT's share surge to over 70%, indicating a significant sell-off of USDT in favor of DAI or USDC.

As a result of this imbalance, the value of Tether's stablecoin, USDT/USD, has experienced a slight de-pegging. Its current trading price hovers around $0.9989. Paolo Ardoino acknowledged the prevailing edginess in the market environment and emphasized the influence of recent news on market sentiment.

In a recent interview, Ardoino underscored Tether's role as a gateway for liquidity and recognized the impact of market interest and sentiment on inflows and outflows. He also highlighted the potential for direct attacks on Tether, as previously witnessed in 2022, and the involvement of whales attempting to manipulate Curve positions by shorting USDT on AAVE, leading to interest spikes.

The current imbalance within the Curve 3pool is not an isolated incident. Similar situations arose in March when the balances of USDC and DAI exceeded 45% each, as well as in November during the collapse of the FTX exchange. A comparable imbalance was observed after the crash of the Terra ecosystem in May 2022, causing temporary volatility and the loss of USDT's peg.

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What is Tether:

Tether is the most widely adopted coin in circulation. USDT was the first-ever stablecoin introduced to the market. It is designed to peg its issued coin 1-to-1 with the Dollar. Tether was one of the first stablecoins issued in several blockchains, available on the Tron, ETH, Omni, EOS, Algorand, Solana, and the Binance Smart Chain (BSC) networks. It has received mass adoption as the reserve currency for most traders as it doesn’t fluctuate like typical crypto coins.

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