DAI recovers after severe depeg caused by USDC ripple effect
MarketDAO’s stablecoin DAI recently experienced a recovery following a de-pegging event that saw the stablecoin drop from the $1 value to $0.88.
As the Silicon Valley Bank saga continues, the price of USDC, which is pegged to the US dollar, experienced a sudden drop over the past two days.
MakerDAO’s algorithmic stablecoin DAI suffered the same fate, depegging from its intended value of $1, leading to a drop in its price to around $0.88. MakerDAO has collateralized its stablecoin with holdings like USDC, which could be why DAI was affected by USDC’s drop.
However, DAI has made a swift recovery, with its price returning to its pegged value of $1 within 48 hours.
The stablecoin market felt an immediate impact as USDC’s de-pegging resulted in a sell-off triggered by Silicon Valley Bank’s failure to process Circle’s $40 million transfer request, which included $3.3 billion in USDC.
Due to USDC’s significant influence as collateral, other major stablecoin ecosystems also followed suit and depegged from the US dollar.
MakerDAO’s DAI, for instance, lost 7.4% of its value as a result of USDC’s depegging. Statista data shows that as of June 2022, the DAI supply worth $6.78 billion was collateralized by cryptocurrencies worth $8.52 billion.
At press time, DAI price is $0.987, with a 24-hour trading volume of $1.1 billion. Within 24 hours, the price increased by 4% while experiencing a decline of 1.3% over the past seven days. The circulating supply of DAI is 6.3 billion, and it currently holds a market cap of $6.1 billion.
USDC accounted for a significant 51.87% of DAI’s collateral, valued at $4.42 billion. Other notable cryptocurrencies used as collateral included ether (ETH) at $1,603 and pax dollar (USDP) at $0.66 billion and $0.61 billion, respectively. Consequently, DAI experienced de-pegging from the US dollar, momentarily dropping to $0.897.
SVB has been closed down by the California Department of Financial Protection and Innovation for reasons that have not been disclosed. In response, the regulator has appointed the Federal Deposit Insurance Corporation as the receiver to safeguard insured deposits.
