MarketDAO’s DAI stablecoin recently saw a rally following an unpegging event that saw the stablecoin drop from $1 in value to $0.88.
As the Silicon Valley Bank saga continues, the price of USDC, which is pegged to the US dollar, has seen a sudden drop in the past two days.
MakerDAO’s DAI algorithmic stablecoin suffered the same fate, delinking from its predicted value of $1, leading to its price dropping to around $0.88. MakerDAO has collateralized its stablecoin with holdings like USDC, which could be why DAI was affected by the USDC crash.
However, DAI quickly recovered and its price returned to its fixed value of $1 in 48 hours.
The stablecoin market felt an immediate shock as the USDC unpegging 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 the significant influence of USDC as collateral, other major stablecoin ecosystems have also followed suit and de-pegged from the US dollar.
MakerDAO’s DAI, for example, lost 7.4% of its value as a result of the USDC unpegging. Statista data shows that as of June 2022, $6.78 billion worth of DAI supply was collateralized by $8.52 billion worth of cryptocurrency.
At press time, the DAI price is $0.987, with a 24-hour trading volume of $1.1 billion. In 24 hours, the price rose 4% while experiencing a 1.3% drop in the last seven days. The circulating supply of DAI is $6.3bn and it currently has a market capitalization of $6.1bn.
USDC represented a significant 51.87% of the DAI collateral, valued at $4.42 billion. Other notable cryptocurrencies used as collateral included ether (ETH) at $1,603 and pax dollar (USDP) at $660 million and $610 million, respectively. Consequently, DAI experienced decoupling from the US dollar, momentarily falling to $0.897.
SVB has been shut down by the California Department of Innovation and Financial Protection for reasons that have not been disclosed. In response, the regulator has appointed the Federal Deposit Insurance Corporation as receiver to safeguard insured deposits.
