USDT now accounts for 70% of Curve's 3pool. Is this an unfounded panic, or do large institutions know something we don't? If you don't want to take this risk, you can choose to short USDT on the chain as a hedge. Curve is the main place to exchange stablecoins because the protocol has the deepest liquidity.
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When the Curve 3pool is unbalanced, it is more difficult to make swaps and there is greater slippage. What is happening right now is that people are selling USDT. If you want to convert USDT into other stablecoins, you have a few options, such as USDC, DAI, FRAX, or a decentralized stablecoin like LUSD. You can also short USDT on-chain easily: • Go to a money market like Aave or RDNT Capital. • Pledge a less volatile collateral like USDC or another stablecoin that is not USDT. • Borrow USDT on top of that. • Exchange the borrowed USDT for other stablecoins. • Leveraged short hedging is also possible.
If USDT depegs, you can repay the loan and earn a yield. On Aave, the Ethereum mainnet, the annualized interest rate for borrowing USDT is about 2%, but on Arbitrum it reaches 20%. On Radiant, the borrowing fee is 10%, but it is free if you meet the $RDNT reward conditions.
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