QUICK TAKE:
Tether(USDT) price slightly depegged earlier today
Alameda is said to be shorting USDT by supplying USDC on AAVE and borrowing USDT
TRON DAO Reserve announced that it would purchase 300 million USDT on the open market
Since the FTX exchange and Alameda issues surfaced, the crypto markets have suffered a cascade of negative consequences. Bitcoin and all of the popular altcoins reached new yearly lows, causing panic in the market.
However, today the spotlight was on the top stablecoin Tether(USDT) depegging in the midst of a massive bearish wave in the market. In the meantime, market participants started panicking. At the time of press, as per CMC Tether was trading at $0.996. It was down 0.29% in the last 24 hours. Notably, it fell to a maximum of 3% from its $1 peg earlier today.
Yo #Tether, what's the matter? #USDT
When Terra collapsed, we had a similar price action.
People are de-risking and they are dumping USDT for USDC / BUSD just in case.
This is a normal price movement considering market pressures as long as Tether can pay up. pic.twitter.com/nyKJ62OTjT
— Duo Nine | discord.gg/ycc (@DU09BTC) November 10, 2022
Soon afterward, Tether froze $46 million in USDT belonging to the FTX exchange and held on the Tron blockchain. Reportedly, this was at the behest of Law Enforcement agencies, who are conducting an investigation against FTX.
This came after TRON DAO Reserve, a decentralized cryptocurrency reserve, announced that it would purchase 300 million USDT on the open market. It had earlier said that will purchase USDT worth $1 billion. The goal, it said in a tweet, was to “safeguard the overall blockchain industry and crypto market,” without going into further detail.
Notably, Tron founder Justin Sun had earlier today revealed that he was looking into acquiring FTX. At the same time, he also enabled trading for TRX, Tron’s native token, on FTX.
Alameda shorting USDT
Notably, Alameda is said to be shorting USDT by supplying USDC on AAVE and borrowing USDT. Further, on Curve, the platform swapped USDT to USDC, and the transaction is recorded on Etherscan. Further, a wallet associated with Alameda Research borrowed 250,000 USDT on Aave this morning, which it transferred to Curve. Traders speculate that the firm is shorting the asset, but it is unclear what its overall trading position is based solely on on-chain data.
so alameda is trying to short $usdt?
>supply USDC on aave>borrow USDT on aave>swap USDT to USDC on curve
dafuq man…https://t.co/F3tQvDMfF8
— astromagic (Trust_No_One) (@astro__magic) November 10, 2022
Furthermore, Curve’s stablecoin pool is becoming out of balance at the same time. The pool has a large USDT component (82%), which reduces the liquidity for other stablecoins. The reason for this would have been traders exchanging USDT for other stablecoins.
Although, Tether CTO Paolo Ardoino urged patience in response to the day’s USDT moves. He wrote,
#tether processed ~700M redemptions in last 24h. No issues. We keep going.
Interestingly, Ardoino’s Tweet echoed Tether’s official stance, which had already been published the day before. The USDT issuer stated that it had no direct exposure to FTX or Alameda. Tether wrote,
Tether is completely unexposed to Alameda Research or FTX. Tether tokens are 100% backed by our reserves, and the assets that are backing the reserves exceed the liabilities.