In March, we witnessed #USDC depeg following the unexpected closure of Silicon Valley Bank. The thing is that the issuer of the stablecoin — Circle kept $3.3 billion assets in the bank. The company’s reserves decreased and USDC lost parity 1:1.
The liquidity outflow started. The situation created strong negativity around other stablecoins. The domino principle worked. A significant part of their collateral came from USDC. For example, #DAI by 48% was secured by USDC.
Then people started to get rid of $USDC at an unfavorable rate and the situation may repeat itself. That is why Amulet Protocol has launched a new product to cover the risks of depeg stablecoins.
Amulet Protocol — simple, reliable #cover for everyone in web3 and already provides smart contract vulnerability cover.
And now provides coverage for depeg stablecoins.
Two functions added:
Purchase cover to protect against a depeg.
Stake to provide capacity for depeg cover.
When purchasing covers, users deposit their USDC or $USDT into a vault where the assets will be protected. In case of depeg stablecoin and triggering of the trigger price, the user receives a trigger payout.
Underwrite — allows users to #Stake their assets in the vault, thereby taking the risk in the event of a price trigger or receive a payout without triggering a trigger.
Once all prices are agreed upon between payments and underwriting capital (deposited in a separate vault), the vaults are slammed. Funds are released when coverage expires or when a depricing event is triggered.
If a #Stablecoin depeg occurs buyers will be paid their covered losses. If the coverage expires without triggering, underwriters will be paid their premiums.
So far, depeg coverage has been released for two stablecoins: USDC and USDT. The vaults have been audited by FYEO and are already available here 👇https://app.amulet.org/#/vault/trade
