dYdX plans to continue operations regardless of USDC-USD price changes
Decentralized exchange dYdX has announced that it will continue to function even if the price of USDC diverges from its stable value of $1. USDC is a fully collateralized stablecoin managed by Circle, and dYdX uses it as collateral for trading. This announcement comes as a relief to traders who were concerned about the potential impact on their positions if the value of USDC were to fall.
dYdX has stated that all positions, collateral, and funding payments in USDC will be worth less in USD terms in the event of a USDC depeg. However, traders will not be liquidated as a result of USDC-USD price changes. The notional value of a position, collateral pools, and funding payments are all measured in USDC, which means that dYdX will continue to function as normal in the event of a USDC depeg.
According to dYdX, all user positions, collateral, funding payments, and the insurance fund will all be worth less in USD, proportional to the change in USDC-USD price. However, leverage and liquidation status will not be affected by USDC-USD price changes.
In terms of funding rates, dYdX uses oracle prices from underlying markets paired with USD, which means that the prices on dYdX will continue to track the USD prices of each asset. Funding on dYdX is paid in USDC, and funding rate calculations are independent of USDC-USD prices.
dYdX’s announcement provides traders with more reassurance that their positions will not be liquidated as a result of USDC-USD price changes. The stability of USDC has been a major factor in its popularity among traders, and dYdX’s decision to continue to function even if USDC diverges from its stable value should help maintain that popularity.
The USDC stablecoin was affected by the bankruptcy of Silicon Valley Bank, leading to a significant drop in the USDC/USDT trading pair on OKX to $0.936. Additionally, the BUSD/USDT trading pair on Binance saw a drop to $0.9941, marking the lowest points recorded since mid-April 2021.
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