Mysterious Surge: USDT Ratio in Curve’s 3pool Exceeds 50% Without Clear Explanation

In the aftermath of the recent cryptocurrency market dump triggered by news of the Federal Reserve halting interest rate hikes, a surprising trend has emerged among decentralized finance (DeFi) users. Data from Curve indicates that there has been a notable shift in the conversion of funds from USDT to other stablecoins such as USDC and DAI within the 3pool.

The 3pool, which comprises USDT, USDC, and DAI, is the largest stablecoin pool on Curve. Over the past 48 hours, it has witnessed a clear imbalance as the proportion of USDT in the pool has risen from the initial 30% to a staggering 51%. Meanwhile, the proportions of USDC and DAI within the 3pool have decreased to 24.5% and 25.2%, respectively.

Currently, the 3pool holds approximately $381 million in stablecoins, an increase from $354 million 48 hours ago. During the same timeframe, the amount of USDT in the pool has surged from $108 million to $195 million, while USDC and DAI have experienced withdrawals, dropping from $123.3 million and $122.5 million to $92.3 million and $93.3 million, respectively.

Source:  Delphi Digital

The sudden and significant increase in the proportion of USDT within Curve’s 3pool has left investors in the cryptocurrency space concerned. Similar shifts in USDT ratios have historically been associated with major market fluctuations.

The last time the USDT proportion in the 3pool surpassed the 50% mark was in November 2022, coinciding with the FTX exchange’s bankruptcy. Additionally, in March of this year, the largest stablecoin pool on Curve saw the USDT percentage drop below 5% as DeFi users fled from USDC during the U.S. banking crisis. These events have fueled speculation about whether someone possesses advance knowledge of USDT-related information and is making decisions to convert this stablecoin to alternative solutions. It is also possible that USDT is being targeted, similar to the attack on UST in Curve’s 4pool, which resulted in a depegging event on May 8, 2022, and the subsequent complete collapse of the LUNA-UST ecosystem within five days.

Earlier this week, Tether, the company behind USDT, announced the issuance of 1 billion USDT on the Ethereum blockchain, likely aiding Binance in transitioning liquidity from TRON to Ethereum. Despite a decline in overall stablecoin trading volume during May, Tether’s market capitalization recently reached a new record high of $83.4 billion.

The sudden and unexplained rise in the proportion of USDT within Curve’s 3pool raises questions about the stability and future of this popular stablecoin. Market participants will undoubtedly closely monitor developments to determine the underlying factors behind this shift and assess its potential implications for the broader cryptocurrency ecosystem.

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