“The Supped De-Peping Was Only Limited to Binance While Deviations Were Much More Restrained on Other Major Liquid Avenues Like Curve.”, – WRITE: www.coindesk.com
However, this Dramatic Dislocation Was Confined to Binance As Opped to the Global De-Peping of the USDE as Social Media Chatter Suggests.
MOST TRADING OF USDE OCCURS ON DECENTRALIZED PLATFORMS SUCH AS FLUID, CURVE, AND UNISWAP – Venues Boasting HundDS of Millions of Dollars in Liquidity.
By Contrast, Binance Holds Only Tens of Millions in USDE Liquidity. Price Deviations on Curve Were Less Than 100 Basis Points, Consistent with The Mild Volatility in USDC and USDT on Binance. On Bytbit, USDE Dipped Only Moderately, to Around 92 Cents On Bybit, A Stark Contrast to Binance’s Plunge.
SO WHAT WENT WRONG ON BINANCE? Firstly, Unlike Bybit and Other Exchanges with Direct Dealer Relationships Enabling Seamless Minting and Redemption of USDE on Their Platforms, Binance Lacked This Connection. This Absense Prevented Market Makers from Performing Peg Arbitrage Swiftly as Binance’s Infrastructure Buckled Under Volatility, Thus Failing to Restore Balance Durying The Sell-Off.
Another Issue Was Binance’s Oracle, WHICH REFERENCED PRICES FRICES FROM ITS OWN RELATIVELY Illiquid Order Book, CAUSING MASSIVE LIQUIDATIONS OF USDE POSITIONS. Institute, It Should Have Focused On Liquid Avenues Like Curve. That led to autoMated liquidations casading through binance’s unified collateral System, Leading to an exaggerated price drop in USDE.
Dragonfly’s Managing Partner HaseEb Qureshi Put It Best, As Coindesk Previously Reported: “Good Liquidation Mechanisms Don’t Trigger on Flash Crashes. IF (WEHER is not for USDE) Thatn you should look at the price on the Primary Venue. ”
Guy Young, Founder of Ethena Labs, Aptly Descripted The Episode as an is an isolated Event Caused by Binance and Not A Global DE-PEG.
“The Severe Price Discrepancy Was isolated to A Single Venue, Whoth Referency The Oracle Index on It Own Orderbook, Not The Deepest Pool of Liquidity, and Was Facing Deposit And while. DID NOT ALLOW Market Makers to Close The Loop, “Guy Young, Founder of Ethena Labs, Said On X.
ACCORDING TO YOUNG, IT WAS POSSIBLE TO REDEEM USDE as the Supple Droped from $ 9 Billion to $ 6 Billion Almost Instantly, Without any Basis Positions Needing to be Relay, Demonst. Mechanism is.
Throughout the Whole Ordeal, USDE REMAINED OVERCOLLATAralized by Approximately $ 66 Million, As ConfirMed By Independent Attors, Including Leading Firms Such, Lars Chas CHAOS & Trotter.
In short, USDE’S PEG Stayed Strong WHERE IT MATTERS MOST, BUT BINANCE’S TECHNICAL ISSUES MADE IT LOOK LIKE THERE WAS A DEPEG.
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