Makerdao Issues Emergency Proposal to Address $3.1B in USDC Collateral After Stablecoin Depegging Incident

On March 11, 2023, the decentralized finance project Makerdao issued an emergency proposal following the USDC depegging incident that saw the stablecoin dip down to $0.877 per unit. At the time of writing, Makerdao commands $3.1 billion in USDC collateral that backs a portion of the project's stablecoin, DAI.

Timeline of Maker, Usd-coin

The turmoil induced by the fall of Silicon Valley Bank has led to USDC losing its dollar peg. The stablecoin fell as low as $0.87 earlier today as holders flocked to other crypto assets.

Late Friday night, the USDC issuer Circle Internet Finance released a statement saying that it “awaits clarity” from federal banking regulators regarding the standing of its accounts at Silicon Valley Bank.

Nine of the top 10 stablecoins by market cap are trading below their dollar peg as the market reels from the contagion sparked by the depeg of Circle's USDC stablecoin on March 11, according to CryptoSlate data.

Concerns are rising within the cryptocurrency industry following the revelation that $3.3 billion of the approximately $40 billion in USDC reserves remain at Silicon Valley Bank (SVB).

USD Coin (USDC) is struggling to maintain its peg to the US dollar after revelations that some of the cash backing the top stablecoin is stuck in Silicon Valley Bank. The Boston-based firm says $3.3 billion of the $40 billion backing USDC is locked in the collapsed bank, which is now controlled by the FDIC.

On Saturday, March 11, 2023, crypto advocates are concerned as a few stablecoin assets have depegged from their $1 parity. The second-largest stablecoin USDC, issued by Circle Financial, fell below $0.90, reaching a low of $0.877 per coin. Additionally, around five other stablecoins have dropped below the U.S.

The world of cryptocurrency is known for its volatility, with prices rising and falling on a regular basis. However, the recent collapse of the USDC stablecoin has caused investors to fear that the entire market could be on the verge of a catastrophic crash.

On March 11, MakerDAO issued an “urgent executive proposal” to mitigate any risks to the protocol associated with its USDC tail risk exposure. Make DAO has over 3.1 billion USDC in collateral backing its DAI stablecoin.

Cryptocurrency exchanges Binance (CRYPTO: BNB) and Coinbase Global Inc (NASDAQ: COIN), two of the top cryptocurrency exchanges, announced temporary suspensions of USD Coin (CRYPTO: USDC) conversions due to concerns about the fallout from the collapse of Silicon Valley Bank , a subsidiary of SVB Financial Group (NASDAQ: SIVB). The move followed worries that Circle, the company behind USDC stablecoin, held some of USDC's cash reserves at Silicon Valley Bank, which California's financial regulator shut down.

USDC Coin Price News: The cryptocurrency market displayed signs of recovery amid concerns of liquidity issues stemming from the failure of two US banks —  Silvergate and Silicon Valley Bank. But the depegging of USD Coin (USDC) is reminiscent of the Terra stablecoin terraUSD (UST) in 2022.