The past few weeks in the crypto market has been busy. With Ethereum’s Shanghai Upgrade going live today, the de-pegging of the USDC stablecoin, soon after the Silicon Valley Bank (SVB) announced its liquidity issues in its books which resulted in a bank run.
The incident followed up with around $2.2 billion worth of USD Coin (USDC) being burnt since this week started, as redemptions surpassed $4 billion on March 14, 2023, night. As stated by The Block, around 723 million USDC tokens were burnt in one transaction during early Asian hours on March 15, 2023.
Read On: Ethereum Shanghai Upgrade goes live
According to the data, it further shows that there has been several other USDC burns that took place over multiple separate transactions. The amount of them ranging from $300 million to $600 million. All of these transactions together brought the total burnt value of the USDC tokens to over $2.2 billion in a little over 24 hour time period.
The burning mechanism of tokens in the crypto space refer to effectively taking the tokens out of their circulating supply by sending them to a separate address that is not controlled by any individual. This USDC burns is likely to be followed by reduction in reserve backing or redemptions.
During these event, the net redemptions of the USDC token crossed the $4 billion mark yesterday, on March 14, 2023. The issuer of the USDC token, Circle, have mentioned that they will process all transactions and honor redemptions.
As per the announcement blog on the USDC update, Circle said, “Moreover, as part of our ongoing initiatives to strengthen the USDC reserve, we now hold the cash portion of the reserve at BNY Mellon, except for limited funds held at transaction banking partners in support of USDC minting and redemption.“
What Is Depegging in Crypto?
Depegging in crypto refers to the sense of a stablecoin that is deviating from its intended peg. For example, if a USD-pegged stablecoin sustain a drop in value under the value that is not $1, the coin is said to be depegged. The events of depegging are common in both fiat and crypto spheres.
Source: CoinDesk
