Curve Finance has recently experienced a tremendous influx of transactions that have helped push its trading volume to the highest levels ever.
The platform became the most attractive and used protocol by the users for swapping purposes as de-peg went on for the USD Coin (USDC).
Trading Volume Hit Historic Levels
Curve Finance is one of the largest swapping pools for stablecoins. The platform recently announced that the trading volume they recorded recently was the recorded highest.
As per their officials, the trading volume was the highest in the past 24-hours. It reportedly went up to $7 billion and cross the particular benchmark in a particular period.
The findings have revealed that the reason behind the tremendous spike in demand for the protocol was the business seizure of the Silicon Valley Bank.
Due to the SVB’s takedown, the trading value of the USDC de-pegged. With the dollar losing its 1:1 peg with the dollar, the investors became very uncertain about the price of the stablecoin.
With the entire investment market becoming very uncertain about the future de-peg, they hasted to exchange the token.
They proceeded with moving to the platform so they could swap the impacted stablecoin with other stablecoins.
What Does Curve Finance Offer?
Curve Finance is known for offering one of the largest liquidity pools for the stablecoins that are mainly the largest by market capitalization.
As of now, the major stablecoins that the protocol supports include TrueUSD (TUSD), Dai, Frax (FRAX), Tether (USDT), and USD Coin (USDC).
Due to the de-pegging of the USDC, there was FUD all over the cryptocurrency industry. The fear kept on rising and the investors were not willing to take a step further to support any tokens.
With the USDC losing its dollar peg, it was obvious that the Curve Finance pools would become unbalanced. As the sell-off began of the stablecoin, its situation kept getting more and more unbalanced.
The entire downfall took place in a matter of hours with the USDC losing its dollar peg.
USDC’s Stablecoin Market Presence
For those with less knowledge about the USD Coin. It is the second-largest stablecoin in terms of market capitalization. The overall valuation of the asset is currently more than $40 billion.
According to the January 31 data update, the valuation of the USDC was at a high of $42 billion. It is known for being the only stablecoin that has a 100% reserve in the form of collaterals.
This means that the valuation that the investors see for the token is what Circle, the stablecoin’s issuer has reserved in multiple banking and financial firms.
USDC’s De-peg Resulted in a Chain-Reaction
It is important to mention that it is extremely rare for a stablecoin to lose its peg, as they are backed by high reserves or very complicated algorithms.
However, if a stablecoin does end up losing its peg, it can become very catastrophic, especially, when the crypto industry has already suffered so much in the year 2022.
Due to the constant market downtrends in the year 2022 and the crash of major networks, the crypto market has become very sensitive.
The crash of a single protocol within the crypto industry can turn into a huge calamity for the entire industry. As the USDC lost its peg, it was expected that its fall may result in a huge chain reaction.
Turns out, the analysts’ speculation was correct because other stablecoins ended up losing their pegs. Compared to other stablecoins, it was MakerDAO that faced a major de-peg as well.
Its value reportedly plummeted by 5%, which was another grieving news for the entire crypto industry.
Since the de-peg took place, the situation has recovered for all the stablecoins. However, it has managed to help the Curve Finance protocol reach a new milestone.
At the time of publication, every major stablecoin such as USDC, DAI, USDT, and BUSD is trading at its full potential.