Wew! What does over a half billion dollar tsunami look like on Curve? Here are today’s trends to watch from Curve Market Cap:
Let’s unpack the role of $DAI in yesterday’s storm, as a massive flood of activity washed through Curve pools.
Curve Finance @CurveFinanceToday's trading volume was caused by... $DAI going right to the peg! Always nice to see stablecoins at 1.0 https://t.co/I8SMQLpPws
Much of the activity can be attributed to rebalancing $DAI. For about a week, the price of $DAI was ever so slightly unpegging, peaking at $1.0058.
This isn’t the most unpegged it’s ever been. In fact, it had peaked at nearly $1.05 in September. Nonetheless, an absolute torrent of volume rushed through Curve yesterday, ultimately bringing DAI back to its price. Note that of the top 6 pools by volume yesterday, five of them ($3Pool, $sUSD, $Y, $COMP, $BUSD) have exposure to $DAI.
Ironically, an intentional depegging may be coming soon. Sébastien Derivaux last week published a brainstorming post to the MakerDAO forum with several ideas for 2021. One idea is to head off potential regulatory hurdles by issuing a side version of $DAI that could float in value, and then depreciate the dollar-pegged $DAI if necessary.
The proposal has been somewhat controversial, but is an understandable precaution given the concerns throughout DeFi space about increasing regulation.
By way of comparison, Tether has fought concerns its entire existence, even recently as it continues to print new stablecoins to the tune of a $21B total. Paolo Ardoino, Bitfinex CTO, spent his holiday break defending against concerns about rumored regulatory crackdowns.
Tether @Tether_toTether tokens (USDt) are fully backed by reserves and are issued pursuant to market demand. 2/2
Whether or not Derivaux’s proposal to depeg $DAI gets traction, the Maker community remains innovative and proactive. As Bitcoin and Ethereum have hit new all time highs lately, $MKR, the Maker token, has largely kept up, seeing its price jumping to roughly $700. We look forward to watching what happens as interest in cryptocurrency continues to grow.
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