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An Update on USDC and Silicon Valley Bank

circle.com

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Re: An Update on USDC and Silicon Valley Bank

#141

Post by SilasX »

dmak wrote: post #139
323 wrote: post #75

Earlier quoted context omitted.

Yes, by creating a synthetic - you short BTC/USDC and long BTC/USD. This will create a USDC/USD synthetic. Both BTC/USDC and BTC/USD can offer up to 100x leverage, so the synthetic USDC will also be up to 100x. Of course, there is a long list of risks in such a trade, and if you need to ask about it it's not for you.

I am curious to read more about the risks, but don't plan to make this trade. Could you share a few points just to give me a direction to dig deeper?

It seems like the point of that comment to look knowledgeable while providing no actionable information[2] and falsely implying it’s too difficult[1], so I’m guessing no, as that would defeat their seeming objectives in making the comment to begin with.

[1] which it isn’t; here’s what legit attempts at explanation look like: https://news.ycombinator.com/item?id=35113400

https://news.ycombinator.com/item?id=35113126

[2] if it weren’t, it would explained some of the terminology used, since the asker clearly isn’t deep in the business in the first place

Re: An Update on USDC and Silicon Valley Bank

#142

Post by oarabbus_ »

dmak wrote: post #139
323 wrote: post #75

Earlier quoted context omitted.

Yes, by creating a synthetic - you short BTC/USDC and long BTC/USD. This will create a USDC/USD synthetic. Both BTC/USDC and BTC/USD can offer up to 100x leverage, so the synthetic USDC will also be up to 100x. Of course, there is a long list of risks in such a trade, and if you need to ask about it it's not for you.

I am curious to read more about the risks, but don't plan to make this trade. Could you share a few points just to give me a direction to dig deeper?

Binance announced today they will have USDC/USDT and other stablecoin trading pairs.

https://www.binance.com/en/support/announcement/binance-adds...

Individuals in many countries (but not the USA) have access to Leverage Trading on Binance.

You could also use any of the following DeFi liquidity pools: https://nomics.com/markets/usdt-tether/usdc-usd-coin/markets

Re: An Update on USDC and Silicon Valley Bank

#143

Post by jonnydubowsky »

obblekk wrote: post #6

23% of the reserve, or $9.7B is held in cash. I think on Thursday, SVB saw cash outflow requests over $40b in one day. USDC peg is so far below 1 right now there will definitely be a lot of par arbitrage Monday trying to withdraw. Hopefully it doesn’t take longer than a day for them to settle treasury trades, and maybe some people have lost the keys to their crypto. They could also possibly have a line of credit with…

USDC is now back up from $0.82 to ~ $0.97

Re: An Update on USDC and Silicon Valley Bank

#144

Post by Xeoncross »

spywaregorilla wrote: post #137
rvnx wrote: post #125

Earlier quoted context omitted.

Yeah, it sounded like a perfect plan if no customers wanted to get their funds within the next 10 years. ¯\_(ツ)_/¯

No that's not it. You can sell the bonds any time. But now they're worth considerably less because interest rates are much higher now. They locked themselves in at rate that are now terrible for 10 years.

So weird to think that near-zero interest rates are the best you can do for the next 10 years. I'm pretty sure everyone way saying "lock in this low interest rate before they go up again!"

Re: An Update on USDC and Silicon Valley Bank

#145

Post by westurner »

Xeoncross wrote: post #144
spywaregorilla wrote: post #137

Earlier quoted context omitted.

No that's not it. You can sell the bonds any time. But now they're worth considerably less because interest rates are much higher now. They locked themselves in at rate that are now terrible for 10 years.

So weird to think that near-zero interest rates are the best you can do for the next 10 years. I'm pretty sure everyone way saying "lock in this low interest rate before they go up again!"

On Treasuries over what windowed series? https://fred.stlouisfed.org/tags/series?t=treasury%3Byield+c...

Is this the one?

"10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity" https://fred.stlouisfed.org/series/T10Y3M

Re: An Update on USDC and Silicon Valley Bank

#146

Post by PheonixPharts »

WalterSear wrote: post #45
bb88 wrote: post #24

Earlier quoted context omitted.

Can one short USDC with leverage?

Short? I can't see this not returning to it's peg by the next news cycle. It's free money. SVB went bankrupt - as a business: it can't pay its bills. People are reacting to this as if the deposits have vanished entirely. If you think USDC is a shorting opportunity, short anything crypto. USDC is literally the second largest domino.

> I can't see this not returning to it's peg by the next news cycle. It's free money.

But isn't this the problem?

If over the weekend billions of dollars of USDC is purchased at less that $1 from people expecting to cash in on "free money" come Monday, Circle is going to have to be able to ensure that that actually happens, which could easily require more liquidity than remotely possible (edit: I just realized that Circle claims that back 1-to-1 with liquid assets).

Volume right now in USDC is at record highs. If all of those people are hoping to make free money on Monday, and it turns out Circle is unable to maintain that, then the entire USDC will crash almost instantly once people realize it's impossible to keep it pegged.

I'm far from a crypto expert so could you clarify what I'm missing?

Re: An Update on USDC and Silicon Valley Bank

#147

Post by SilasX »

patrickaljord wrote: post #103
WalterSear wrote: post #38

Earlier quoted context omitted.

IMHO, they are justifiably confident that this will all blow over in a few days, and that their deposits will be available to them soon after, albeit with a few percent missing. But I concur - they are showing their true colors by not defending the peg.

it's not their job to defend the peg on the open market (not to mention impossible by definition), their only product is the possibility to redeem each USDC for $1 through a circle account. We will see on Monday if they can deliver.

Sure, it’s not technically “their job” to destroy a dollar’s worth of obligations for 90 cents. It’s just a darn good idea.

Re: An Update on USDC and Silicon Valley Bank

#148

Post by landemva »

Laaas wrote: post #123
bhaak wrote: post #8

Earlier quoted context omitted.

Terra was no stablecoin and it has been constantly pointed out that it wasn't. USDC is backed 1 USDC for 1 USD. What you're actually seeing here is that the traditional finance system has lead to a crash in crypto. That's almost refreshing. Usually crypto fucks up by itself (see FTX and Terra for the most recent ones).

Arguably, the FTX debacle is in the same bucket, as it was caused by people having their money on an exchange that essentially functioned like a fractional reserve bank.

FTX functioned more like a self-flushing toilet.

Re: An Update on USDC and Silicon Valley Bank

#149

Post by yieldcrv »

jdross wrote: post #98
sql-spy wrote: post #92

[flagged]

This is FUD spreading — they filed an 8-k on friday dispelling concerns here and emphasizing their diversification of fund sources and liquidity. it’s smart to limit exposure to insurance caps, but that doesn’t mean there is going to be a contagion de facto

Something that custodies money should be able to give it all back instantly. If it is vulnerable to "fear uncertainy and doubt" as a self fulfilling prophecy of not being able to pay out everything instantly, then it should be dismantled.

I think its interesting that properly collateralized and well managed services don't make the news, but it is very common in the crypto space for 100% withdrawals to occur seamlessly. Far more common than the implosions. Whereas seemingly all banks are relying on withdrawals en masse simply not happening.

Re: An Update on USDC and Silicon Valley Bank

#150

Post by SparkyMcUnicorn »

latchkey wrote: post #105
mdasen wrote: post #80

Earlier quoted context omitted.

That means it's not really a peg. If you have a peg, it means that the currency issuer is willing to buy their currency for a set amount. Right now, Circle isn't willing to buy USDC for $1 USD - therefore, there is no peg. Or maybe what we're talking about is a broken peg. Circle was willing to pay $1 USD for a USDC, but they're no longer willing to pay that (at least temporarily). Maybe countries have seen their peg…

> Right now, Circle isn't willing to buy USDC for $1 USD https://www.circle.com/blog/an-update-on-usdc-and-silicon-va...

Where does it say that? All I see is the exact opposite being said.
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