USDT de-peg presents arbitrage opportunities for DeFi traders
Stablecoin slightly de-pegged from its usual 1:1 ratio with the US dollar on the Curve decentralized exchange.
This deviation created a unique arbitrage opportunity in the DeFi market — causing a significant increase in USDT trading and borrowing.Connect/Create WalletNo wallet? No problem. You can set one up for free. We recommend Torus for first-time users.
Liquidity pools on Curve and Uniswap have been overrun with USDT sellers, causing USDT to trade momentarily below $1 instead of its standard parity. Even more noteworthy is Curve Curve's 3Pool, the top liquidity pool for USDT trading, becoming heavily imbalanced. In the pool, USDT's balanceto over 70% — suggesting that traders are selling it for the two other stablecoins: DAI and USDC.
Market participants reacted quickly to the de-peg, causing a significant increase in USDT borrowing from Aave, the top decentralized lending and borrowing protocol. Borrowers sold the devalued USDT for DAI or USDC — both of which held their standard 1:1 peg with the US dollar — on Curve’s 3pool., who, using 17,400 ETH and 14,690 stETH as collateral, borrowed $31.5 million USDT from Aave 2 and exchanged it for 31.47 million USDC at a rate of $0.997 on Curve.
The sudden de-pegging of USDT from the USD created a unique opportunity for these traders to profit from arbitrage — capitalizing on price differences between markets. In this case, the discrepancy between USDT’s lowered trading price and its typical dollar parity.
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