The depegging of USD Coin (USDC) and Dai (DAI) from the United States dollar prompted a frenzy of loan repayments over the weekend, allowing debtors to save a total of more than $100 million off their loans.
Following the collapse of Silicon Valley Bank (SVB) on March 10, the USD Coin (USDC) price dropped to lows of $0.87 on March 11 amid concerns about its reserves being locked at SVB.
MakerDAO’s stablecoin DAI also depegged briefly, going as low as $0.88 on March 11, according to CoinGecko.
The depegging, in the backdrop of broader crypto turmoil, led to more than $2 billion in loan repayments on March 11 on decentralized (DeFi) lending protocols Aave and Compound — with more than half made in USDC, according to a report by digital assets data provider Kaiko.
Another $500 million in debts were paid in DAI on the same day, it noted.
This tapered off as both USDC and DAI started heading back toward their peg. The following days did not have anywhere near as many repayments, with a rough total of only $500 million in loan repayments across Tether (USDT), USDC, DAI and other coins on March 12, and half of that on March 13.
Overall, blockchain analytics firm Flipside Crypto estimates that USDC debtors saved $84 million as a result of paying back loans while the stablecoin was de-pegged. While those using DAI saved $20.8 million.
“Overall, DeFi markets experienced two days of huge price dislocations that generated countless arbitrage opportunities across the ecosystem, and highlighted the importance of USDC,” the Kaiko report said.
Related: USDC depegged, but it’s not going to default
The depegging of USDC also led MakerDAO to reconsider its exposure to USDC, after crypto projects incorporating DAI in their tokenomics suffered losses due to a chain reaction.
Circle’s USDC began its climb back to $1 following confirmation from CEO Jeremy Allaire that its reserves are safe and the firm has new banking partners lined up, along with government assurances that depositors of SVB will be made whole.
According to CoinGecko data, USDC is sitting at $0.99 at the time of writing.