In an infrequent move, The TrueUSD (TUSD) stablecoin rose to $1.20 a few days ago on Binance. A SUI farming pool on the exchange is the likely reason behind the 20% increase in priceaccording to beincrypto.
TrueUSD (TUSD) delinked from various exchanges, including Binance. Unusually, the token rose to over $1.20 on the exchange.
Binance is one of the most popular exchanges for TrueUSD, and the trading platform promotes it as a zero fee pair.
TrueUSD (TUSD): Did Aave and Compound Cause Stablecoin Depeg?
The reason for the roughly 20% increase in price could be due to the high demand for the token, as liquidity cannot be maintained. Financial services site Kaiko reported on the development, saying: “TUSD liquidity has not kept pace with its volumes, making a decoupling like this more likely.”
Kaiko also noticed that Aave and Compound users started borrowing large sums of the token when depeg began. Regarding the trading strategy employed, Kaiko stated:
“Most of these transactions appear to be organic rather than bot-driven. The most common strategy was to borrow TUSD and exchange it for USDC, effectively shorting TUSD from its high price. However, neither Aave nor Compound have a large amount of TUSD, which meant that loan rates rose rapidly, reaching over 100% APR on both protocols.”
What is TrueUSD (TUSD)?
TruseUSD (TUSD) is an ERC-20 stablecoin pegged to the US dollar. It has increased its market capitalization, becoming the fifth largest stablecoin, according to DeFiLlama.
It currently has a market capitalization of $2.5 billion, up 20% over the past week.
The reason for the increase could be the SUI farming pools on Binance. Sui is a Layer 1 blockchain network, and users can lock up BNB and TUSD to farm the token.
There was also some controversy after TRON founder Justin Sun sent $50 million worth of TUSD to Binance.
Speculation was that Sun was trying to cultivate SUI’s liquidity pools on Binance. Changpeng Zhao tweeted that Binance would take action against any farming action taken. Sun reversed the transfer.
Stablecoin supply falls
The stablecoin market has had an eventful 2023, although the past few days have not been so rosy.
The aggregate supply of the top 5 stablecoins has fallen by around 23% this year, according to data from Glassnode.
Tether (USDT) continues to dominate the stablecoin market, with its market share rising to a 15-month high in March.
Other stablecoins have been affected, such as USDC, which saw billions in outflows a few months ago. It remains the second largest stablecoin at $30 billion, well behind Tether’s $82 billion.
Source: Ambito
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