USDT is currently heavily over represented in the 3pool on Curve which is now over 60%
Is this baseless panic or do large entities know something we don’t?
I don’t want to take that bet so I’ve shorted USDT on-chain as a hedge. Here’s how👇 1/5
Curve is the main place for swapping stablecoins as the protocol has the deepest liquidity.
When the Curve 3pool becomes imbalances it becomes more difficult to swap without experiencing large slippage.
This is what’s happening right now because people are selling USDT.
If you want to convert USDT to another stablecoin you have several options such as USDC, DAI, FRAX or decentralized stablecoins like LUSD on mainnet or VST on Arbitrum.
You can additionally short USDT quite easily on-chain:
• Go to a money market like @AaveAave or @RDNTCapital.
• Deposit a collateral that’s not very volatile like USDC or another stablecoins that’s not USDT
• Borrow USDT against this
• Convert borrowed USDT to another stablecoin
• (can also loop this for a leveraged short)
If USDT depegs you can repay the loan and you’ve made a profit.
On Aave Eth mainnet it costs ~2% APY to borrow USDT but on Arbitrum 20%.
On Radiant it costs 10% to borrow but is free if you’re eligible for $RDNT rewards.
Do I think USDT will depeg?
No. But I have no way of knowing what’s going on behind the scenes.
As I already have funds on Radiant, it’s free for me to make this short and is therefore +EV.
Not financial advice