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If their PAX/BUSD -> USDC conversion only works during the opening hours of that New York bank, wouldn't this be well-known to everyone who tried to convert to

by xg15 4y ago

If their PAX/BUSD -> USDC conversion only works during the opening hours of that New York bank, wouldn't this be well-known to everyone who tried to convert to USDC in the past? As in, what "situation" are they talking about? Going only from their tweet, there is nothing out of the ordinary happening at all...

3np 4y ago
The idea would be that in the past their buffer of liquidity has been enough that they cover up without having to go to the bank between opening hours, and that recent surge in withdrawals (this would be the "situation") has now dried up that buffer. Not speaking to how that reflects actual events, it's all consistent.
vgatherps 4y ago
In theory, this is related to their recent automated BUSD <-> USDC conversion program. They started treating the two as fungible, and so have split reserves between the two (likely BUSD for the most part). If your reserves of USDC get drained faster than you can replenish, then you can't withdraw more USDC (even though it's backed since you have a BUSD waiting to convert). Such a system runs along just fine, until suddenly there's huge USDC withdrawal pressure over the weekend, you can't get dollars from the bank BUSD uses to the bank USDC uses, and the USDC reserve goes empty. Wait for banks to get back into business and everything is super fine. From the outside the above situation and a true insolvency look quite similar. It should be possible to inspect their BUSD balances on chain though?
- xg15 4y ago
  Ah ok. Yeah, them using up their stock of USDCs so they have to wait now until they can buy more would actually make sense.
shawabawa3 4y ago
They likely have a reserve of say $100M in USDC to fulfil withdrawals, and only when withdrawals exceed that amount before they can do the bank transfers to top it up will they have to suspend withdrawals

by xg15 4y ago

3np 4y ago

The idea would be that in the past their buffer of liquidity has been enough that they cover up without having to go to the bank between opening hours, and that recent surge in withdrawals (this would be the "situation") has now dried up that buffer. Not speaking to how that reflects actual events, it's all consistent.

vgatherps 4y ago

In theory, this is related to their recent automated BUSD <-> USDC conversion program. They started treating the two as fungible, and so have split reserves between the two (likely BUSD for the most part). If your reserves of USDC get drained faster than you can replenish, then you can't withdraw more USDC (even though it's backed since you have a BUSD waiting to convert). Such a system runs along just fine, until suddenly there's huge USDC withdrawal pressure over the weekend, you can't get dollars from the bank BUSD uses to the bank USDC uses, and the USDC reserve goes empty. Wait for banks to get back into business and everything is super fine. From the outside the above situation and a true insolvency look quite similar. It should be possible to inspect their BUSD balances on chain though?

xg15 4y ago
Ah ok. Yeah, them using up their stock of USDCs so they have to wait now until they can buy more would actually make sense.

shawabawa3 4y ago

They likely have a reserve of say $100M in USDC to fulfil withdrawals, and only when withdrawals exceed that amount before they can do the bank transfers to top it up will they have to suspend withdrawals