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You are confusing a "peg" with "backed" Circle have $1 which you can redeem each USDC for. They don't theoretically have extra cash lying around to buy USDC a
by shawabawa3 4y ago
You are confusing a "peg" with "backed"
Circle have $1 which you can redeem each USDC for.
They don't theoretically have extra cash lying around to buy USDC at discount, and they certainly can't use reserves for that (they are needed to serve withdrawals)
Hopefully they do have some corporate cash spare to buy up cheap USDC so that what they lose to SVB doesn't make them insolvent
- itsdrewmiller 4y agoThey should be able to buy 1 USDC with $0.9 of reserve, destroy it, and have $0.1 left over in profit, no?
- dtech 4y agoI fail to see the difference, note that the title mentions "depegs". If they buy 1 USDC at $0.9 with their reserves, they can remove the USDC, and keep $0.1 since they'll need $1 less reserve. How is this fundamentally different from a peg? This is exactly why nations with pegged currencies keep foreign cash reserves.