After Tornado Sanctions, Centre Bans USDC Addresses
Decentralized stablecoins as consortium bars 38 addresses
Again, stablecoins are popular.
USDC, the second-largest stablecoin, banned 38 addresses on Aug. 8. These USDC tokens are frozen and can't be moved. 81 IPs are blacklisted.
Dune Analytics Centre's move was in response to the US Treasury's decision to penalize Tornado Cash, a system that permits private crypto transactions by commingling and mixing user deposits.
Before Aug. 8, the Treasury has never approved an open source protocol, Jeremy Allaire noted. Circle and Coinbase established Centre in 2018. Circle markets USDC-related items.
DeFi is shaken by asset freezes.
Increased USDT demand
The share of USDT in Curve Finance's 3-pool has dropped from 29.60% to 25.71% since the Tornado sanctions were announced.
3-pool is Curve's second-largest pool with $987M in assets. The reduction in USDT is likely due to people swapping USDC for USDT and DAI.
The DAI
As over 50% of DAI is collateralized with USDC, ShapeShift CEO Erik Voorhees is afraid that the USDC held in Maker's smart contracts may also be prohibited.
MakerDAO's peg stability contract (PSM) has $3.59B USDC, according to Nansen. PSM allows fixed-rate USDC-DAI swaps.
Top 5 USDC holders. Nansen's
Etherscan values USDC at $54.1B. That makes it the second-largest Ethereum token after Tether's USDT.
Alternatives
DeFi consumers are exploring for alternatives to USDC as concerns mount.
According to DEX Screener, Liquity's USD-pegged LUSD has risen to $1.04. Since Liquity only accepts ETH as collateral, LUSD is a more decentralized choice.
Influencers like Tetranode are talking about RAI, which isn't linked to the USD but backed by ETH to keep a constant pricing.
Given the declining trust in USDC and centralized stablecoins, some in Synthetix Discord believe sUSD could gain market share. Synthetix's native token, SNX, is used to mint sUSD.
Aave and Curve have both announced stablecoin launches.
Angel investor and crypto advisor Tyler Reynolds doesn't think users will quit USDC yet. "I'm not sure how many will go until laws get harsher," he told The Defiant. Many people deny that rules will crack down.
Reynolds forecasts KYC regulations for all stablecoins in 18 months. He then told The Defiant that only centralized stablecoins like USDC will be affected.
Cases
In a Liquity-hosted Twitter Space, Ameen Soleimani, RAI's co-founder, threatened legal action. Ashleigh Schap, RISC Zero's CSO and Liquity's advisor, agreed. Schap mentioned a chat with attorney Collins Belton about pushing some anti-DeFi acts to the Supreme Court.
Stablecoin issuers have higher risks. Censorship, which goes against crypto's core ideals, has made decentralization more important.