Here’s what debtors were up to when USDC fell on the charts



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  • USDC losing its peg pulled down the markets, but many saw it as an opportunity to pay loans at a discount
  • Debtors saved around $100 million off their loans during the market rout

As the crypto-market suffered over the weekend, there was a silver lining for some. When stablecoins lost their dollar peg, a group of debtors were able to gain profits. In fact, a recent report from crypto-data provider Kaiko shed light on how borrowers were able to snatch a discount on their loan payments.

Leading DeFi protocols Aave and Compound saw debtors rushing to repay their loans on 11 March when stablecoins were undergoing a downgrade. 

Debtors find solace as USDC fell

The collapse of Silicon Valley Bank triggered a downward spiral for many stablecoins. It led to USDC slumping to as low as $0.87 on 11 March, with other coins soon following suit. USDC has since regained its peg, however, and was trading at $0.99 at press time.

On that day, Aave and Compound saw loan repayments worth around $2 billion, according to Kaiko. Here, it is to be noted that a majority of these payments were made using USDC while some were made with DAI.

Debtors were able to repay the loans at a reduction because of the coins’ de-pegging. This is an interesting finding because if we look at the data, the days preceding and following 11 March did not see much activity at all.

Analytics firm Flipside Crypto further revealed that borrowers saved around $100 million. This included USDC debtors saving $84.1 million and debtors of DAI saving $20.8 million.

Aave and Compound also saw massive withdrawals after coins lost their peg, according to Flipside Crypto. In fact, Compound users withdrew around $400 million while $13.1B was withdrawn from Aave, $11.9B of which was ETH.

These repayments and withdrawals indicate that DeFi protocols saw tremendous activity as stablecoins fell. The massive price dislocations created arbitrage opportunities across the ecosystem, highlighting the importance of USDC once again.