Stablecoin swapping pool Curve Finance experienced the highest daily trading volume in its history, exceeding $7 billion in the 24 hours since the Silicon Valley Bank (SVB) collapse triggered a wave of uncertainty across markets, causing USD Coin (USDC) to depeg from the U.S. dollar. 

Curve supports liquidity pools for major stablecoins, such as USDC, Tether (USDT), Frax (FRAX), Dai (DAI) and TrueUSD (TUSD). Fear, uncertainty and doubt have spread across crypto markets during the last few hours, resulting in unbalanced pools in the decentralized finance platform due to a sell-off of USDC — leading the stablecoin to fall below its $1 peg. 

USDC is the second-largest stablecoin, with a market cap of over $42 billion as of January 31, and serves as collateral for many stablecoin ecosystems. Its depeg immediately affected other stablecoins, such as the MakerDAO-issued DAI, down 5% at the time of publication.

To prevent panic selling, MakerDAO filed an “urgent executive proposal to mitigate risks to the protocol” on March 11, seeking restrictions on minting DAI using USDC. MakerDAO is one of the largest holders of the stablecoin, with over 3.1 billion USDC ($2.85 billion) in reserves collateralizing DAI. Crypto whales have reported severe losses and appear to be selling off assets in an attempt to preserve capital, Cointelegraph reported.

Circle, the company behind the USDC, disclosed on March 11 that $3.3 billion of its $40 billion reserves were stuck in the Silicon Valley Bank, which was shut down the day before by the California Department of Financial Protection and Innovation. The watchdog also appointed the Federal Deposit Insurance Corporation as the receiver to protect insured deposits.

In comments to Cointelegraph, Dave Weisberger, co-founder and CEO of algorithmic-trading platform CoinRoutes, said the “fodder for a broader contagion event is there” and that “the spark could be materializing,” putting at risk many startups and tech companies in the country — a critical sector for the “sustained growth of the American economy.”