In a Tweet posted by user @cryptotutor Friday, a screenshot appears to show a 27% spread between stablecoin Magic Internet Money (MIM) and USD Coin (USDC) trading pair on decentralized exchange, or DEX, Uniswap (UNI). Both have a theoretical peg of 1:1 against the U.S. Dollar.
"Magic Internet Money," joked cryptotutor, as he attempted to swap approximately $1 million in MIM but received a quote for only 728.6k USDC. Others quickly took to social media to complain as well. In another screenshot, user @DeFiDownsin allegedly received a quote to swap $984k worth of MIM for just 4,173 in USDT on SushiSwap (SUSHI).
Curve, a popular platform for stablecoin trading, offered its insight on the matter. "Uniswap actually now works much better than what the screenshot shows. Sushiswap is just unsuitable for stablecoin-to-stablecoin swaps always," said the Curve team via a tweet.
During bear markets, investors typically flee from holding volatile cryptocurrencies and instead pile into stable assets that generate fixed income. For example, the amount of deposits in Terra Luna's flagship stablecoin savings protocol, Anchor, which promises yields of up to 20%, has increased from $2.3 billion to $6.1 billion in the past 60 days.
However, the capital flight has also resulted in issues, such as stablecoin liquidity disappearing from exchanges, causing their spread to widen to excruciating levels. In addition, the flock of stablecoins into the Anchor protocol has caused its yield to become unsustainable as there are not enough borrowers to pay depositors' interest.
But despite large fluctuations in the market, Curve appears to be doing better than ever. According to its developers, the platform saw a record trading daily volume of $3.6 billion, with total deposits surpassing $16.7 billion. Investors typically seek to take advantage of the occasional difference between stablecoins' theoretical peg to fiat money or other stablecoins to make a profit.