Shortly after Circle revealed that Silicon Valley Bank failed to transfer $3.3bn of its USD Coin (USDC) reserves, the market responded with a sell-off, depegging the stablecoin from the US dollar. However, not all investors were lucky enough to walk away with their funds amid the uncertainty.
To cut losses, investors began selling their USDC tokens in exchange for other stablecoins such as Tether (USDT) to avoid temporary losses. Unfortunately, a Crypto Twitter member who goes by BowTiedPickle highlighted a transaction showing that a USDC investor paid over $2 million to receive $0.05 of USDT.
With USDC insolvency fears running rampant, users are fleeing to safety in other stables. However, not everyone is going to get there in one piece.
This is how one unfortunate user paid $2,080,468.85 to receive $0.05 of USDT. pic.twitter.com/R8YdudWfsV
— BowTiedPickle.eth | Solidity Carrier (@BowTiedPickle) March 11, 2023
On-chain investigations revealed that the user had stored the assets in a liquidity pool (LP), a popular method of earning cryptocurrency. The user could have sold their LP tokens for USDT for a 6% slippage. However, they opted for a “questionable” method. As BowTiedPickle explains it:
“The unfortunate soul used the KyberSwap aggregation router to dump a large clip of LP 3CRV (DAI/USDC/USDT) token into USDT.”
Given the race against time, the USDC investor forgot to set his slippage, allowing investors to set an exact token price for the transaction to take place. He further explained the various nuances that eventually led to an MEV bot making $2.045 million in profit after paying $45 in gas and $39k in MEV bribes.
Crypto Twitter Member BowTiedPickle provides an overview of how USDC investor lost over $2 million. Source: Twitter
The above episode highlights how human error can result in a permanent loss of funds. When charging USDC for fiat or other cryptocurrencies, Cointelegraph advises investors to double-check information and transfer methods.
Related: Breaking: Circle reveals $3.3B tied up in Silicon Valley Bank
Shortly after Circle confirmed that Silicon Valley Bank held $3.3 billion, the resulting liquidation of USDC caused the value of the stablecoin to fall below $1.
1/ Following confirmation late today that transfers initiated on Thursday to clear balances have not yet been processed, $3.3bn of the ~$40bn USDC reserves remain in SVB.
— Circle (@circle) March 11, 2023
At the time of writing, the USDC lost more than 10% of its value as it was trading at $0.8774.
This post USDC investor shelled out $2 million to receive $0.05 USDT trying to evade the drop
was published first on https://cointelegraph.com/news/usdc-investor-shells-out-2m-to-receive-0-05-usdt-trying-to-evade-crash