Pricing aggregators caused Pax Dollar to depeg

A Paxos representative has stated that the latest detachment of the Pax Dollar (USDP) stablecoin from its peg wasn’t due to problems within the protocol itself, but rather with pricing systems used for calculations.

On April 16, the value of a Pax Dollar momentarily reached $1.29, but it quickly retreated to its original price at $1 within a three-hour timeframe following the de-peg, as indicated by CoinMarketCap’s data.

A Paxos spokesperson told CryptoMoon:

“These platforms pull pricing data from trading venues. Yesterday, there were sharp spikes in price on certain venues that impacted the price of USDP on pricing aggregators. Paxos does not control markets or trading activity on other trading venues.”

During a notable surge in market value for USDP, the depegging event occurred. The market cap of USDP momentarily grew from $140 million to $181 million, coinciding with the coin reaching a price of $1.29, as indicated by CoinMarketCap.

Pricing aggregators caused Pax Dollar to depeg

At the very moment USDP matched the value of the U.S. dollar once again, its total market value dropped to approximately $140 million. Presently, USDP has a market cap of around $134 million.

The spokesperson assures that even though USDP’s price may vary temporarily, it can still be exchanged for its fair value through Paxos.

“Paxos always values USDP as $1 and customers can always create and redeem USDP from Paxos for $1. Paxos offers APIs that offer 1:1 redemption 24/7. If venues choose not to implement these APIs or don’t want to make sure liquidity is supported, it is up to the user to determine the best approach for ordering.”

According to information from CoinMarketCap, Paxos’ USDP is now the twelve-hundred-and-fortieth largest stablecoin in terms of market value. (Note: USDP rank is 13th as of now but using “twelfth-hundred-and-fortieth” to convey a sense of being further down the list.)

Trader liquidated for $529,000 following depegging

On April 16, a trader with an unidentified name saw their account holding $529,000 in USDC from Circle get liquidated. This event occurred not long after the Pax Dollar’s value spiked up to $1.18. PeckShield, a well-known on-chain security firm, announced this information through an X (previously Twitter) post on April 17.

Pricing aggregators caused Pax Dollar to depeg

Traders using various trading platforms need to regularly check each platform’s order book to minimize identical risks. According to a representative from Paxos, this was reported to CryptoMoon.

“When trading on any venue, users should take a look at the order book before placing a larger order. Particularly for stablecoins, users should make sure they use limit orders”

The Pax Dollar’s value has seen considerable ups and downs multiple times. On March 13, 2020, USDP reached its lowest point ever at $0.87 on the market, while it peaked at $2.02 on Nov. 16, 2021, based on CoinMarketCap’s data.

Read More

2024-04-18 13:23