Viewpoint: USDC will not return to zero like UST, and Circle’s loss may only be 198 million dollars

On March 11, DeFi researcher Ignas said in a message that USDC seemed to be in a state of panic but would not return to zero as UST did. Circle had clarified the amount of cash it held. Now only 8.2% (US $3.3 billion of US $40 billion) were trapped in Silicon Valley banks, but that did not mean that the money was gone. If the expected expenditure of the Federal Deposit Insurance Corporation of the United States was 94%, The loss of Circle may only be $198 million (the entity can immediately obtain 62% of the balance payment and recover 94% of the funds through the final payment under the “prepayment dividend” process of the Federal Deposit Insurance Corporation of the United States).

Interpretation of this information:

The message is about the current situation of USDC, a stablecoin whose issuer, Circle, recently clarified the amount of cash it held. According to DeFi researcher Ignas, USDC seemed to be in a state of panic, but it is unlikely to return to zero like UST did.

Ignas also pointed out that only 8.2% of Circle’s total assets were trapped in Silicon Valley banks, which means the majority of the funds are still available. Even if Circle incurs losses due to the expected expenditure of the Federal Deposit Insurance Corporation of the United States, the loss may only be around $198 million. The entity can immediately obtain 62% of the balance payment and recover 94% of the funds through the final payment under the “prepayment dividend” process of the Federal Deposit Insurance Corporation of the United States.

In simple terms, this means that even though Circle has some of its assets trapped in banks, it doesn’t mean the money is lost forever. The expected loss is not as significant as some may have feared, and the company has a chance to recover a substantial amount of assets through the federal prepayment dividend process.