Burning USDC and Minting DAI Prove to Be Popular On-Chain Activities Amid SVB Collapse

Circle’s USDC stablecoin had nearly $3 billion in net redemptions since Friday, while the total supply of DAI increased by 1.2 billion tokens over the same time period.

AccessTimeIconMar 13, 2023 at 7:12 p.m. UTC
Updated May 9, 2023 at 4:10 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Burning USDC and minting DAI have become popular on-chain activities among crypto natives who have been adjusting from the fallout stemming from the shutdown of Silicon Valley Bank (SVB).

Circle Internet Financial’s USDC stablecoin had almost $3 billion in net redemptions, defined as the total number of USDC burned minus the number of USDC minted between March 10 and press time Monday, per on-chain data from blockchain analytics firm Nansen. Over the same time period, the total supply of DAI increased by 1.2 billion tokens, according to a Makerburn dashboard for DAI minting.

As a result, USDC’s market capitalization dropped 10%, from $43.5 billion on Friday to roughly $39.5 billion Monday, while DAI’s market capitalization increased nearly 29%, per CoinGecko.

The supply of DAI jumped 1.2 billion tokens since Friday (Makerburn)
The supply of DAI jumped 1.2 billion tokens since Friday (Makerburn)

On Friday, March 10, SVB was shut down by state regulators, causing widespread financial chaos in the banking industry that has bled into the crypto ecosystem. Among the impacted was Circle, which had $3.3 billion in cash deposits at SVB, and MakerDAO, which uses USDC to generate its alternative stablecoin DAI.

The following day, crypto users sent $1.2 billion to both MakerDAO and Circle’s burn address, Nansen data shows. Burns are indicative of USDC holders redeeming their tokens for cash.

The mass burn reversed Circle’s early March trend where it had been minting more USDC than it was destroying. Between March 1 and March 9, Circle minted a net average of $143 million USDC a day, but this trend has since changed: Starting on March 10, Circle has burned a daily net average of $727 million.

Additionally, Nansen data shows that MakerDAO’s Peg Stability Module, a smart contract that holds assets like USDC to back the value of DAI, saw a 91% increase in USDC deposits, jumping to $4.1 billion today from $2.1 billion on March 10.

The MakerDAO community is currently considering a governance proposal that would pause swaps in its Peg Stability Module that would freeze the token purchases needed to mint new DAI tokens.

Currently, USDC makes up 63.1% of the collateral used to generate all DAI in circulation, according to a DAI Stats dashboard.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Sage D. Young

Sage D. Young was a tech protocol reporter at CoinDesk. He owns a few NFTs, gold and silver, as well as BTC, ETH, LINK, AAVE, ARB, PEOPLE, DOGE, OS, and HTR.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.