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khold_stare | 3 years ago

That is definitely not how USDC is set up. The creator takes 1 USD, and gives back 1 USDC and vice versa. In this case, some of the USD held at SVB disappeared, so Circle has less money for the USDC -> USD redemptions. There needs to be a 1:1 backing, otherwise a stable coin is just smoke and mirrors.

discuss

order

TekMol|3 years ago

    creator takes 1 USD, and gives back 1 USDC and vice versa
How do they make money then?

nikanj|3 years ago

They invest the USD. If the investments work out, they keep the profits. If they don’t, the customers just got crypto’d

humanizersequel|3 years ago

Short term treasuries. They're a liquidity provider for the US government.