Delphi Digital: Even if stablecoins have sufficient collateral, that doesn't mean they are immune to potential crowding

Comparing the news, Delphi Digital tweeted, “Tether and Circle are not foolproof systems. Just because they are secured by short-term treasury bonds and cash equivalents on a 1:1 ratio doesn't mean they are immune to potential crowding. The USDC de-anchoring incident already showed signs of this risk as early as the Bank of Silicon Valley (SVB) went bankrupt in early 2023.

USDC was originally fully reserved, but when the Bank of Silicon Valley went out of business, part of the reserve was temporarily unavailable. This means that risk is only shifting upwards. In the traditional banking industry, payment risks are usually scattered among institutions. In a stablecoin system, payment channels may be deterministic and automated, but this means that settlement risks that were originally eliminated among participants are now concentrated at the issuer level. The system has not become risk-free, but has transformed into a vertically dependent structure. This is the root cause of concern that the concentration of issuers is beginning to cause concern.”