> ## Documentation Index
> Fetch the complete documentation index at: https://pegana.xyz/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# USDC slipped to $0.87 — the day a stable broke on a bank, not on chain

> Silicon Valley Bank held ~$3.3B of Circle's reserves. The peg held against intrinsic, but the orderbook didn't trust intrinsic for 36 hours.

<Info>
  **Asset**: USDC · **Class**: Fiat stable · **Date**: 2023-03-11
  **Worst spread**: −1300 bps · **Duration**: ≈ 36 h outside `PEGGED`
  **Detected live**: No (pre-Pegana retrospective)
</Info>

## Background

Circle disclosed late on Friday March 10, 2023 that \~$3.3B of USDC reserves sat at
SVB, which had been placed into FDIC receivership. The intrinsic value of a USDC
token still reflected $1 of redemption claim — but the secondary market refused to
price it that way until guarantees arrived.

## Trigger

The first sub-$0.99 prints landed within an hour of the SVB-exposure disclosure.
Within four hours USDC was trading $0.96 on Coinbase and $0.92 on DEXs, with
worst-case prints near $0.87 in thin Sunday hours.

## Cascade

* DAI lost its peg simultaneously — its reserves were USDC-heavy.
  (See [DAI / SVB contagion](/docs/case-studies/dai-contagion-march-2023).)
* MakerDAO emergency-paused USDC swaps via the PSM.
* DEX pools rebalanced violently — large LPs printed losses on every imbalance.
* Borrowing markets that priced collateral at \$1.00 of USDC liquidated otherwise-healthy positions.

## Recovery

Treasury, the Fed and the FDIC announced full backstop on Sunday March 12. USDC
re-pegged in under 4 hours of US market open Monday. The full episode lasted
\~60 hours.

## What Pegana would have shown

* **Friday \~22:30 UTC** — First Curve 3pool imbalance prints USDC at \$0.989. Smoothed
  spread crosses 30 bps after dwell. **`PEGGED → DRIFT`** transition fires.
* **Saturday \~03:00 UTC** — Spread crosses 50 bps. **`DRIFT → DEPEG`**.
* **Sunday \~04:00 UTC** — Thin-Sunday DEX prints push spread above 5%. **`DEPEG →
  CRITICAL`**.
* **Monday \~14:00 UTC** — Sustained recovery; exit dwell expires.
  **`CRITICAL → DEPEG → DRIFT → PEGGED`** over \~3 hours of sustained sub-threshold readings.

Each transition would have carried both `intrinsic_usd` (≈ \$1.00 throughout) and
`market_usd` (the actual print), letting downstream consumers reason about which
side moved.

## Lesson

Pegana's two-numbers framing is built for exactly this case. Intrinsic was \~\$1; market
was not. A monitor that only watches one side prints either a false negative or a
false positive — neither is useful when liquidation engines are pulling the trigger.

## Sources

* [Circle press release — SVB exposure](https://www.circle.com/blog/an-update-on-usdc-and-silicon-valley-bank)
* [FDIC SVB Notice (Mar 10 2023)](https://www.fdic.gov/news/press-releases/2023/pr23016.html)