Crypto.com halts Solana USDC and USDT deposits & withdrawals (here’s what that means).
We’ve covered the FTX contagion concept a lot over the past few days...
But there's more to cover - this time, it’s with Crypto.com and Solana.
On Wednesday, Crypto.com sent an email out to its users which said:
“Following recent industry events, please be informed that we have suspended deposits and withdrawals of USDC and USDT on the Solana blockchain in the Crypto.com app and exchange. This is effective immediately.”
They went on to say:
“You may withdraw USDC and USDT at any time using other supporting networks, including Cronos and Ethereum.”
Right. So here’s what that all means:
USDC and USDT are both stablecoins - they’re powered by blockchain technology, but pegged exactly to the US Dollar. $1 USDC is equal to $1 USD (or extremely close to it).
Solana uses the proof-of-stake method to validate transactions. And to be a validator, you need to stake your tokens (i.e. lock 'em up).
But, as it happens, the end of the token lock-in period known as “Epoch 370” is about to come. And with it, 54M+ SOL tokens will be unlocked (i.e. they can be taken out of the staking pool and sold).
And this is where things get a little scary...
The soon-to-be-unlocked tokens will represent around 15% of Solana's available supply, once released.
And SOL is Alameda’s (FTX’s trading arm) second-largest holding.
There is a strong fear in the market right now that many of those soon-to-be-unlocked tokens will be withdrawn and sold.
…plus - less staked tokens, means less validators, which potentially means less security for transactions.
The combination of all this news was too much to handle for Crypto.com - so they decided to do something drastic and stop allowing people to trade stablecoins on the Solana blockchain.
Alright that's it. That's everything for today.
Helluva week we're all having here, no?
