The BabelFish Multisig signers have taken action in response to the current market situation affecting certain US banks and stablecoins, which have caused these stablecoins to lose their peg to the US dollar. The signers have decided to utilize the Emergency Deposit Pause feature to prevent USDC and DAI from being included in XUSD.
The issue started with Circle, the issuer of the popular USDC stablecoin, holding part of the collateral at Silicon Valley Bank. DAI, on the other hand, is primarily collateralized by USDC, leading to increased sell pressure and resulting in the deppeging of the stablecoins from the US dollar.
To ensure the safety of XUSD, the BabelFish Multisig signers have paused the deposits of USDC and DAI on the smart contract level, making it impossible to deposit these coins. However, they have decided to leave XUSD deposits on the bridge in maintenance mode until Monday — for the dust to settle — as a precautionary measure.
It is worth noting that the amount of USDC does not have a significant impact on the aggregator as it is only around 1.05% and amount of DAI in the aggregator is negligible. Majority of XUSD’s composition is ZUSD from Sovryn’s Zero protocol — which is a solid, bitcoin-backed, overcollateralized Stablecoin secured by an easy-to-understand mechanism built into the smart contract.