What is Mars Protocol?

Mars Protocol is An autonomous (smart-contract-based) lending protocol, it can run on computer code 24/7. It has the potential to accept any form of digital value for deposits and loans, from cryptos to LP tokens and beyond. Mars Protocol is a complete credit protocol that enables Terra native assets (mAssets, ANC, MIR) to be borrowed or used as collateral, thereby providing them with another valuable use case.

Like banks, Mars aims to attract deposits and lend out this money while managing illiquidity and insolvency risk. Unlike banks, Mars is a fully automated, on-chain credit facility governed by a decentralized community via a transparent governance process. All decisions are made by the Martian Council, composed of MARS stakers who put skin in the game to backstop certain kinds of protocol risk in exchange for a portion of the protocol borrowing fees. Mars Protocol is being developed by a joint venture among Delphi Labs, IDEO CoLab Ventures, and Terraform Labs. Read More

What is Red Bank?

Red Bank is the lifeblood of Mars protocol and a decentralized & fully automated, on-chain credit facility. In fact, Red Bank is an autonomous (smart-contract-based) lending protocol, it can run on computer code 24/7. It has the potential to accept any form of digital value for deposits and loans, from cryptos to LP tokens and beyond. Currently, There are 3 supported assets in Mars Protocol’s Red Bank: $OSMO, $ATOM, and $axlUSDC.

Based on the Flipside's team analysis, During the USDC de-peg crisis, borrowers seized the opportunity and repaid their loans at a lower dollar price across different decentralized lending platforms.

In this dashboard, we are going to examine if similar behavior of borrowers has occurred via Mars Protocol's Red Bank. In fact, We are mainly going to analyze USDC repayment activity on Red Bank after March 1, 2023. The time period of this analysis is divided into 3 parts:

• Before USDC Depeg: 2023-03-01 ~ 2023-03-10
• USDC Depeg: 2023-03-11 ~ 2023-03-13
• USDC Repeg: 2023-03-14 ~ Today

Silicon Valley Bankruptcy

Venture capitalists and technology executives are scrambling to make sense of and account for the potential repercussions of the sudden implosion of Silicon Valley Bank on Friday.

The Federal Deposit Insurance Corporation, or FDIC, said Friday that U.S. federal regulators shut down Silicon Valley Bank, the premier financial institution for Silicon Valley tech startups for the past 40 years. The collapse of SVB represents the biggest banking failure since the 2008 global economic crisis. The collapse of the second largest in U.S. banking history — sent anxiety across the financial system and shook the tech industry, raising concerns about whether companies would be able to get their money back and pay their employees.

SVB Impact on USDC and Circle (USDC Manager)

Payments-technology firm Circle tweeted Friday that $3.3 billion of the $40 billion of its USD Coin (USDC) cryptocurrency reserves remained at Silicon Valley Bank.

“Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S. economy and will follow the guidance provided by state and federal regulators,” the Boston-based company said in a tweet on Friday.

The bank, Circle said in another tweet, is one of six that it uses for managing the 25 percent of USDC reserves held in cash. The company had about $44.5 billion worth of tokens in circulation in January, according to a reserve report issued by accountants at Deloitte.

Circle Internet Financial's USDC stablecoin massively depegged from its intended $1 price – a harrowing development for a product designed as a place for investors to safely park money. The USDC/USDT pair (which tracks Circle's coin versus the bigger one issued by Tether) sank as low as $0.869 on the Kraken exchange at 07:16 UTC on March 11, 2023 – far lower than it ever got amid the market stresses that followed the FTX debacle in November. It was back to around $0.94 as of 18:07 UTC.

Stablecoins derive their value from those reserves; if one is worth more than $43 billion – as USDC was before – there should be roughly that much cash or cash-like fixed-income instruments stashed somewhere backing that up. USDC's market capitalization has now slumped below $40 billion.

It's worth noting to say that other stablecoins such as MakerDAO's DAI, FRAX, USDD have also depegged from $1. However, USDT, meanwhile, at one point spiked to $1.06 on Kraken versus the U.S. dollar as investors appeared to shift money away from USDC. Bitcoin climbed back above $20,000.

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