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A major exchange's USD1 deposit promotion triggered a chain reaction, with liquidity exhaustion unleashing arbitrage bots.
【BlockBeats】A leading exchange’s 20% fixed annualized deposit activity launched in partnership with USD1 recently triggered a chain reaction in the market. A large number of users, seeing the attractive yield, quickly exchanged USDT for USD1, resulting in USD1 surging to a 0.39% premium. Money moves fast.
But where the money flows is interesting. Some funds flowed into Lista DAO’s lending market, where users collateralized SolvBTC or SolvBTC-BTCB to borrow USD1 to participate in arbitrage. After borrowing, they gradually sold off in the spot market — in other words, they were arbitraging to the moon.
Even more dramatic, some traders directly traded the BTC/USD1 pair, using market orders to sell BTC. The problem is that this trading pair has almost no liquidity. A large order hits the market, and the buy orders are instantly consumed, pushing the BTC price down. But this didn’t last long; arbitrage bots immediately swooped in to buy, pulling the price back to normal levels.
CZ later clarified that this actually indicates the platform was not involved in the trading. The newly launched trading pair has thin liquidity, so large orders naturally impact the price, but the market’s self-correcting ability is strong. Since this trading pair is not included in any index system, it didn’t trigger any liquidation chain reactions.