Circle drops Yield rates to 0%

Circle, the company that runs and issues USDC has dropped their Circle Yield product APY rate to 0%.

Back in June I wrote about my anxieties around Circle. Oh hey, what’s that? Genesis and its yield product customers are exposed to the credit risk of Genesis? And Genesis loaned $2.3bn to 3AC?

Well I for one am sure everything will be finehttps://t.co/yUtSbtIQJJ pic.twitter.com/7x5YklIATY

— Ed Zitron (@edzitron) November 16, 2022

As highlighted by the CEO of the media relations company EZPR, Ed Zitron, Genesis was the driving force behind Circle’s Yield product, having invested $25 million into Circle.

ZItron wrote about his concerns surrounding Circle back in June, quoting the firm’s statement that acknowledged their exposure “to credit risk” through their affiliation with Genesis — the same Genesis that had previously loaned Three Arrows Capital (3AC) $2.3 billion.

IMHO this is incredibly revealing. Usually you hike rates to attract capital. Going to zero suggests you’re more concerned with the negative outflows from paying “interest” than you are in attracting new capital you KNOW isn’t coming. https://t.co/vPH6OIeKYs

— Michael (@profplum99) November 16, 2022

In response to Zitron’s tweet, another Twitter user, Michael, described Circle Yield’s drop to 0% as “incredibly revealing,” suggesting that this negative drop in interest shows more concern for negative payment outflows than attracting new capital.

IMHO this is incredibly revealing. Usually you hike rates to attract capital. Going to zero suggests you’re more concerned with the negative outflows from paying “interest” than you are in attracting new capital you KNOW isn’t coming. https://t.co/vPH6OIeKYs

— Michael (@profplum99) November 16, 2022

An announcement on Circle’s official Twitter account on Nov. 16 detailed their overcollateralized fixed-term yield product, the $2.6 million outstanding in loans, and their assurance that loans remained safe from potential losses.

1/ Circle Yield is an overcollateralized fixed-term yield product. Genesis is a counterparty to Circle in this product. Total Circle Yield customer loans outstanding are $2.6 million as of 11/16/22 and are protected by robust collateral agreements.

— Circle (@circle) November 16, 2022