In a Twitter thread, Transfero CEO Thiago Cesar explains how BRZ is priced and why, during FTX’s insolvency crisis and freeze of withdrawals, the stablecoin’s price unpegged from the Brazilian real (BRL), which forms its collateral.
As is well known, the BRZ is the largest non-dollar-pegged stablecoin on the market and maintains a 1-to-1 parity with the BRL. But this parity is determined by the market. That is, by the buying and selling forces of the stablecoin, and by maintaining reserves equivalent in cash to the total tokens issued, these forces balance the price at R$ 1.
According to Cesar, FTX exchange was always one of the most liquid markets for BRZ. Still, with the freezing of withdrawals that culminated in the bankruptcy process, there was a run on the other exchanges where the stablecoin is listed, where many users issued sell orders under R$ 1. The situation lasted only for a while but was soon normalized.
12) Isso claramente gerou pânico em outras corretoras e usuários passaram a liquidar seus BRZs por menos de 1 BRL. A situação não durou muito tempo e, dada a livre circulação e conversão de BRZs por 1 real na plataforma da @transferogroup, o BRZ retomou sua paridade.
— Thiago Cesar 🇧🇷🇦🇷 (@thiacesar) November 12, 2022
Transfero’s CEO reminds us that information asymmetry, practical barriers between exchanges (a FTX user can not have an account at BitGet), technological barriers (BRZ on Solana network versus Ethereum network) are reasons for the breakage of the isonomy of an efficient market, allowing this type of arbitrage to be done by some market players.
However, he points out that since the market is aware that it can sell its BRZ to Transfero for the price of R$ 1, this type of fluctuation is only momentary and, as such, tends to return to equilibrium, normalizing the conditions for an efficient market.
15) Podem haver novos descolamentos de preço? É claro, mas com o mercado ciente de que pode vender seus BRZs para a @transferogroup por 1 BRL, tais disrupções serão apenas momentâneas. Preços não são uma foto, são um filme.
— Thiago Cesar 🇧🇷🇦🇷 (@thiacesar) November 12, 2022
Check out the complete thread published by the executive here.
