Two markets to watch today for depeg/arbitrage plays. 🧵

1️⃣ USDai
• Has three major things happening today:
• Mint caps open (250M)
• Pendle's PT-USDai-20Nov expires today (95M)
• autoUSDai / autosUSDai discontinued (50-60M)
• In the three cases, new USDai is unlocked freely to the market.
• Right now, it's trading above peg $1.0011, but converging to par.
• Redemption via the primary market does not require KYC, and has a 0.015% fee. This means you can always redeem 100,000 USDai for 99,985 USDC (they will probably have to manage liquidity on redemption wallets). This is its floor price

#1: Today, it might briefly trade under peg. Cowswap/1inch allows limit DEX orders 😉

#2: The mint gives you a 1:1 rate. So if it's trading above peg, it's a free arb. Dowside is the floor price (if you wanted to get out immediately after mint, and if the market was underpegged)

#3: Of course, there's the Allo Points route (mint or buy on open market 1:1 or below peg to stay in the eco and participate in the points campaign, which I'm heavily doing), but this article focuses on peg arbitrage.

2️⃣ cUSDO
• Pendle's PT-cUSDO-20Nov expires today
• Many of those Pendle users locked their YT, meaning they were not able to exit at a reasonable price before today
• So, there will probably be many people wanting to exit
• This might cause a brief cUSDO depeg against USDC, depending on how fast redemptions are managed

#1: cUSDO can be redeemed for USD0 and then for USDC via OE's primary market (this requires KYC) and takes 1-3 days. Arbitrageurs KYCd users will buy cUSDO on the open market to do this redemption

#2: For non-KYC users, you can still rely on someone arbing the peg up and selling on the open market

To check if cUSDO's peg is below par or not (since it's yield-bearing), see here: app[.]openeden[.]com/usdo and simulate the cUSDO unwrapping > USD0 and then the USD0 redemption > USDC. This is what KYCd users do to arb it.

3️⃣ Both USDai and cUSDO operate with T-bills, and unless there's a hack or unauthorised funds mismanagement, redemption and floor prices are guaranteed, and someone will arb it.

Redemptions might be slowed down based on volume (and if this happens, they'd need to top up balances).

GL, arbers 🚜

https://x.com/OlimpioCrypto/status/1991151008970350766