What is pUSDC Stablecoin and Why Is It Under One Dollar?

In the early hours of PulseChain, a handful of users lost hundreds of thousands of dollars instantly. 

These users lost money because they either provided liquidity for, or bought, the wrong stablecoin. 

The stablecoin was pUSDC, a near-zero value stablecoin copy on PulseChain.

This article will help you understand pUSDC, so that you can avoid losing money on stupid mistakes.

What is pUSDC?

pUSDC is a PRC20 on PulseChain which came into existence when the entire system-state of Ethereum was copied. 

It is the fork of USDC, a fiat-backed stablecoin issued by Circle on the Ethereum blockchain.

The fundamental reason why the users above lost money is because they confused pUSDC for eUSDC, which is the bridge in USDC from Ethereum.

The contract address for eUSDC, which is the version on PulseChain is: 0x15d38573d2feeb82e7ad5187ab8c1d52810b1f07

Why did pUSDC Depeg from a Dollar?

The fundamental reason why pUSDC depegged from a dollar is because the coins are not redeemable for the underlying collateral. 

Stablecoins are subject to price volatility just like any other token.

When users buy, the price goes up.

When they sell, the price goes down.

The fundamental reason why the prices maintain stability is because users are incentivized to buy the price up and redeem it for collateral. 

In the case of pUSDC, there is no collateral backing it.

I don’t know who needs to hear this, but stablecoin copies on #PulseChain won’t maintain their $1 peg. Anyone that sells coins on PulseX for pUSDC, pDAI, or pUSDT is rekt

— Crypto Coffee ⬣ (@CryptoCoffee369) May 15, 2023

USDC vs eUSDC vs pUSDC

USDC is a fiat-backed stablecoin, issued by Circle on multiple blockchains. It is one of the biggest stablecoins by market cap and other than a few temporary hiccups has been relatively reliable.

eUSDC on PulseChain is a wrapped version of USDC. It is created when users lock USDC in a pool on the PulseChain Bridge which in turn mints a wrapped version on PulseChain. The value of eUSDC is derived from its’ redeemability to real USDC on Ethereum.

pUSDC is simply a copy of the USDC token on Ethereum. It is not redeemable for anything and therefore depegged from a 1 USD.

Don’t Buy or LP with pUSDC

This is not financial advice, but buying or LPing with pUSDC is not a good idea. 

Many users in the early days of PulseChain mistook pUSDC for eUSDC and lost their entire bag. 

For example, some users created liquidity pools (i.e. PLS/pUSDC) under the assumption that pUSDC was $1. It was not.

Opportunistic users swooped in and essentially took their PLS at a 99%+ discount.

Another user traded Hex for pUSDC, thinking he was making a quick crypto arbitrage profit.

❤💛💚💙

This guy lost -$9,900 instantly.

He gave away 290,000 $HEX for just $100 💩

DexScreener has trimmed this early data.
Luckily, I saved it, so we never forget.

He thought he made millions of dollars... but he was trading into pUSDC 💩 pic.twitter.com/IxhvHC28Du

— yourfriendSOMMI ❤️💛💚💙 (@yourfriendSOMMI) May 16, 2023

The Bottom Line

Operating in the cryptocurrency space requires prudence. 

Many users thought they were geniuses, and quickly found out they made a fundamental mistake. 

Make sure you know the basics of any tokens you plan on interacting with.

And double check and triple check token addresses when making moves.