The crypto economy was under utter volatility for the past few weeks, but the space it faced was the worst after one of the largest stablecoins, TerraUSD (UST) de-pegged from its $1 value.
After UST’s decoupling, Do Kwon, the founder of Terraform Labs, shared an update on the rescue plan in which he said that investors will be reimbursed and that the developers are working on it.
Fantom Stablecoin Depegs
Following the de-pegging of UST, today, Fantom Stablecoin DEII becomes the latest to lose its peg to the dollar. Deus Finance’s stablecoin DEI held its peg against the US dollar and fell as low as 54 cents in European hours today.
Algorithmic stablecoins are nothing more than those that are automatically connected or pegged to the price of another coin.
These are not like centralized alternatives like Tether (USDT) or USD Coin (USDC) as they are backed by actual dollars or anything that is equivalent to the stored assets.
DEI operates Deus and is valued at more than $62 million by market capitalization. Deus is a decentralized finance project based on Fantom. This collateral relationship with the dollar is controlled by arbitrage bots to maintain its parity with the dollar.
On Sunday, DEI traded 3 cents below its parity before losing 20 cents, the possible reason being that traders exchanging DEI tokens for USDC amid liquidity on decentralized exchanges caused price fluctuations.
The lower prices have led to DEI being sold for other tokens, which in turn caused the price to drop.
According to the Deus Telegram channel, the lower liquidity was in part due to traders leaving stablecoin pools after losing confidence due to UST bottoming below $1.
However, DEI has now claimed the 72 cents with the Deus developers proposing a re-peg plan with debt tokens to prevent peg collapse in future days.
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This post After Terra’s UST, this stablecoin loses its peg. What is the future of stablecoins? – Coinpedia – Financial Technology and Cryptocurrency News Media
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