Last week there was chaos in the cryptocurrency market due to the unprecedented crash of Terra’s UST stablecoin and LUNA. The crash led traders to debate the reliability of stablecoins, the latest of which was DEI price. This adds $DEI to other algorithmic stablecoins, including UST and USDT, which have also lost their peg to the dollar. Panic caused by the crash of UST last week resulted in a massive price drop of a majority of cryptocurrencies.
DEI follows UST in new crash
In another case of stablecoin diverging from the dollar level, the $DEI stablecoin had lost the $1 peg on Monday. DEI’s price fell to a bottomless low of 52 cents, according to CoinMarketCap. At the time of writing, the stablecoin was trading at 68 cents. DEI’s current market cap is approximately $63 million.
Algorithmic stablecoins have an inherent ability to balance fiat currencies such as the US dollar. They are often under-collateralised, meaning they are not backed by enough assets in reserves to cover the total value of stablecoins. An algorithm that monitors the supply and demand comparison between the stablecoin itself and another coin that supports it serves as the backbone.
DEI Price recovery
The DEUS Finance DAO, which supports the $DEI stablecoin, provides financial infrastructure. Financial instruments, such as synthetic stock trading platforms, options and futures trading are among the instruments offered by Deus. Earlier on Monday, it said their team is working on solutions to maintain stability. They said in a tweet†
“Our team is working around the clock to recover the DEI pin. Mitigating measures were implemented immediately and solutions are being developed for long-term stability.”
The drop in the $DEI price comes after a UST market carnage that wiped out billions of dollars of investor money last week. Another Terra cryptocurrency LUNA, which is interchanged with UST, also lost more than 99% of its value as a result.
Meanwhile, the Luna Foundation Guard (LFG) revealed that the recent Terra crash and the measures to support UST had wiped out most of the reserves. It now owns about $260 million. Less than two weeks ago, LFG had set aside more than $4 billion.
Anvesh likes to write about important crypto adoption announcements by institutions and popular personalities. Being associated with the cryptocurrency industry since 2016, his interest in this space helped redirect his journalism career to the blockchain ecosystem. Follow him on Twitter at @AnveshReddyEth and contact him at anvesh (at) coingape.com
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.
This post Another Stablecoin Follows UST, DEI Price Drops
was published first on https://coingape.com/dei-price-drops/