After Terra’s UST, This Stablecoin Loses it’s Peg.What’s The Future Of Stablecoins?

Time Stamp: May 16, 2022 4:26 PM
Source Node: 1311207

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The crypto economy was under complete volatility for the past few weeks, but the space faced had the worst one after one of the largest stablecoins, TerraUSD (UST) de-pegged from its $1 value.

After UST de-pegged, Do Kwon, the founder of Terraform Labs, shared an update regarding the rescue plan wherein he said the investors will be reimbursed and the developers are working on it.

Fantom Stablecoin Depegs

After UST de-pegging, today, Fantom Stablecoin DEII becomes the latest one to lose its dollar peg. Deus Finance’s stablecoin, DEI last its peg against the US dollar and dropped as low as 54 cents in European hours today.

The algorithmic stablecoins are nothing but the one that is automatically connected or pegged to the price of another currency.

These are not like the centralized alternatives like Tether (USDT) or USD coin (USDC) as these are backed by actual dollars or anything that is equivalent to stored assets.

DEI operates with Deus and is valued at over $62 million by market capitalization. Deus is a Fantom-based decentralized finance project. This collateral ratio with the dollar is monitored using arbitrage bots to maintain its dollar peg.

On Sunday, DEI was trading 3 cents below its peg before losing 20 cents, the possible reason being that traders exchanging DEI tokens for USDC amidst the liquidity on decentralized exchanges caused price fluctuations.

The lower prices have led to DEI being sold for other tokens in turn leading to the price drop.

According to Deus Telegram channel, the lower liquidity was partly due to traders moving out of stablecoin pools after fading confidence due to UST’s bottoming below $1.

However, DEI has now reclaimed the 72 cents with Deus developers proposing a re-pegging plan with debt tokens to prevent the collapse of the peg in the future days.

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