After TerraUSD’s spectacular collapse, another stablecoin has lost its peg. Deus stablecoin (DEI) loses peg after UST stablecoin crash. DEI Stablecoin Crash Led Many crypto Investor Speechless and doubting the concept of stablecoin.
The stablecoin, which was launched by Deus Finance, a crypto derivatives trading platform, lost its peg on Sunday and hasn’t been able to reclaim it since. According to CoinMarketCap, the cryptocurrency was selling at around 60 cents on Wednesday, significantly below its theoretical $1 peg. This stablecoin appears to be suffering from the fallout from the UST crash, which has led to a decrease in investor confidence in stablecoins.
DEI is the second algorithmic stablecoin backed by cryptocurrencies that have lost their peg to the dollar in the last two weeks. This digital asset was backed up to 20% by DEUS, the Deus Finance ecosystem’s native cryptocurrency, while the majority of its reserves were held in a number of different stablecoins.
As of writing this article, the DEI Stable Coin is Trading at $0.6111 as per the data from coinmarketcap.com
About DEUS Finance
DEUS Finance is a decentralised financial services marketplace, with the DEUS DAO serving as a platform for others to create financial products. Options, futures trading, and synthetic stock trading platforms are examples of such instruments. It is also responsible for the recent peg loss of the stablecoin DEI. The DEUS Finance coin is now trading at $216 and has a market capitalization of over $19 million. It goes without saying that it is a little coin with a low trading volume.
How DEI Stablecoin Pegging Works
DEI is backed by digital assets. Deus Finance’s native cryptocurrency accounts for 20% of company holdings, while the remaining 80% is made up of other stablecoins.
The depegging of the DEI, unlike the UST disaster, was caused by many hacks that shook the ecosystem. Following a $3 million attack in March, the protocol was unable to generate enough USDC to support the DEI. The hacks were mostly a series of flash loan attacks that caused the DEI to lose its peg as the value of DEUS dropped.
DEUS Finance Action Plan After DEI Crash
Following the depegging, the Deus Finance team took to Twitter to reassure its followers that the 1:1 dollar peg would be restored. However, confidence in the token had plummeted, and the stablecoin had not recovered significantly. The DEI’s value had dropped to 60 cents on Tuesday. It is now trading at 58 cents as of this writing. These prices suggest that the Deus Finance team’s efforts have been ineffective thus far.
A bond programme was one of the initiatives it implemented. This bond scheme is essentially a treasury bond that will withdraw 35 million DEI from circulation in an effort to restore the peg. The Deus Finance team is still working to restore the peg, according to their most recent tweet on Twitter.
Many in the space have concluded that stablecoins backed by cryptocurrencies are not possible due to the decrease of both digital assets. One of the main reasons is that these cryptocurrencies are extremely volatile, and when their prices change as they have recently, the dollar peg of the stablecoins they support is jeopardised.
When compared to USDT, UST, or USDC, DEI is a significantly smaller stablecoin. According to CoinGecko, its market cap is around $39 million. Its lowest point during the depeg event was $0.525, and it has since rebounded somewhat. However, it’s tough to predict whether the team will be able to return DEI to $1.
DEI is the second stablecoin to lose its anchor, following a “death spiral” selloff that knocked Terraform Labs’ UST stablecoin down to 13 cents from its dollar peg last week. Meanwhile, Luna, the cryptocurrency that assisted UST in regulating its price, lost virtually all of its value in less than a day, resulting in massive losses for investors.
Analysts’ View On DEI Stablecoin Crash
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