Depegging debacle: Is DEI, hybrid algorithmic stablecoin, following UST’s footsteps

Following the decimation of Terra’s UST and a temporal depegging of Tether’s USDT, Deus Finance (DEI) is the newest to undergo the identical destiny.

The meltdown of the stablecoins 

Currently valued at over $50 million by market capitalization, DEI is a hybrid algorithmic stablecoin from DEUS Finance, a DeFi Protocol. 

DEUS Finance makes use of two tokens known as DEUS and DEI. The former is the mission’s native governance token, and the latter is its dollar-pegged stablecoin. 

The depegging of the DEUS’ DEI could be attributed to the Protocol’s lack of over $30 million on account of two flash mortgage assaults skilled within the final two months.

This, coupled with a decline within the value of the DEUS token led to a depreciation of the collateral worth of the DEI stablecoin which pushed down the collateral ratio to 43%. 

Last 48 hours

DEI’s depegging was first observed on 15 May because the token traded three cents in need of its $1 peg. By evening, the token declined by a further 17 cents as lack of liquidity on decentralized exchanges pushed merchants to modify their DEI tokens for USDS. Increased FUD led a number of merchants to distribute their DEI to hedge in opposition to danger and this additional pushed down the worth of the token. 

At $0.6336, the token declined by 6% within the final 24 hours. At $0.6336 per DEI token, the token up to now recorded a 36% decline from its $1 peg.

Source: CoinMarketCap

Similarly, earlier than the depegging commenced on 15 May, the market capitalization for the DEI token was $88,844,548. Immediately, the depegging occurred and it declined sharply to $55,353,250, which was a 38% decline. With plans underway to make sure that DEI regains its peg, the market cap of the token stood at $56,093,053 on the time of writing. 

1652815203 216 Depegging debacle Is DEI hybrid algorithmic stablecoin following USTs footsteps

Source: Coingecko

Further to this, the final two days have been marked with vital distribution of DEI Token. Currently standing at $27,588,250, the buying and selling quantity for the token noticed an 83% improve in simply two days. Without a corresponding spike in value, this was solely proof of the elevated promoting stress that had taken place. 

Depegging debacle Is DEI hybrid algorithmic stablecoin following USTs footsteps

Source: CoinGecko

With information of elevated regulatory murmurs following UST’s and USDT’s depegging, regulators have as soon as once more been confirmed proper as to why elevated regulation is required for the crypto house to thrive optimally.

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