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After the collapse of TerraUSD (UST), a series of algorithmic stablecoins of various platforms were severely affected. And DEUS Finance’s stablecoin DEI has just become the latest “victim”.
As the market continued to suffer greatly because of the LUNA-UST event, DEI – an algorithmic stablecoin of the DeFi platform DEUS Finance (DEUS) built on Fantom (FTM) failed to sustain. its rate against the USD when it fell below 0.5986 USD at press time.
When the DEI price hit the lowest low in history, the market capitalization of the project also followed from nearly 100 million USD to about 52 million USD. However, despite DEI’s reliance, DEUS Finance’s governance token, DEUS, rose from $163.4 to $327.28, before falling to the current $209.
This fallout is largely due to the aftermath of stablecoin concerns caused by the failure of UST-LUNA and the decision by the developers of Deus Finance to pause DEI buybacks. On the other hand, this is also considered the next significant step backwards for the project because only about 2 weeks ago, Deus Finance continued to be “visited” by hackers with a total loss of 13.4 million USD.
According to the main announcement from the project team in the past 24 hours, Deus Finance is proposing a bond program to fix the exchange rate problem for DEI. These bonds will allow users to deposit collateral and earn a fixed interest based on the maturity date.
DIP-7: $DEUS Treasury Bonds
We are a treasury bond program aimed at securing peg stability
These treasury bonds allow users to deposit collateral and earn a fixed interest based on the maturity date.
— DEUS Finance DAO (@DeusDao) May 15, 2022
Our team is working around the clock to restore the DEI peg. Mitigation measures were implemented immediately and solutions are being developed for long-term stability.
Further updates to follow.
— DEUS Finance DAO (@DeusDao) May 16, 2022
While DEI is also an algorithmic stablecoin like UST, DEI is collateralized, meaning users can earn 1 DEI by depositing $1 worth of collateral by popular assets like USD Coin ( USDC), Fantom (FTM), Dai (DAI), WBTC or DEUS.
Similar to UST, DEI’s peg is stabilized by the mint – burn DEUS mechanism. When DEI is minted, DEUS collateral will be burned unless other tokens are used as collateral. On the other hand, when bringing DEI to redeem, DEUS will be minted.
However, DEI is not the only stablecoin that has been severely impacted by the LUNA-UST crisis. Over the weekend, Kava Network’s USDX also entered the de-peg wave this time around. Even the “king” of Tether (USDT) and some other leading algorithmic stablecoins such as Tron’s USDD or Near Protocol’s USN all lost value in the afternoon of May 12.
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