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Kava Network’s decentralized stablecoin USDX has just dropped from the $1 price zone. According to figures from Coingecko, the coin’s market capitalization hovers around $115 million.
USDX fell to the $0.55 zone on Wednesday and is currently hovering around $0.65.
The reason for this depeg is still unknown. As unlike algorithmic stablecoins like UST, Kava’s USDX can be minted against a collateralized loan.
As explained from Twitter by Kava Labs – the team behind this stablecoin, USDX lost its peg because of its direct links to the UST – the stablecoin that has rocked the market recently. UST accounts for the majority of USDX collateralization (alongside other assets like Kava, Cosmos, Bitcoin or Ether), which is part of the reason for the coin’s recent volatility.
Scott Stuart, co-founder and CEO of Kava Labs said:
“USDX is not the UST and USDX is expected to return to the original anchorage zone.”
Mr. Stuart also added that Kava has isolated the risks that UST can affect the UST system, even though UST depeg is inherently a major risk for many of the protocols involved.
Besides UST, USDN is a name that has also deviated from the 1 USD zone recently. Before that, USDN also had a de-peg phase, after having dramas with the investment fund Alameda.
> See more: Drama scene between Waves and Alameda
Even the market leading “traditional” stablecoin Tether (USDT) on May 12 was de-peg as a wave of panic flooded the market, hitting the coin’s “partially backed” quote. This compares to the “full margin” of two competitors, USDC and BUSD.
However, thanks to adjustments from the Tether company, the USDT price then quickly returned to the 1 USD price zone, showing that the largest stablecoin in the crypto market is not easy to “get FUD”.
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