Data Shows Deus Finance’s Stablecoin DEI Loses US Dollar Freeze and fell to a low of 54 cents during European hours on Monday. The decline comes amid several algorithmic stablecoins that lost their fixation last week.
The algorithmically stablecoin should be automatically linked to the price of another currency. Unlike centralized alternatives such as Tether (USDT) or USD coin (USDC), these are backed by real dollars or equivalent assets held in banks.
The DEI is valued at over $62 million at market capitalization. Operated within Deus, a decentralized finance (DeFi) project from Fantom, it consists of 10% DEUS tokens and 90% other stablecoins.
DEI Margin Ratio is constantly monitored and adjusted through arbitrage bots. which continuously trades $1 base token for 1 DEI or vice versa. to ensure fixation
DEI, which traded 3 cents lower on Sunday. and lost 20 cents on Sunday night. As traders tend to trade DEI tokens for USDC, the drop in price leads traders to sell more DEI to other tokens as a hedge. which caused the price to drop further
Previously, Deus developers have temporarily halted the DEI exchange mechanism that allows investors to trade DEI for other tokens.
Developers in Deus’ Telegram explained that the liquidity drop was partly due to traders leaving the stablecoin group following the collapse of UST last week and lower-than-usual support for the DEI token after leverage. from the $13.4 million Deus protocol at the end of April.
Meanwhile, DEI has regained 72 cents at the time of writing, with developer Deus stating a debt token redemption plan that will prevent future pin collapse.
The downturn follows a multibillion-dollar investment in the Terra UST ecosystem. As it lost its fixation and fell to a low of 22 cents, the associated luna token (LUNA) fell to a few pennies from a price of over $100 earlier this month. Losing up to 99.7% of its value in less than a week.
The panic during the UST last week caused a similar sell-off in other stablecoins such as Waves’ stablecoin USDN, which lost 15%.
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