After the fall of crypto-UST, it is the stablecoin DEI’s turn to lose its indexing

The impressive fall in UST is starting to have consequences for the entire algorithmic stablecoin sector. The first victim is DEI.

After UST, it’s DEI’s turn to see its value fall. The algorithmic stablecoin from the DEUS ecosystem, which was linked to the dollar, lost its affiliation on the night of May 15 and fell in a few hours from a value of one dollar to 0.52 dollars. The crypto has since struggled to rally, and was back at $ 0.67 at the time of publication of this article. But there is no guarantee that it will be able to recover definitively – because, as Numerama showed a few days ago, the fall of UST may very well mark the end of crypto-algorithms.

Stablecoins are a separate category within cryptocurrencies. They are by definition supposed to have a stable price and use different mechanisms to do so. The most popular stack coin, Tether, uses dollars or stocks to secure its price – but in the case of algorithmic stack coins, such as UST and DEI, a number of calculations are involved. But in some cases, these devices are not enough: Terra’s UST project is proof of this, and DEI could easily be the next.

The price of DEI, which was stable until then, stalled // Source: Coin Market Cap

DEI’s fall, the first of a long list?

DEI is the algorithmic stablecoin of the DEUS (decentralized finance) ecosystem, a cross-blockchain project offering financial services. DEI works hand in hand with DEUS, the system’s second cryptocurrency, and it’s thanks to a mechanism burn and mint that the two assets manage to balance each other – and DEI, to maintain its indexation. This is a device a bit from UST and LUNA, although stablecoin also relied on the relationship between the two cryptocurrencies to preserve its value.

The DEI stall is due, among other things, to several attacks that the ecosystem has suffered in recent months, and which have caused DEUS to lose 43% of its value, explains the specialized media Decrypt. With this fall, the mechanism for keeping DEI afloat was made more complex and could not keep up – and some users took advantage of the dual crypto-balancing system to sell DEUS at the DEI price. As a result, the price of stablecoin stalled.

DEUS
Can the DEUS ecosystem survive the decline in the value of its stablecoin? // Source: Deus

The decline in the value of DEI is not solely due to UST – but the timing is not insignificant. Did the shipwreck of Terra give stablecoin ideas to others who were trying to make money on the back of DEI? Right now, it’s hard to say. What is certain is that it will be difficult to restore investor confidence in a project similar to UST – and this stall does not bode well for DEI’s future.

Can the IED be saved?

Our team is working tirelessly to restore the indexing of DEI “DEUS warned on Twitter on May 16, hours after the dropout. ” Mitigation measures were implemented immediately and solutions to ensure long-term stability are being developed. ”

Currently, the teams in the DEUS ecosystem are avoiding making the same mistakes as Terra: they have suspended the balancing mechanism between the two cryptocurrencies at the moment and are trying to set up a new security system for DEI. It remains to be seen if this will be enough to allow it to regain its indexing.

Currently, the teams in the DEUS ecosystem are avoiding making the same mistakes as Terra: they have suspended the balancing mechanism between the two cryptocurrencies at the moment and are trying to set up a new security system for DEI. It remains to be seen if this will be enough to allow it to regain its indexing.

For now, the “classic” stablecoin sector in general seems to be holding up. During the UST crash, all heads turned to Tether, the most popular stablecoin, which briefly stalled at $ 0.95. Eventually he held on and was able to return to his indexing – but the whole sector remains extremely feverish. If DEI can not get up quickly, it may be too late for him.

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