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Terra’s crash shakes confidence leaving some other stablecoins on shaky ground

The Verge |

depegged coins - Terra’s crash shakes confidence leaving some other stablecoins on shaky groundIn the wake of the sudden collapse of TerraUSD, several other stablecoins’ values (whose values are supposedly pegged to the dollar) have started facing issues.

Deus Finance’s DEI coin is currently trading at around 66 cents and has been fluctuating since Sunday, reaching a low of around 52 cents early Monday morning.

Unlike other major stablecoins like USD Coin and Tether, which (allegedly) have actual dollars or assets backing them, DEI’s values are controlled by algorithms making trades. It’s not that there’s no collateral — as CoinTelegraph points out, there’s a DEUS token that you can use to get new DEI tokens and that you can receive if you redeemed DEI.

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The Terra coin lost its peg to the dollar, eventually leading to massive inflation in the accompanying Luna coin. Eventually, the Terra blockchain was frozen, and many major exchanges delisted it from sale.

The destabilization of DEI and other coins has also opened up a new attack on a decentralized finance protocol called Scream, which lets users borrow cryptocurrencies by posting other ones as collateral. According to The Block, Scream had the price of DEI hardcoded to $1 — so attackers were able to buy DEI coins for less than $1 and post them as a full dollar’s worth of collateral. The result has left many Scream users unable to withdraw their deposits, left holding the bag on the protocol’s bad debts.

Another coin called Fantom USD has also depegged from the dollar and is currently trading around 83 cents. Scream also had Fantom USD’s listed at $1 despite its depegging — though that’s changing — letting people play the same trick in a separate currency.

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As for Deus, it seems like there is a plan on getting DEI back to its $1 value. In a Medium post on Sunday, a member of Deus’ controlling organization said that Deus will start selling treasury bonds. Yes, like the ones the US Treasury does — in fact, the post says that the idea is “inspired by the best stable coinproject [sic] in human history, the US dollar.”

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