{"id":5944,"date":"2022-05-17T14:46:18","date_gmt":"2022-05-17T14:46:18","guid":{"rendered":"https:\/\/scienceandnerds.com\/2022\/05\/17\/terras-crash-has-left-some-other-stablecoins-and-protocols-on-shaky-ground\/"},"modified":"2022-05-17T14:46:19","modified_gmt":"2022-05-17T14:46:19","slug":"terras-crash-has-left-some-other-stablecoins-and-protocols-on-shaky-ground","status":"publish","type":"post","link":"https:\/\/scienceandnerds.com\/2022\/05\/17\/terras-crash-has-left-some-other-stablecoins-and-protocols-on-shaky-ground\/","title":{"rendered":"Terra\u2019s crash has left some other stablecoins and protocols on shaky ground"},"content":{"rendered":"<p>Source: <a href=\"https:\/\/www.theverge.com\/2022\/5\/16\/23075139\/stablecoin-terra-crash-depeg-dei-fantom-usd-scream-defi-instability\">https:\/\/www.theverge.com\/2022\/5\/16\/23075139\/stablecoin-terra-crash-depeg-dei-fantom-usd-scream-defi-instability<\/a><br \/>\n<code><br \/><\/br><\/code><\/p>\n<div readability=\"88.971915430735\">\n<p id=\"VlwIoW\">In the wake of the sudden collapse of TerraUSD, several other stablecoins\u2019 values (whose values are supposedly pegged to the dollar) have started facing issues.<\/p>\n<p id=\"KWeUbF\">Deus Finance\u2019s <a href=\"https:\/\/www.coindesk.com\/markets\/2022\/05\/16\/fantom-stablecoin-dei-becomes-latest-to-lose-dollar-peg\/\">DEI coin<\/a> is currently trading at around 66 cents and has been <a href=\"https:\/\/coinmarketcap.com\/currencies\/dei\/\">fluctuating since Sunday<\/a>, reaching a low of around 52 cents early Monday morning.<\/p>\n<p id=\"iOpYer\">Unlike other major stablecoins like USD Coin and Tether, which (<a href=\"https:\/\/www.theverge.com\/22620464\/tether-backing-cryptocurrency-stablecoin\">allegedly<\/a>) have actual dollars or assets backing them, DEI\u2019s values are controlled by algorithms making trades. It\u2019s not that there\u2019s <em>no<\/em> collateral \u2014 as <a href=\"https:\/\/cointelegraph.com\/news\/deus-finance-s-dollar-pegged-stablecoin-dei-falls-below-60-cents\"><em>CoinTelegraph<\/em> points out<\/a>, there\u2019s a DEUS token that you can use to get new DEI tokens and that you can receive if you redeemed DEI. Unlike with Terra, where the value of the corresponding coin crashed, <a href=\"https:\/\/coinmarketcap.com\/currencies\/deus-finance-2\/\">the value of DEUS<\/a> seems to be holding up okay.<\/p>\n<p id=\"Igqg6f\">The Terra coin lost its peg to the dollar, eventually leading to <a href=\"https:\/\/www.theverge.com\/2022\/5\/12\/23069232\/terra-luna-collapse-stablecoins-crypto-crash-bitcoin\">massive inflation<\/a> in the accompanying Luna coin. Eventually, the Terra blockchain was frozen, and many major exchanges delisted it from sale. The result has been a major blow to the credibility of stablecoins, previously seen as the safest commodities in the volatile cryptocurrency world.<\/p>\n<div class=\"c-float-right\">\n<aside id=\"4FxisZ\"><q>Stablecoins are having a moment, so small dips can turn into big worries<\/q><\/aside>\n<\/div>\n<p id=\"uGQeTY\">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. <a href=\"https:\/\/www.theblockcrypto.com\/post\/147046\/defi-lender-left-with-35-million-bad-debt-after-quoting-depegged-stablecoins-at-1\">According to <em>The Block<\/em><\/a>, Scream had the price of DEI hardcoded to $1 \u2014 so attackers were able to buy DEI coins for less than $1 and post them as a full dollar\u2019s worth of collateral. The result has left many Scream users unable to withdraw their deposits, left holding the bag on the protocol\u2019s bad debts. <\/p>\n<p id=\"Sc3iHw\">In the case of DEI, primary lenders have \u201cagreed to repay back all debts borrowed out,\u201d <a href=\"https:\/\/twitter.com\/Screamdotsh\/status\/1526138254185181184?s=20&#038;t=HuVixW4N96QMQJgjlhNo4A\">according to Scream<\/a> \u2014 but other hard-coded stablecoins are continuing to cause problems. Another coin called Fantom USD has also depegged from the dollar and is currently trading around 83 cents. Scream also had Fantom USD\u2019s listed at $1 despite its depegging \u2014 though <a href=\"https:\/\/twitter.com\/Screamdotsh\/status\/1526138207372550144?s=20&#038;t=ePeeWWNePQwMn9BLVK-71Q\">that\u2019s changing<\/a> \u2014 letting people play the same trick in a separate currency.<\/p>\n<p id=\"WeDkCj\">As for Deus, it seems like there is a plan on getting DEI back to its $1 value. In a Medium post on Sunday, a member of Deus\u2019 controlling organization said that Deus <a href=\"https:\/\/lafayettetabor.medium.com\/dip-7-treasury-bonds-4cc886148b9e\">will start selling treasury bonds<\/a>. Yes, like the ones the US Treasury does \u2014 in fact, the post says that the idea is \u201cinspired by the best stable coinproject [sic] in human history, the US dollar.\u201d Basically, users will put up something in collateral and get a bond they can \u201credeem 1 DEI for 1$ worth of\u201d the collateral. <\/p>\n<p id=\"Q1s1Jv\">Of course, Deus is promising to pay interest on the bonds, too. The idea, according to the post, is that this will help make sure DEI has \u201can unbreakable backing at 1 DEI: 1 USDC.\u201d Deus also recently made some changes to its processes in April, when it <a href=\"https:\/\/lafayettetabor.medium.com\/new-dei-peg-mechan-1af3e3d9a975\">implemented a new mechanism<\/a> to make sure DEI stays at its peg after it destabilized a few times in March.<\/p>\n<p id=\"WcRIrp\">Deus <a href=\"https:\/\/twitter.com\/DeusDao\/status\/1526195318341218305\">says on Twitter<\/a> that it\u2019s \u201cworking around the clock to restore the DEI peg\u201d and promises further updates.<\/p>\n<\/div>\n<p><code><br \/><\/br><\/code><\/p>\n<p>Source: <a href=\"https:\/\/www.theverge.com\/2022\/5\/16\/23075139\/stablecoin-terra-crash-depeg-dei-fantom-usd-scream-defi-instability\">https:\/\/www.theverge.com\/2022\/5\/16\/23075139\/stablecoin-terra-crash-depeg-dei-fantom-usd-scream-defi-instability<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: In the wake of the sudden collapse of TerraUSD, several other stablecoins\u2019 values (whose values are supposedly pegged to the dollar) have started facing issues. Deus Finance\u2019s 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 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5945,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"pagelayer_contact_templates":[],"_pagelayer_content":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[49,8],"tags":[50],"class_list":["post-5944","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-technology","tag-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Terra\u2019s crash has left some other stablecoins and protocols on shaky ground - Science and Nerds<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/scienceandnerds.com\/2022\/05\/17\/terras-crash-has-left-some-other-stablecoins-and-protocols-on-shaky-ground\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Terra\u2019s crash has left some other stablecoins and protocols on shaky ground - Science and Nerds\" \/>\n<meta property=\"og:description\" content=\"Source: In the wake of the sudden collapse of TerraUSD, several other stablecoins\u2019 values (whose values are supposedly pegged to the dollar) have started facing issues. Deus Finance\u2019s 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. 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Deus Finance\u2019s 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. 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