The recent crash of the UST stablecoin had rocked the market to its core. This depegging was credited for most of the market crash and the incredibly low momentum that has trailed most digital assets in the space since then. Most other stablecoins, although challenged, had been able to maintain their peg. That is, all but one, which has now become the second stablecoin to lose its peg in less than a two-week span.

DEI Stablecoin De-Pegs

Another dollar-pegged stablecoin known commonly as DEI has lost its peg and is now trading significantly below a dollar. This stablecoin seems to be suffering from the aftereffects of the UST crash, which has seen investors put less faith into stablecoins. 

DEI is the second algorithmic stablecoin backed by cryptocurrencies that have lost their dollar peg in a two-week period. This digital asset in particular was backed by the native cryptocurrency of the Deus Finance ecosystem, DEUS, up to 20%, and the majority of its reserves were in a variety of other stablecoins.

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Unlike the UST crash though, the depegging of the DEI had to do with multiple hacks that had rocked the ecosystem. A $3 million hack back in March left the protocol unable to adequately provide enough USDC to back the DEI. Mainly the hacks have been a number of flash loan attacks that coupled with the value of DEUS dropping, had seen the DEI lose its peg.

DEI trading at $0.58 | Source: DEIUSD on TradingView.com

Following the depegging, the Deus Finance team had taken to Twitter to assure its community that it was working on restoring the 1:1 dollar peg. However, faith in the token had declined very low and there has not been much recovery in the stablecoin. By Tuesday, the value of the DEI had declined to 60 cents. At the time of this writing, it is trading at 58 cents. These prices indicate that the measures being implemented by the Deus Finance team may not have been effective so far.

One of the measures it had put in place was a bond program. This bond program is basically a treasury bond that will remove 35 million DEI from circulation, reducing the supply in an effort to recover the peg. According to the last post on their Twitter account, the Deus Finance team continues to work in order to restore the peg.

Elsewhere, the UST peg has recorded some recovery. This stablecoin which had been the market trigger saw investors lose billions following its crash, which had inadvertently led to the collapse of LUNA. 

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The decline of both these digital assets has now led many in the space to come to the conclusion that stablecoins backed by cryptocurrencies are not feasible. One major reason is that these cryptocurrencies are very volatile and when their prices fluctuate as they have been in recent times, the dollar peg of the stablecoins they back are threatened.