More stable coins are destabilizing and causing even more shenanigans

In the wake of TerraUSD’s sudden collapse, several other stablecoins values ​​(whose values ​​are believed to be pegged to the dollar) began to face problems.

Deus Finance’s DEI coin currently trades at about 66 cents and is fluctuating since sundayand hit a low of about 52 cents Monday morning.

Unlike other major stablecoins such as USD Coin and Tether, which (allegedly) have real dollars or assets, DEI’s values ​​are checked by algorithms that execute transactions. It’s not that there is new collateral — if CoinTelegraph points out, there is a DEUS token that you can use to get new DEI tokens and that you can receive if you have redeemed DEI. Unlike Terra, where the value of the associated coin crashed, the value of DEUS seems to be holding up well.

The Terra coin lost its peg to the dollar, eventually leading to massive inflation in its companion Luna coin. Eventually, the Terra blockchain was frozen and taken off sale by many major exchanges. The result is a major blow to the credibility of stablecoins, which were previously seen as the safest commodities in the volatile cryptocurrency world.

The destabilization of DEI and other coins has also led to another attack on a decentralized financial protocol called Scream, which allows users to borrow cryptocurrencies by placing others as collateral. According to The blockScream had hard-coded the price of DEI to $1 – so attackers could buy DEI coins for less than $1 and place them as collateral for a full dollar. The result has left many Scream users unable to withdraw their deposits, leaving them with the protocol’s bad debt bag.

In DEI’s case, primary lenders have “agreed to repay all debts lent”, according to Scream — but other hard-coded stablecoins continue to cause problems. Another coin called Fantom USD has also been de-pegged from the dollar and is currently trading around 83 cents. Scream also had Fantom USDs listed at $1 despite the depegging – though that is changing — have people play the same trick in a separate currency.

As for Deus, it appears there is a plan to bring DEI back to its $1 value. In a Medium post on Sunday, a member of Deus’s controlling organization said that Deus going to sell treasury bonds† Yes, like the one the US Treasury does – in fact the post says the idea is “inspired by the best stable currency project [sic] in human history, the US dollar.” Basically, users will put something as collateral and get a bond that they can “exchange 1 DEI for $1 worth of” the collateral.

Of course, Deus also promises to pay interest on the bonds. The idea, according to the post, is that this will ensure that DEI has “unbreakable support at 1 DEI: 1 USDC.” Deus also recently made some changes to its processes in April when it a new mechanism implemented to make sure DEI stays on its feet after being destabilized a few times in March.

deus says on Twitter that it is “working around the clock to restore the DEI pin” and promises further updates.