Depegging debacle: Is DEI, hybrid algorithmic stablecoin, following UST’s footsteps

ambcrypto.com:

Following the decimation of Terra’s UST and a temporal depegging of Tether’s USDT, Deus Finance (DEI) is the latest to suffer the same fate.

Currently valued at over $50 million by market capitalization, DEI is a hybrid algorithmic stablecoin from DEUS Finance, a DeFi Protocol. 

DEUS Finance uses two tokens called DEUS and DEI. The former is the project’s native governance token, and the latter is its dollar-pegged stablecoin. 

The depegging of the DEUS’ DEI can be attributed to the Protocol’s loss of over $30 million as a result of two flash loan attacks experienced in the last two months.

This, coupled with a decline in the price of the DEUS token led to a depreciation of the collateral value of the DEI stablecoin which pushed down the collateral ratio to 43%. 

DEI’s depegging was first noticed on 15 May as the token traded three cents short of its $1 peg. By night, the token declined by an additional 17 cents as lack of liquidity on decentralized exchanges pushed traders to switch their DEI tokens for USDS. Increased FUD led several traders to distribute their DEI to hedge against risk and this further pushed down the price of the token. 

At $0.6336, the token declined by 6% in the last 24 hours. At $0.6336 per DEI token, the token so far recorded a 36% decline from its $1 peg.

Source: CoinMarketCap

Similarly, before the depegging commenced on 15 May, the market capitalization for the DEI token was $88,844,548. Immediately, the depegging occurred and it declined sharply to $55,353,250, which was a 38% decline. With plans underway to ensure that DEI regains its peg, the market cap of the token stood at $56,093,053 at the time of writing. 

Source: Coingecko

Further to this, the last two days have been marked with significant