After UST disengagement…the threat remains for many other stablecoins
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Answer After UST disengagement…the threat remains for many other stablecoins
In the past weeks, many stablecoins have been de-pegged.
Since the collapse of UST, many other cryptocurrencies have followed suit.
After revealing the significant risks to USDT due to its insufficient reserves, several stablecoins have been de-pegged.
Although stablecoins are facing a host of problems, they still represent 15% of the total cryptocurrency market cap, and USDT, USDC and BUSD still account for 90% of the total stablecoin market cap.
In the wake of the UST crash, USDT suffered a minor de-peg, which led to a crisis of confidence.
Despite a 20% market cap drop, USDT still ranks first in the stablecoin, accounting for 44.17% of the total stablecoin market cap.Read:Bakkt platform succeeds in raising $ 182 million in its investment round
There were stablecoins that were de-pegged prior to the UST crash.
On April 4, 2022, the price of USDN, a stablecoin backed by Waves, dropped to $0.83, a major breakout.
The stablecoin was depegged again on August 26, with the price dropping to $0.9.
In May 2022, the algorithmically stable coin UST collapsed and fell into a death spiral, leading to the bankruptcy of many projects and companies.
Meanwhile, the UST crash also wiped out most of the decentralized stablecoin’s market capitalization.
At the moment, the UST price stands at $0.02466.
DAI Project Market Value Trend:
After the collapse of UST, USDX, the original decentralized stablecoin of the Kava Network, fell to $0.66 and reached a bottom around $0.55, which is far below its supposed dollar peg.
In May, DEI, a stablecoin issued by the derivatives protocol DEUS Finance, was unpinned and priced at $0.37.
On June 20, USDD, a stablecoin in the TRON ecosystem, was trading at around $0.9595, indicating a peg removal of approximately 4%.
On August 14, the dollar depegged and fell to around $0.7. On August 23, the stablecoin broke off again, with the price dropping to around $0.7734.Read:Cryptocurrency lender Nexo launches web 3 investment fund
On August 19, HUSD lost its peg to the dollar, as low as $0.84.
Earlier this month, after US authorities announced sanctions against Tornado Cash, MakerDAO co-founder Ron Christensen said on Discord that MakerDAO could sell all of its exposure to USDC in the protocol, a move that could see DAI abandon its dollar peg.
He later stated on social media that DAI’s de-linking from USDC is the best way for the project to decentralize.
It has been reported that 80% of the collateralized assets behind DAI are in stablecoins and 60% are in USDC.
It should be noted that after the Tornado Cash penalty, the issuer of USDT Tether also announced that it has not been contacted by the regulations and will not freeze addresses related to Tornado Cash for the time being, but will comply with the requests of the US authorities.
Compared to fiat currencies, decentralized stablecoins are more stable, transparent, efficient, and censorship-resistant.
In addition, the cost of holding stablecoins is also lower.
Once a stablecoin is de-pegged from a real-world asset, it will become more resistant to censorship.Read:ETH price surge to monthly high causes over $150 million to liquidate Ethereum positions
This achieves complete decentralization, which is what the blockchain space advocates.
However, de-pegging also exposes investors to greater risks as the stablecoin can easily de-peg under harsh market conditions or during a liquidity crunch.
Regardless, issuers are required to transparently raise additional collateral for other assets so that users can trust their stablecoins, which also makes minting stablecoins very expensive.
Although decentralization is often promoted in the cryptocurrency market, it can be argued that investors rely heavily on “central assets” based on the high market capitalization of stablecoins.
The DeFi market has moved steadily forward, new types of decentralized stablecoins have appeared.
Many hope that the DeFi stablecoin market capitalization will continue to grow, which will promote a more diversified range of stablecoins.
When talking about the DeFi market, we must mention AMM, which is a widely recognized investment channel.
Despite its popularity, it is associated with AMM At great risk as markets on the chain suffer from delays and wild projects.
Recently, CoinEx has emerged which also offers AMM and allows manufacturers to share close to 50% of the fees.
Additionally, in CoinExAMM profits are calculated daily, which is very convenient and guarantees users great asset security.
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Disclaimer: This article does not provide any investment advice, and all statistics mentioned here are for reference only, information provided here may not be relied upon in investment decisions, for which you will be entirely responsible.
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