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Another stablecoin loses peg – DEI team working to restore the peg

198 points by thm 4y ago

grnmamba 4y ago
DEI seems to be a really tiny coin.
thaway2839 4y ago
Distributed Finance: > Deus Finance reacted by halting the redemption process in order to try and stabilize the coin The Aristocrats!
- ceejayoz 4y ago
  The losses are distributed.
  - deleted 4y ago
    [deleted]
logifail 4y ago
> Traders are taking advantage of this arbitrage mismatch, buying up DEI coins and exchanging them for $1 worth of collateral, making matters worse. Deus Finance reacted by halting the redemption process in order to try and stabilize the coin. Good luck with that. Who else is reminded of the story of George Soros "[making] $1.5 billion in just a single month [in late 1992] by betting [that] the British pound and several other European currencies were priced too richly against the German deutsche mark"[0] ? [0] https://www.forbes.com/sites/steveschaefer/2015/07/07/forbes-flashback-george-soros-british-pound-euro-ecb/ https://www.forbes.com/sites/steveschaefer/2015/07/07/forbes...
- Ekaros 4y ago
  Isn't entire point of stablecoin that you can redeem it for the face value at any time? Not being able to redeem it seems like violating the contract or changing the rules while game is running...
  - phire 4y ago
    - cowtools 4y ago
      Well, the users did agree to the code when they bought $cryptocurrency
      - phire 4y ago
        Are all the users programmers, are they fluent with the language and frameworks? Could they even read the code if they wanted to? Even if they could read the code and understand that there is a mechanism in place that allows designated humans to pause redemption, the code says nothing about when and how this mechanism should be used. The user might reasonably expect such a mechanism would only be used in an emergency, like the network has been hacked, or there is a bug. They might expect that it would never be used for the financial advantage of the network operators simply because the coin has depegged and redemption is acting as expected.
        coding_unit_1 4y ago
        You've neatly captured why TradFi regulation is a thing.
        reedjosh 4y ago
        Users that don't understand these things shouldn't jump into the market and buy the hottest thing. They should probably stick to long lasting products like BTC, ETH, or XMR. > The user might reasonably expect such a mechanism would only be used in an emergency A de-peg event is an emergency if there's not enough real value to back it. The USD was depegged from gold in the seventies for very similar reasons. In both cases the printer got ahead of the backing. Today we use a currency that survived a de-peg event due to military backing.
        ibejoeb 4y ago
        > Are all the users programmers, are they fluent with the language That's a fair criticism, but isn't it the status quo in the industry in general? Surely most people with stakes in the markets don't truly understand the regulations or the innate dynamics of them.
- formerly_proven 4y ago
  > Deus Finance reacted by halting the redemption process in order to try and stabilize the coin. Nothing to see here, move along
- IAmEveryone 4y ago
  I don't quite understand how these traders are "making matters worse" by using the defining characteristic of a "stablecoin". If anything is making matters worse, it would seem to be the "reaction" of halting the redemption process.
  - Tenoke 4y ago
    Presumably because it would be more likely to stabilize if they didn't take advantage but it's designed so they would so one can't really complain about that.
  - sp332 4y ago
    Yes, normally buying DEI would help drive demand and thus price back upward. The article mentions that arbitrage bots do this all the time and it helps maintain the peg. It's only a problem when it's too difficult to mint new DEI (putting collateral into the system).
    - pas 4y ago
      could you explain this in a bit more detail? why it's difficult to mint new DEI, or why it's difficult to put collateral into the system? is the incentive that "currently it trades below 1.0, so I buy it, then redeem it for 1.0" which should drive the price up, right? where does the money come from to finance this arbitrage? is there a redemption pool that shrinks every time someone executes this cycle?
  - jbverschoor 4y ago
    The same way we can do by organizing bank runs. They’re illegal, but in reality the system is just broken
    - logifail 4y ago
      > The same way we can do by organizing bank runs. They’re illegal [..] Source? Imagine we're all back in early September 2008, and one of us were to post that Lehman Brothers was suffering unprecedented losses due to the subprime mortgage crisis. Would you count that as organizing a bank run? > in reality the system is just broken Indeed. Yet another system which only reveals just how broken it is when you apply enough pressure.
- haasted 4y ago
  Sounds a lot like the same mechanism that undid the Iron Finance stablecoin [0]: > One IRON token is always redeemable for $1 worth of collateral, which on IRON is a mixture of TITAN and the Circle and Coinbase-created stablecoin USDC. [0] https://thedefiant.io/iron-finance-implodes-after-bank-run/ https://thedefiant.io/iron-finance-implodes-after-bank-run/
  - lalaland1125 4y ago
    It's also the same problem that UST had. Algorithmic stablecoins don't work
    - yokem55 4y ago
      Undercollateralized algorithmic stablecoins that use their own issued coin as a '1:1' collateral don't work because they depend on ponzi growth to maintain the illusion of it working. Overcollateralized algo stables such as DAI are much more sustainable. They require substatially more of a user's unrelated capital (whitelisted assets not based on the stablecoin's issuing protocol such as eth or wbtc which also have relatively deep liquidity available on the market) to be locked up and held as collateral to mint the stablecoin. And that makes drawing down the supply much smoother when times get rough as folks with their capital locked up will repay their debt on their own or have the market do it for them in a liquidation of locked capital. This repayment is what burns the supply and keeps the stable from falling far below peg. In fact historically, DAI's problem was that it would go way over peg during drawdowns because damand for DAI to stave off or participate in liquidations would push the usd price of dai way up. It is highly capital inefficient model, as it takes roughly at least $1.50 of the other asset to mint $1.00 worth of stablecoin, and users will usually go for a much higher ratio to prevent the liquidation threshold from kicking in. And this capital inefficiency really kneecaps growth since you can't mint anywhere near as much of the stablecoin, but it also means the protocol and thus the stablecoin is much more robust in downturns. Now it still has real risks because the protocol still depends on lively and accurate oracles to watch and report the collateral values, and that liquidations execute properly when collateral values fall enough to trigger them. But those risks are much more manageable compared to the risks undercollateralized stablecoins present.
- UncleMeat 4y ago
  "Cryptocurrencies are trustless, distributed, and uncensorable." "The team behind cryptocurrency X has halted a primary use of the tokens." Hmm...
  - EdwardDiego 4y ago
    Has Binance "gone down for maintenance" yet? Typically happens when the market's scary.
    - Tenoke 4y ago
      The market isn't 'scary', this is a small stablecoin, and overall the crypto market is up today[0]. Also exchanges do have issues when the volume is much above the norm but this if anything happens as or more often when there's a lot of buying pressure. It's also much more of an issue with e.g. Coinbase than Binance. Binance are more likely to let you trade as you wish but temporarily disable withdraws while they move funds around. 0. https://www.coingecko.com/ https://www.coingecko.com/
      - logifail 4y ago
        > Binance are more likely to let you trade as you wish but temporarily disable withdraws while they move funds around I was under the impression that providers being able to "temporarily disable withdrawals" [due to lack of liquidity, political pressure, or indeed any other reason] is one of the key things that crypto didn't suffer from?
        Tenoke 4y ago
        On-chain sure. I am not sure why you'd expect guarantees off-chain. If you let me handle an asset for you instead of handling it yourself you are bound by how I operate, not just how the asset itself operates. Though I am also not sure why you'd think liquidity doesn't matter, that's neither here nor there.
        4y ago
- mytailorisrich 4y ago
  These so-called 'stablecoins' are bound to end badly, frankly. It's the same story repeating itself again and again, just need to wait long enough for a new generation to come of age and think that past history does not apply to them.
- SemanticStrengh 4y ago
  for DEI there is no redemption..
- icambron 4y ago
  > buying up DEI coins and exchanging them for $1 worth of collateral Doesn’t seem like this would be possible? When the peg fails, wouldn’t all the people holding the coin flood the redemption process, immediately draining it of all USD? Or put it this way: those traders buying the coin for 80 cents and then redeeming it for a dollar…who are they buying it from and why wouldn’t they redeem it? They just left 20 cents on the table. I feel like I’m missing something.
  - vkou 4y ago
    I'm just guessing, here, but it's possible you're missing the exit strategy where the insiders are calmly walking towards the escape pods.
- zzleeper 4y ago
  Wouldn't it had made more sense for the "market makers" to buy the coins themselves at half the price instead of waiting for arbitragers to just pocket the extra money?
  - deleted 4y ago
    [deleted]
antupis 4y ago
Tether is also brink of collapse https://www.ft.com/content/db9c3f32-cd91-4149-9788-95b2046bea10 https://www.ft.com/content/db9c3f32-cd91-4149-9788-95b2046be...
- eli 4y ago
  Has been for years but it does seem like an extended bear market will finally do it and unravel most crypto
- mcintyre1994 4y ago
  Not clear. Tether is back at $0.9988, and the 9% decrease in that headline is market cap not price - it never got anywhere near 9% below peg. I’m very skeptical of Tether’s collateral, but it seems to have withstood this and maintained its peg for now.
  - thaway2839 4y ago
    It's consistently 1/10th of a cent below the peg. That's not maintaining its peg. That being said, it has been stable at that price for several days now, but let's see what the next few weeks hold.
    - TheAlchemist 4y ago
      This is due to the redemption fee. Per se, it’s not an alarming sign. There are more than enough red flags with Tether already !
    - phphphphp 4y ago
      I'm as cynical about Tether as any sane person, but it's important to disambiguate between value on an exchange and redeemable value. If USDT is $0.90 on every exchange, but you can still redeem 1 USDT for 1 USD from Tether, then it is maintaining its peg. UST's value on an exchange was the peg by design, because it was algorithmic, but that's not true of non-algorithmic stable coins -- i.e: Tether.
      - 4y ago
deleted 4y ago
[deleted]
marban 4y ago
Can someone ELI5 why we need more than one fiat-collateralized stablecoin?
- petesergeant 4y ago
  I think people are starting to think we don't even have one
- 542458 4y ago
  The big reasons I could see would be that a) you don’t trust the people behind the first one (or the country they’re based in, etc) b) the underlying technology of the new coin is more appealing (tx/s, smart contracts, fees, etc) That said, this is all Wild West and trusting any of these vendors to actually do what they say seems very risky.
  - marban 4y ago
    Seems like I trust neither a nor b.
  - charcircuit 4y ago
    For b) you can get around that by creating wrapped versions of a more trusted stablecoin.
    - joosters 4y ago
      'Wrapping' a coin implies trusting some other person to not run away with them.
      - charcircuit 4y ago
        You can easily create a smart contract that can wrap and unwrap tokens. This requires no extra trust.
        polygamous_bat 4y ago
bzxcvbn 4y ago
If I wanted to own something that I could always redeem for $1, I would buy $1.
- whimsicalism 4y ago
  Not always an option, depending on where you live.
  - tgv 4y ago
    Or if you need to evade taxes and other tyrannical measures. Yes, being sarcastic.
  - onlyrealcuzzo 4y ago
    It's always an option if you have a meaningful amount of money.
- sonicggg 4y ago
  But what if you're trying to avoid tax?
  - consp 4y ago
    The coin will compensate you by removing your wealth so you avoid tax by not having any. Anyway: You will lose either by the tax agencies finding out (when you actually try to buy stuff) or this way.
    - bliteben 4y ago
      Bonus if you do both
  - a2800276 4y ago
    Cash
- PKop 4y ago
  USDC
qgin 4y ago
I don't know enough about crypto to understand what it means that the team is working to restore the peg. Unless something is literally 100% collateralized by the thing it is pegged to, what code changes are there in the world that can legitimately maintain that peg under all conditions?
- NovemberWhiskey 4y ago
  When I read "working to restore the peg" I read either "frantically looking for a bailout" or "frantically looking for a way to turn this into a rug pull".
- joosters 4y ago
  > what code changes are there in the world that can legitimately maintain that peg None. But I guess it sounds good to pretend to be doing something useful!
- jacobsenscott 4y ago
  There is exactly one way to peg a currency to the USD. It is to simply declare it is pegged, and have a super power sized military to force people to act like it is. Even then you are constrained by the geography your military controls.
  - qgin 4y ago
    Sounds like the dev team has a lot of work to do then
- LegitShady 4y ago
  The only way to peg it is to always be willing to give someone a $1 for one, which will drive the price towards a $1 assuming you can convince people to buy them. The problem is that this coin won't give you $1 - assuming they're allowing redemption at all, it will give you .80c worth of coinbase's USDC and .20c worth of DEUS tokens. If you believe DEUS is going to crash, that means the value of DEI is 80c maximum through USDC. Coinbase is of course is dire straits as its stock has plummeted from ~$360 (it's all time high) in early november to $130 in early may and is currently sitting at around $70, so while it isn't a coin, the future of USDC is tied to coinbase and the future of USDC is unknown especially if its parent company is floundering and stock is down to ~20% of its high in november and down ~73% YTD. I would describe their situation as "volatile". DEUS had already lost more than 50% of its value between the beginning of April ($1100) and the beginning of May ($420 ha!), and its continuing on its way down ($200 currently). So not sure how they can maintain a peg when 20% of that peg is in 'currency' that is in free fall, and the other 80% is tied to coinbase whose stock is in freefall this year. They never had any currency backing it at all - it was always coinbase's USDC and DEUS which is the 'luna' of DEI's 'terra'.
joosters 4y ago
coinmarketcap.com says there are 7.46 billion DEI coins out there => a 'market cap' of about $4.4B, yet coingecko.com says there are only 89 million coins (implying $52M) - that's a huge difference. Which one is right? FWIW, there doesn't appear to be any 'real world' exchange that handles DEI.
- charcircuit 4y ago
  >Which one is right? 88,867,859.101631 DEI https://ftmscan.com/token/0xDE12c7959E1a72bbe8a5f7A1dc8f8EeF9Ab011B3 https://ftmscan.com/token/0xDE12c7959E1a72bbe8a5f7A1dc8f8EeF... >there doesn't appear to be any 'real world' exchange that handles DEI. SpookySwap is the largest DEX on Fantom.
dsr_ 4y ago
A stablecoin can't lose a peg, because it is backed 1:1 with a fully audited deposit of the underlying currency. "But what about -" -- then it's not a stablecoin.
- kwertyoowiyop 4y ago
  These are SchrodingerCoins: they may be stable or they may not, and until you open the box…
  - whitesilhouette 4y ago
    he he he
- grey-area 4y ago
  Unfortunately none of these 'stablecoins' are actually backed 1:1 with a fully audited deposit at all. So when the crypto market crashes, some get exposed as a lie, which causes the crypto market to crash...
  - _fat_santa 4y ago
    I noticed that DEI is backed with BTC as one of the funding options. I think it's a bit risky to back a stablecoin with a non-stablecoin that can have wild price movements.
  - zionic 4y ago
    DAI is, it is in fact over-collateralized.
    - grey-area 4y ago
      We'll find out. I suspect you're wrong, unless by collateralized you mean they store other cryptocurrencies of questionable value as their collateral. In that case sure they're probably just overflowing with funds, until they actually need to use them during a crash.
MrMan 4y ago
the price was hardcoded into the code, ha ha. now they changed the hardcoded price to .85 or something.
zivkovicp 4y ago
Stablecoins will all collapse eventually, and then take down all but a few of the cryto currencies. To my understanding (I am not a crypto expert, just a casual observer) Stablecoins basically collateralize a certain percentage of the outstanding coin in order to provide the "peg"... so maybe 1:10 coins is backed by USD, Btc, real estate, or whatever... and then the exchange rate is set and as long as everyone plays along, it works. If an actor starts redeeming a significant percentage of coin for collateral, then there is less and less collateral to prop up the coin. Same effect if that collateral loses value. It is also my opinion that most crypto "has value" only because it is relatively liquid and can be "cashed out" to USD via an exchange or stablecoin. When people start to recognize the stablecoin scam, the price of all crypto will collapse because the liquidity and USD exchange will disappear in an instant. edit: same thing happened with the USD when it lost the gold backing (and too much redemption led to the decoupling, not enough collateral). In the crypto world, I would say that BTC is the gold equivalent that provides the collateral and legitimacy, so maybe a temporary panic will provide a good BTC buying opportunity? We will see.
- zaphod12 4y ago
  So that's just 1 kind of stablecoin. The other is algorithmic - Terra was in that model. There are many excellent descriptions online, but essentially the backing entity buys and sells another coin (Luna in the case of Terra) whose value can fluctuate to maintain the price of their stablecoin. They are kinda genius in theory and so far rather messy in practice.
  - zivkovicp 4y ago
    No doubt, there are a lot of brilliant minds at work in this space and I hope it becomes more mainstream. I'm still a bit of a skeptic though when it comes to anything other than Bitcoin and tend to believe that it's all just a liquidity game and if you can maintain the illusion of USD liquidity, you will keep the ball rolling and rake in a lot of money. Ultimately they do it so they can exchange their coin for USD, or maybe buy real estate, etc.
- PKop 4y ago
webinvest 4y ago
> Investors should keep an eye on USDT as the largest stablecoin and how its prices move in relation to other major coins to determine the direction of the markets. Has anyone here already done this analysis?
empathy_m 4y ago
Looking forward to seeing what's next for YC-backed Stablegains. (Glad I invested with them instead of buying UST myself as I got out early in the de-peg at 1:1. Thanks to investors for funding that and for the 15% APY while the good times lasted.)
timcavel 4y ago
mtoner23 4y ago
Traders arent taking advantage of the situation. They are doing what they're supposed to to bring back the peg. You are supposed to buy up the stablecoin to restore the peg. The fact that this causes a death spiral is why people keep saying these projects are worthless.
fsociety999 4y ago
I have noticed that people come on here to gloat about things like this due to the pure hatred of crypto flowing through their veins without realizing that they are cheering on regular people suffering ultimately at what will be the expense of big banks and Wall Street and governments. What I mean is when these cryptos have problems or are hacked, regular people are the ones who stand to lose everything in most cases. You can believe that people are dumb for “falling for the scam” in the first place and deserve it, but if you really believe that then I feel sorry for you. It’s pretty obvious and has been for quite some time that the ultimate goal here is for a central bank digital currency (CBDC), and stories like this as well as the UST collapse play right into that hand. I guess what I’m saying is be careful what you wish for. A government/central bank issued digital currency will be far worse for privacy and security than any of these insignificant stablecoins. Imagine the government deciding when and where you are allowed to access your money or what you are allowed to spend it on and what items or stores you are allowed to shop for/in. I feel like it is even possible that Wall Street is BEHIND the collapse of these stablecoins. They couldn’t pay for better press to help convince the public that a CBDC is necessary for the future. I suspect the CBDCs are already ready to go, but their last step is convincing the public they need one. The push for a cashless society has been going on for a number of years now and seems amplified lately.
- Nursie 4y ago
  What I wish for is that governments hadn't sat on their hands when ordinary people were being scammed into these things in the first place. The entire cryptocurrency ecosystem represents a massive failure to regulate, and a massive victory of technical flim-flam salesmen in bamboozling the governments in the world into being afraid to regulate in case they strangled something valuable, when in fact they were allowing normal folks to get ripped off massively. If "regular people" are losing money, it's because "regular people" have been duped and regulators have been duped. It's sad they're losing money, but it's also entirely predictable. But do you know what? After years of being told I'm just a jealous idiot who doesn't understand cryptocurrency or blockchains by the oh-so-smart 'investors' in this space, I'm going to enjoy a bit of shadenfreude here, whatever you think of that. If the whole space collapses I will celebrate - hopefully fewer regular people will be duped in future.
wallaBBB 4y ago
some new news while we're all waiting for USDT to lose its peg...
jmyeet 4y ago
Once again, the only thing that maintains value in an asset is the collective belief of said value. This applies to currencies and other assets. It doesn't matter what assets you have backing a peg because there's always a trust element. Even if, say, the US dollar was 100% backed by gold, there'd still be a trust element that the government would honor redemptions. Once again, the US dollar has never been 100% backed by gold. It was a peg, which doesn't even require you to hold any gold. And FDR changed the peg, which was a sovereign devaluation. The same thing could've happened with 100% gold reserves. And what gives the US dollar its value is really the long dick of the US government. What we're seeing here once again if Crypto Andys learn exactly why the financial system is the way it is. An algorithmic stablecoin is ridiculous. Collateral helps but it all boils down to trust. Consider this quote: > Deus Finance reacted by halting the redemption process in order to try and stabilize the coin. This is exactly the sort of intervention a central bank performs when managing a currency. So what exactly are we gaining with crypto?
- dqpb 4y ago
  > It doesn't matter what assets you have backing a peg because there's always a trust element. Presumably if you have enough assets backing it, then if people start mass selling you can just buy back the currency for the price it’s pegged at.
Fargoan 4y ago
I've been into crypto since 2012 and have never heard of this coin. USDX on Kava lost it's peg too but there are no articles about that because it's another small cap coin. Though USDX never was meant to follow the dollar exactly it is down significantly more than normal.
- vmception 4y ago
  USDX is a casualty of UST implosion and bad coding. People found a way to arbitrage the low value UST for something in the USDX system. Press F to pay respects.
prionassembly 4y ago
Banking is older than trigonometry, or even writing. All of this has happened with clay tablets; all of this will happen again.
- tintedfireglass 4y ago
  AFAIK banking started in Italy during the Renaissance. Which is quite young imo. Trigonometry is way older than that.
  - prionassembly 4y ago
    https://michael-hudson.com/2000/03/how-interest-rates-were-set-2500-bc-1000-ad/ https://michael-hudson.com/2000/03/how-interest-rates-were-s...
turtledove 4y ago
You love to see it. Every one of these is a joy to behold.
kristjansson 4y ago
> Traders are taking advantage of this arbitrage mismatch, buying up DEI coins and exchanging them for $1 worth of collateral, making matters worse Really? Isn't that the mechanism as intended? Why is anyone still selling to them at .64 if there's really an arb?
- cycrutchfield 4y ago
  Who wants to play musical chairs and be left standing when the music stops?
  - kristjansson 4y ago
    No one, but the question is why a ton of arb _buyers_ were pushing the price _down_.
WalterBright 4y ago
Pegging has never worked for fiat currencies, and I don't know why anyone thought this would work for cryptocurrencies. One classic example is when the US dollar was pegged to gold, and then the fiat dollar was inflated until the banking system collapsed, resulting in the Great Depression. Earlier examples are every attempt at bimetalism.
nikolay 4y ago
In the cryptocurrency space, everything is false advertising! Stable coins are neither stable, nor coins!
calltrak 4y ago
“There's a sucker born every minute.” -- P. T. Barnum
bogomipz 4y ago
The post states: >"Deus Finance uses DEUS and DEI tokens for their DeFi protocol, where minting 1 DEI requires $1 of collateral. When redeeming, for instance, one DEI, users would get 80% of the value in USDC and 20% in DEUS if USDC was used as collateral for the creation of DEI in the first place." I've read this same passage 5 times now and I still don't understand it as this sounds very circular. Shouldn't you be able to redeem a stable coin for $1 in whatever currency it is pegged to? Could someone explain how this works?
- rsecora 4y ago
  It doesnt work. If you invest 1$, you will pay fees and gas for it. If you try to redeem you will pay fees and gas for another two coins. (Even if they are pegged) If you redeem those tho coins you pay fees. Furthermore USDC aren't $s (and are backed by a company that is loosing value) and deus aren't dollars. Only the issuer and exchanges gain via fees and emissions. Now conversion without fees or gas is 0.5 to 1.
  - bogomipz 4y ago
    Thanks for the break down. How is this "meant" to be attractive exactly then? What is the value proposition they are intending here? Why would someone ever buy something a stable coin that they could only ever redeem a maximum of 80% of what they paid for it?
zeven7 4y ago
This coin is rank #2858 on Coin Market Cap. This is non-news.
- graeme 4y ago
  Someone may be practicing for peg breaks and/or gaining capital for the big one (Tether). The more losses and panic, the easier an attack
TedShiller 4y ago
Can we at least not call them stablecoins anymore?
bandyaboot 4y ago
Isn't the point of a "stablecoin" to remain stable against its target? Why bother trying to restore the peg...even if they do, it doesn't change the fact that it's not "stable". You failed--give it up.
NelsonMinar 4y ago
Not to discount the hilarious news but DEI is pretty small beer, a market cap of about $65M before the collapse. https://www.bloomberg.com/news/articles/2022-05-16/another-stablecoin-loses-its-peg-as-algorithm-fails-to-keep-pace https://www.bloomberg.com/news/articles/2022-05-16/another-s... Tether is the big stablecoin, about $76B now (down from $83B). They've consistently lied about how much real capitalization they have backing it. When it collapses it will probably bring most of the cryptocurrency market with them.
- Animats 4y ago
  Yes, Tether's the big one. Tether broke its peg last week, but recovered. That was a shock. The risk for Tether is that, while people may not be dumping Tether, they're not likely to put new money into it. A slow outflow will eventually drain the partial reserves.
gbrits 4y ago
DAI did not loose peg. This story is completely fabricated. There's a tendency on HN to hate on everything crypto, but come on. Please just look at the data. In fact, along side USDC and BUSD, DAI is (or at least has been) trading at a slight premium the last couple of days.
- Animats 4y ago
  DEI, not DAI.
  - gbrits 4y ago
    mea culpa
deleted 4y ago
[deleted]
Animats 4y ago
Trading has been forcibly slowed down.[1] Coin goes into a screaming dive, volume jumps up as people exit or speculate on a rebound. Normal. Then, volume drops way off within an hour and price stabilizes around US$0.58. Not normal. With the bridges out of DEI offline, exiting must be harder. But that also means the US$0.58 price is not a real market price. [1] https://coinmarketcap.com/currencies/dei/ https://coinmarketcap.com/currencies/dei/
t_mann 4y ago
This part stands out to me: Deus Finance reacted by halting the redemption process What is decentralized about those projects if a central team can turn off a major element of the protocol or is needed to perform open market operations as with UST?

198 points by thm 4y ago

DEI seems to be a really tiny coin.

Distributed Finance: > Deus Finance reacted by halting the redemption process in order to try and stabilize the coin The Aristocrats!

ceejayoz 4y ago
The losses are distributed.
- deleted 4y ago
  [deleted]

logifail 4y ago

> Traders are taking advantage of this arbitrage mismatch, buying up DEI coins and exchanging them for $1 worth of collateral, making matters worse. Deus Finance reacted by halting the redemption process in order to try and stabilize the coin. Good luck with that. Who else is reminded of the story of George Soros "[making] $1.5 billion in just a single month [in late 1992] by betting [that] the British pound and several other European currencies were priced too richly against the German deutsche mark"[0] ? [0] https://www.forbes.com/sites/steveschaefer/2015/07/07/forbes-flashback-george-soros-british-pound-euro-ecb/ https://www.forbes.com/sites/steveschaefer/2015/07/07/forbes...

Ekaros 4y ago
Isn't entire point of stablecoin that you can redeem it for the face value at any time? Not being able to redeem it seems like violating the contract or changing the rules while game is running...
- phire 4y ago
  - cowtools 4y ago
    Well, the users did agree to the code when they bought $cryptocurrency
    - phire 4y ago
      Are all the users programmers, are they fluent with the language and frameworks? Could they even read the code if they wanted to? Even if they could read the code and understand that there is a mechanism in place that allows designated humans to pause redemption, the code says nothing about when and how this mechanism should be used. The user might reasonably expect such a mechanism would only be used in an emergency, like the network has been hacked, or there is a bug. They might expect that it would never be used for the financial advantage of the network operators simply because the coin has depegged and redemption is acting as expected.
      - coding_unit_1 4y ago
        You've neatly captured why TradFi regulation is a thing.
      - reedjosh 4y ago
        Users that don't understand these things shouldn't jump into the market and buy the hottest thing. They should probably stick to long lasting products like BTC, ETH, or XMR. > The user might reasonably expect such a mechanism would only be used in an emergency A de-peg event is an emergency if there's not enough real value to back it. The USD was depegged from gold in the seventies for very similar reasons. In both cases the printer got ahead of the backing. Today we use a currency that survived a de-peg event due to military backing.
      - ibejoeb 4y ago
        > Are all the users programmers, are they fluent with the language That's a fair criticism, but isn't it the status quo in the industry in general? Surely most people with stakes in the markets don't truly understand the regulations or the innate dynamics of them.
formerly_proven 4y ago
> Deus Finance reacted by halting the redemption process in order to try and stabilize the coin. Nothing to see here, move along
IAmEveryone 4y ago
I don't quite understand how these traders are "making matters worse" by using the defining characteristic of a "stablecoin". If anything is making matters worse, it would seem to be the "reaction" of halting the redemption process.
- Tenoke 4y ago
  Presumably because it would be more likely to stabilize if they didn't take advantage but it's designed so they would so one can't really complain about that.
- sp332 4y ago
  Yes, normally buying DEI would help drive demand and thus price back upward. The article mentions that arbitrage bots do this all the time and it helps maintain the peg. It's only a problem when it's too difficult to mint new DEI (putting collateral into the system).
  - pas 4y ago
    could you explain this in a bit more detail? why it's difficult to mint new DEI, or why it's difficult to put collateral into the system? is the incentive that "currently it trades below 1.0, so I buy it, then redeem it for 1.0" which should drive the price up, right? where does the money come from to finance this arbitrage? is there a redemption pool that shrinks every time someone executes this cycle?
- jbverschoor 4y ago
  The same way we can do by organizing bank runs. They’re illegal, but in reality the system is just broken
  - logifail 4y ago
    > The same way we can do by organizing bank runs. They’re illegal [..] Source? Imagine we're all back in early September 2008, and one of us were to post that Lehman Brothers was suffering unprecedented losses due to the subprime mortgage crisis. Would you count that as organizing a bank run? > in reality the system is just broken Indeed. Yet another system which only reveals just how broken it is when you apply enough pressure.
haasted 4y ago
Sounds a lot like the same mechanism that undid the Iron Finance stablecoin [0]: > One IRON token is always redeemable for $1 worth of collateral, which on IRON is a mixture of TITAN and the Circle and Coinbase-created stablecoin USDC. [0] https://thedefiant.io/iron-finance-implodes-after-bank-run/ https://thedefiant.io/iron-finance-implodes-after-bank-run/
- lalaland1125 4y ago
  It's also the same problem that UST had. Algorithmic stablecoins don't work
  - yokem55 4y ago
    Undercollateralized algorithmic stablecoins that use their own issued coin as a '1:1' collateral don't work because they depend on ponzi growth to maintain the illusion of it working. Overcollateralized algo stables such as DAI are much more sustainable. They require substatially more of a user's unrelated capital (whitelisted assets not based on the stablecoin's issuing protocol such as eth or wbtc which also have relatively deep liquidity available on the market) to be locked up and held as collateral to mint the stablecoin. And that makes drawing down the supply much smoother when times get rough as folks with their capital locked up will repay their debt on their own or have the market do it for them in a liquidation of locked capital. This repayment is what burns the supply and keeps the stable from falling far below peg. In fact historically, DAI's problem was that it would go way over peg during drawdowns because damand for DAI to stave off or participate in liquidations would push the usd price of dai way up. It is highly capital inefficient model, as it takes roughly at least $1.50 of the other asset to mint $1.00 worth of stablecoin, and users will usually go for a much higher ratio to prevent the liquidation threshold from kicking in. And this capital inefficiency really kneecaps growth since you can't mint anywhere near as much of the stablecoin, but it also means the protocol and thus the stablecoin is much more robust in downturns. Now it still has real risks because the protocol still depends on lively and accurate oracles to watch and report the collateral values, and that liquidations execute properly when collateral values fall enough to trigger them. But those risks are much more manageable compared to the risks undercollateralized stablecoins present.
UncleMeat 4y ago
"Cryptocurrencies are trustless, distributed, and uncensorable." "The team behind cryptocurrency X has halted a primary use of the tokens." Hmm...
- EdwardDiego 4y ago
  Has Binance "gone down for maintenance" yet? Typically happens when the market's scary.
  - Tenoke 4y ago
    The market isn't 'scary', this is a small stablecoin, and overall the crypto market is up today[0]. Also exchanges do have issues when the volume is much above the norm but this if anything happens as or more often when there's a lot of buying pressure. It's also much more of an issue with e.g. Coinbase than Binance. Binance are more likely to let you trade as you wish but temporarily disable withdraws while they move funds around. 0. https://www.coingecko.com/ https://www.coingecko.com/
    - logifail 4y ago
      > Binance are more likely to let you trade as you wish but temporarily disable withdraws while they move funds around I was under the impression that providers being able to "temporarily disable withdrawals" [due to lack of liquidity, political pressure, or indeed any other reason] is one of the key things that crypto didn't suffer from?
      - Tenoke 4y ago
        On-chain sure. I am not sure why you'd expect guarantees off-chain. If you let me handle an asset for you instead of handling it yourself you are bound by how I operate, not just how the asset itself operates. Though I am also not sure why you'd think liquidity doesn't matter, that's neither here nor there.
        4y ago
mytailorisrich 4y ago
These so-called 'stablecoins' are bound to end badly, frankly. It's the same story repeating itself again and again, just need to wait long enough for a new generation to come of age and think that past history does not apply to them.
SemanticStrengh 4y ago
for DEI there is no redemption..
icambron 4y ago
> buying up DEI coins and exchanging them for $1 worth of collateral Doesn’t seem like this would be possible? When the peg fails, wouldn’t all the people holding the coin flood the redemption process, immediately draining it of all USD? Or put it this way: those traders buying the coin for 80 cents and then redeeming it for a dollar…who are they buying it from and why wouldn’t they redeem it? They just left 20 cents on the table. I feel like I’m missing something.
- vkou 4y ago
  I'm just guessing, here, but it's possible you're missing the exit strategy where the insiders are calmly walking towards the escape pods.
zzleeper 4y ago
Wouldn't it had made more sense for the "market makers" to buy the coins themselves at half the price instead of waiting for arbitragers to just pocket the extra money?
- deleted 4y ago
  [deleted]

antupis 4y ago

Tether is also brink of collapse https://www.ft.com/content/db9c3f32-cd91-4149-9788-95b2046bea10 https://www.ft.com/content/db9c3f32-cd91-4149-9788-95b2046be...

eli 4y ago
Has been for years but it does seem like an extended bear market will finally do it and unravel most crypto
mcintyre1994 4y ago
Not clear. Tether is back at $0.9988, and the 9% decrease in that headline is market cap not price - it never got anywhere near 9% below peg. I’m very skeptical of Tether’s collateral, but it seems to have withstood this and maintained its peg for now.
- thaway2839 4y ago
  It's consistently 1/10th of a cent below the peg. That's not maintaining its peg. That being said, it has been stable at that price for several days now, but let's see what the next few weeks hold.
  - TheAlchemist 4y ago
    This is due to the redemption fee. Per se, it’s not an alarming sign. There are more than enough red flags with Tether already !
  - phphphphp 4y ago
    I'm as cynical about Tether as any sane person, but it's important to disambiguate between value on an exchange and redeemable value. If USDT is $0.90 on every exchange, but you can still redeem 1 USDT for 1 USD from Tether, then it is maintaining its peg. UST's value on an exchange was the peg by design, because it was algorithmic, but that's not true of non-algorithmic stable coins -- i.e: Tether.
    - 4y ago

deleted 4y ago

[deleted]

marban 4y ago

Can someone ELI5 why we need more than one fiat-collateralized stablecoin?

petesergeant 4y ago
I think people are starting to think we don't even have one
542458 4y ago
The big reasons I could see would be that a) you don’t trust the people behind the first one (or the country they’re based in, etc) b) the underlying technology of the new coin is more appealing (tx/s, smart contracts, fees, etc) That said, this is all Wild West and trusting any of these vendors to actually do what they say seems very risky.
- marban 4y ago
  Seems like I trust neither a nor b.
- charcircuit 4y ago
  For b) you can get around that by creating wrapped versions of a more trusted stablecoin.
  - joosters 4y ago
    'Wrapping' a coin implies trusting some other person to not run away with them.
    - charcircuit 4y ago
      You can easily create a smart contract that can wrap and unwrap tokens. This requires no extra trust.
      - polygamous_bat 4y ago

bzxcvbn 4y ago

If I wanted to own something that I could always redeem for $1, I would buy $1.

whimsicalism 4y ago
Not always an option, depending on where you live.
- tgv 4y ago
  Or if you need to evade taxes and other tyrannical measures. Yes, being sarcastic.
- onlyrealcuzzo 4y ago
  It's always an option if you have a meaningful amount of money.
sonicggg 4y ago
But what if you're trying to avoid tax?
- consp 4y ago
  The coin will compensate you by removing your wealth so you avoid tax by not having any. Anyway: You will lose either by the tax agencies finding out (when you actually try to buy stuff) or this way.
  - bliteben 4y ago
    Bonus if you do both
- a2800276 4y ago
  Cash
PKop 4y ago
USDC

qgin 4y ago

I don't know enough about crypto to understand what it means that the team is working to restore the peg. Unless something is literally 100% collateralized by the thing it is pegged to, what code changes are there in the world that can legitimately maintain that peg under all conditions?

NovemberWhiskey 4y ago
When I read "working to restore the peg" I read either "frantically looking for a bailout" or "frantically looking for a way to turn this into a rug pull".
joosters 4y ago
> what code changes are there in the world that can legitimately maintain that peg None. But I guess it sounds good to pretend to be doing something useful!
jacobsenscott 4y ago
There is exactly one way to peg a currency to the USD. It is to simply declare it is pegged, and have a super power sized military to force people to act like it is. Even then you are constrained by the geography your military controls.
- qgin 4y ago
  Sounds like the dev team has a lot of work to do then
LegitShady 4y ago
The only way to peg it is to always be willing to give someone a $1 for one, which will drive the price towards a $1 assuming you can convince people to buy them. The problem is that this coin won't give you $1 - assuming they're allowing redemption at all, it will give you .80c worth of coinbase's USDC and .20c worth of DEUS tokens. If you believe DEUS is going to crash, that means the value of DEI is 80c maximum through USDC. Coinbase is of course is dire straits as its stock has plummeted from ~$360 (it's all time high) in early november to $130 in early may and is currently sitting at around $70, so while it isn't a coin, the future of USDC is tied to coinbase and the future of USDC is unknown especially if its parent company is floundering and stock is down to ~20% of its high in november and down ~73% YTD. I would describe their situation as "volatile". DEUS had already lost more than 50% of its value between the beginning of April ($1100) and the beginning of May ($420 ha!), and its continuing on its way down ($200 currently). So not sure how they can maintain a peg when 20% of that peg is in 'currency' that is in free fall, and the other 80% is tied to coinbase whose stock is in freefall this year. They never had any currency backing it at all - it was always coinbase's USDC and DEUS which is the 'luna' of DEI's 'terra'.

joosters 4y ago

coinmarketcap.com says there are 7.46 billion DEI coins out there => a 'market cap' of about $4.4B, yet coingecko.com says there are only 89 million coins (implying $52M) - that's a huge difference. Which one is right? FWIW, there doesn't appear to be any 'real world' exchange that handles DEI.

charcircuit 4y ago
>Which one is right? 88,867,859.101631 DEI https://ftmscan.com/token/0xDE12c7959E1a72bbe8a5f7A1dc8f8EeF9Ab011B3 https://ftmscan.com/token/0xDE12c7959E1a72bbe8a5f7A1dc8f8EeF... >there doesn't appear to be any 'real world' exchange that handles DEI. SpookySwap is the largest DEX on Fantom.

dsr_ 4y ago

A stablecoin can't lose a peg, because it is backed 1:1 with a fully audited deposit of the underlying currency. "But what about -" -- then it's not a stablecoin.

kwertyoowiyop 4y ago
These are SchrodingerCoins: they may be stable or they may not, and until you open the box…
- whitesilhouette 4y ago
  he he he
grey-area 4y ago
Unfortunately none of these 'stablecoins' are actually backed 1:1 with a fully audited deposit at all. So when the crypto market crashes, some get exposed as a lie, which causes the crypto market to crash...
- _fat_santa 4y ago
  I noticed that DEI is backed with BTC as one of the funding options. I think it's a bit risky to back a stablecoin with a non-stablecoin that can have wild price movements.
- zionic 4y ago
  DAI is, it is in fact over-collateralized.
  - grey-area 4y ago
    We'll find out. I suspect you're wrong, unless by collateralized you mean they store other cryptocurrencies of questionable value as their collateral. In that case sure they're probably just overflowing with funds, until they actually need to use them during a crash.

MrMan 4y ago

the price was hardcoded into the code, ha ha. now they changed the hardcoded price to .85 or something.

zivkovicp 4y ago

Stablecoins will all collapse eventually, and then take down all but a few of the cryto currencies. To my understanding (I am not a crypto expert, just a casual observer) Stablecoins basically collateralize a certain percentage of the outstanding coin in order to provide the "peg"... so maybe 1:10 coins is backed by USD, Btc, real estate, or whatever... and then the exchange rate is set and as long as everyone plays along, it works. If an actor starts redeeming a significant percentage of coin for collateral, then there is less and less collateral to prop up the coin. Same effect if that collateral loses value. It is also my opinion that most crypto "has value" only because it is relatively liquid and can be "cashed out" to USD via an exchange or stablecoin. When people start to recognize the stablecoin scam, the price of all crypto will collapse because the liquidity and USD exchange will disappear in an instant. edit: same thing happened with the USD when it lost the gold backing (and too much redemption led to the decoupling, not enough collateral). In the crypto world, I would say that BTC is the gold equivalent that provides the collateral and legitimacy, so maybe a temporary panic will provide a good BTC buying opportunity? We will see.

zaphod12 4y ago
So that's just 1 kind of stablecoin. The other is algorithmic - Terra was in that model. There are many excellent descriptions online, but essentially the backing entity buys and sells another coin (Luna in the case of Terra) whose value can fluctuate to maintain the price of their stablecoin. They are kinda genius in theory and so far rather messy in practice.
- zivkovicp 4y ago
  No doubt, there are a lot of brilliant minds at work in this space and I hope it becomes more mainstream. I'm still a bit of a skeptic though when it comes to anything other than Bitcoin and tend to believe that it's all just a liquidity game and if you can maintain the illusion of USD liquidity, you will keep the ball rolling and rake in a lot of money. Ultimately they do it so they can exchange their coin for USD, or maybe buy real estate, etc.
PKop 4y ago

webinvest 4y ago

> Investors should keep an eye on USDT as the largest stablecoin and how its prices move in relation to other major coins to determine the direction of the markets. Has anyone here already done this analysis?

empathy_m 4y ago

Looking forward to seeing what's next for YC-backed Stablegains. (Glad I invested with them instead of buying UST myself as I got out early in the de-peg at 1:1. Thanks to investors for funding that and for the 15% APY while the good times lasted.)

timcavel 4y ago

mtoner23 4y ago

Traders arent taking advantage of the situation. They are doing what they're supposed to to bring back the peg. You are supposed to buy up the stablecoin to restore the peg. The fact that this causes a death spiral is why people keep saying these projects are worthless.

fsociety999 4y ago

I have noticed that people come on here to gloat about things like this due to the pure hatred of crypto flowing through their veins without realizing that they are cheering on regular people suffering ultimately at what will be the expense of big banks and Wall Street and governments. What I mean is when these cryptos have problems or are hacked, regular people are the ones who stand to lose everything in most cases. You can believe that people are dumb for “falling for the scam” in the first place and deserve it, but if you really believe that then I feel sorry for you. It’s pretty obvious and has been for quite some time that the ultimate goal here is for a central bank digital currency (CBDC), and stories like this as well as the UST collapse play right into that hand. I guess what I’m saying is be careful what you wish for. A government/central bank issued digital currency will be far worse for privacy and security than any of these insignificant stablecoins. Imagine the government deciding when and where you are allowed to access your money or what you are allowed to spend it on and what items or stores you are allowed to shop for/in. I feel like it is even possible that Wall Street is BEHIND the collapse of these stablecoins. They couldn’t pay for better press to help convince the public that a CBDC is necessary for the future. I suspect the CBDCs are already ready to go, but their last step is convincing the public they need one. The push for a cashless society has been going on for a number of years now and seems amplified lately.

Nursie 4y ago
What I wish for is that governments hadn't sat on their hands when ordinary people were being scammed into these things in the first place. The entire cryptocurrency ecosystem represents a massive failure to regulate, and a massive victory of technical flim-flam salesmen in bamboozling the governments in the world into being afraid to regulate in case they strangled something valuable, when in fact they were allowing normal folks to get ripped off massively. If "regular people" are losing money, it's because "regular people" have been duped and regulators have been duped. It's sad they're losing money, but it's also entirely predictable. But do you know what? After years of being told I'm just a jealous idiot who doesn't understand cryptocurrency or blockchains by the oh-so-smart 'investors' in this space, I'm going to enjoy a bit of shadenfreude here, whatever you think of that. If the whole space collapses I will celebrate - hopefully fewer regular people will be duped in future.

wallaBBB 4y ago

some new news while we're all waiting for USDT to lose its peg...

jmyeet 4y ago

Once again, the only thing that maintains value in an asset is the collective belief of said value. This applies to currencies and other assets. It doesn't matter what assets you have backing a peg because there's always a trust element. Even if, say, the US dollar was 100% backed by gold, there'd still be a trust element that the government would honor redemptions. Once again, the US dollar has never been 100% backed by gold. It was a peg, which doesn't even require you to hold any gold. And FDR changed the peg, which was a sovereign devaluation. The same thing could've happened with 100% gold reserves. And what gives the US dollar its value is really the long dick of the US government. What we're seeing here once again if Crypto Andys learn exactly why the financial system is the way it is. An algorithmic stablecoin is ridiculous. Collateral helps but it all boils down to trust. Consider this quote: > Deus Finance reacted by halting the redemption process in order to try and stabilize the coin. This is exactly the sort of intervention a central bank performs when managing a currency. So what exactly are we gaining with crypto?

dqpb 4y ago
> It doesn't matter what assets you have backing a peg because there's always a trust element. Presumably if you have enough assets backing it, then if people start mass selling you can just buy back the currency for the price it’s pegged at.

Fargoan 4y ago

I've been into crypto since 2012 and have never heard of this coin. USDX on Kava lost it's peg too but there are no articles about that because it's another small cap coin. Though USDX never was meant to follow the dollar exactly it is down significantly more than normal.

vmception 4y ago
USDX is a casualty of UST implosion and bad coding. People found a way to arbitrage the low value UST for something in the USDX system. Press F to pay respects.

prionassembly 4y ago

Banking is older than trigonometry, or even writing. All of this has happened with clay tablets; all of this will happen again.

tintedfireglass 4y ago
AFAIK banking started in Italy during the Renaissance. Which is quite young imo. Trigonometry is way older than that.
- prionassembly 4y ago
  https://michael-hudson.com/2000/03/how-interest-rates-were-set-2500-bc-1000-ad/ https://michael-hudson.com/2000/03/how-interest-rates-were-s...

turtledove 4y ago

You love to see it. Every one of these is a joy to behold.

kristjansson 4y ago

> Traders are taking advantage of this arbitrage mismatch, buying up DEI coins and exchanging them for $1 worth of collateral, making matters worse Really? Isn't that the mechanism as intended? Why is anyone still selling to them at .64 if there's really an arb?

cycrutchfield 4y ago
Who wants to play musical chairs and be left standing when the music stops?
- kristjansson 4y ago
  No one, but the question is why a ton of arb _buyers_ were pushing the price _down_.

WalterBright 4y ago

Pegging has never worked for fiat currencies, and I don't know why anyone thought this would work for cryptocurrencies. One classic example is when the US dollar was pegged to gold, and then the fiat dollar was inflated until the banking system collapsed, resulting in the Great Depression. Earlier examples are every attempt at bimetalism.

nikolay 4y ago

In the cryptocurrency space, everything is false advertising! Stable coins are neither stable, nor coins!

calltrak 4y ago

“There's a sucker born every minute.” -- P. T. Barnum

bogomipz 4y ago

The post states: >"Deus Finance uses DEUS and DEI tokens for their DeFi protocol, where minting 1 DEI requires $1 of collateral. When redeeming, for instance, one DEI, users would get 80% of the value in USDC and 20% in DEUS if USDC was used as collateral for the creation of DEI in the first place." I've read this same passage 5 times now and I still don't understand it as this sounds very circular. Shouldn't you be able to redeem a stable coin for $1 in whatever currency it is pegged to? Could someone explain how this works?

rsecora 4y ago
It doesnt work. If you invest 1$, you will pay fees and gas for it. If you try to redeem you will pay fees and gas for another two coins. (Even if they are pegged) If you redeem those tho coins you pay fees. Furthermore USDC aren't $s (and are backed by a company that is loosing value) and deus aren't dollars. Only the issuer and exchanges gain via fees and emissions. Now conversion without fees or gas is 0.5 to 1.
- bogomipz 4y ago
  Thanks for the break down. How is this "meant" to be attractive exactly then? What is the value proposition they are intending here? Why would someone ever buy something a stable coin that they could only ever redeem a maximum of 80% of what they paid for it?

zeven7 4y ago

This coin is rank #2858 on Coin Market Cap. This is non-news.

graeme 4y ago
Someone may be practicing for peg breaks and/or gaining capital for the big one (Tether). The more losses and panic, the easier an attack

TedShiller 4y ago

Can we at least not call them stablecoins anymore?

bandyaboot 4y ago

Isn't the point of a "stablecoin" to remain stable against its target? Why bother trying to restore the peg...even if they do, it doesn't change the fact that it's not "stable". You failed--give it up.

NelsonMinar 4y ago

Not to discount the hilarious news but DEI is pretty small beer, a market cap of about $65M before the collapse. https://www.bloomberg.com/news/articles/2022-05-16/another-stablecoin-loses-its-peg-as-algorithm-fails-to-keep-pace https://www.bloomberg.com/news/articles/2022-05-16/another-s... Tether is the big stablecoin, about $76B now (down from $83B). They've consistently lied about how much real capitalization they have backing it. When it collapses it will probably bring most of the cryptocurrency market with them.

Animats 4y ago
Yes, Tether's the big one. Tether broke its peg last week, but recovered. That was a shock. The risk for Tether is that, while people may not be dumping Tether, they're not likely to put new money into it. A slow outflow will eventually drain the partial reserves.

gbrits 4y ago

DAI did not loose peg. This story is completely fabricated. There's a tendency on HN to hate on everything crypto, but come on. Please just look at the data. In fact, along side USDC and BUSD, DAI is (or at least has been) trading at a slight premium the last couple of days.

Animats 4y ago
DEI, not DAI.
- gbrits 4y ago
  mea culpa

deleted 4y ago

[deleted]

Animats 4y ago

Trading has been forcibly slowed down.[1] Coin goes into a screaming dive, volume jumps up as people exit or speculate on a rebound. Normal. Then, volume drops way off within an hour and price stabilizes around US$0.58. Not normal. With the bridges out of DEI offline, exiting must be harder. But that also means the US$0.58 price is not a real market price. [1] https://coinmarketcap.com/currencies/dei/ https://coinmarketcap.com/currencies/dei/

t_mann 4y ago

This part stands out to me: Deus Finance reacted by halting the redemption process What is decentralized about those projects if a central team can turn off a major element of the protocol or is needed to perform open market operations as with UST?