Another stablecoin loses peg as algorithm fails to keep pace

DEUS Finance's DEI token has lost its 1-to-1 peg to the dollar, becoming the latest failure of an algorithmic stablecoin during a period of crypto market stress.

DEI is currently trading at 70 cents, according to data tracker CoinGecko. With a market value of about US$63.5 million, the token is tiny compared with the more than US$18 billion TerraUSD stablecoin that shook crypto markets when it become depegged last week.

Unlike after the TerraUSD break, the drop below the peg by DEI hasn't exasperated concern about a broader crypto market contagion. Bitcoin fell less than 4 per cent on Monday (May 16), while popular DeFi tokens such as Solana and Cardano were down similar amounts.

Put out by Deus Finance, a marketplace for financial services, DEI is different from TerraUSD, or UST, in that it's a fractional reserve stablecoin, backed by coin collateral, consisting of 20 per cent DEUS tokens and 80 per cent of other stablecoins, such as USDC.

Deus's team is working to restore the peg, according to a Tweet.

The depegging comes several months after Deus Finance was hacked, with some coins stolen.

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UST is currently trading at about 6 cents. Last week, even the world's biggest stablecoin, Tether - which is not algorithmic and claims to have full reserves - lost its dollar peg before regaining it. Crypto bellwether Bitcoin is trading at less than US$30,000, down from over its all-time high of almost US$69,000 in November. BLOOMBERG