Scream DeFi project suffers losses after FUSD depegging and DEI’s dollar peg

Scream on Fantom suffers losses after FUSD depegging and DEI’s dollar peg.

The Fantom-based lending service Scream was hit by losses stemming from the depegging of FUSD and DEI’s dollar peg. Its users used algorithmic stablecoins as collateral for loans in USDT, FRAX, DAI, MIM and USDC.

We are currently working on a solution to the fUSD bad debt issue. The Fantom Foundation has agreed to run a liquidation bot that will liquidate any underwater positions that use fUSD as collateral.

— 😱 (@Screamdotsh) May 16, 2022

According to DeFi Llama, TVL over the 24-hour period fell by 46.6% — to $75.88 million.

Representatives said the project would rely on Chainlink oracles going forward.

Creditors who deposited USDT, FRAX, DAI, MIM and USDC are currently experiencing difficulties reclaiming them. The absence of a cap on FUSD deposits has compounded the situation.

According to the project’s dashboard, FUSD is valued at $0.99, DEI at $1. At the time of writing, the market price of the first stablecoin stood at $0.83 (its low was $0.79), and the second at $0.66 ($0,51), according to CoinGecko.

In coordination with the Fantom Foundation, the project is developing a solution that would liquidate all undercollateralized loans in FUSD. The team aims to fix the asset’s value at $0.81.

In the next three to four weeks, the Fantom Foundation will audit the liquidation mechanism, which is intended to restore FUSD’s peg to $1.

The DEI loan situation has been resolved, the Scream team said.

On May 15, the Deus Finance DAO, associated with the stablecoin, proposed selling the community treasury bonds for USDC, DAI and FRAX to restore the peg to $1.

As reported in March, a hacker attacked the Deus Finance DAO using flash loans. The attacker earned around $3 million; the protocol, reportedly, suffered more.

In April, the project was again attacked along a similar vector. The hacker drained assets valued at roughly $13.4 million from the smart contracts.

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