DEI stablecoin from Deus Finance DAO loses dollar peg

In the evening of May 15, the Deus Finance DAO’s algorithmic stablecoin DEI lost its peg to the U.S. dollar.

#PeckShieldAlert Stablecoin $DEI tanks to $0.77. https://t.co/mzfVnN06Wi pic.twitter.com/BaqmDF16KM

— PeckShieldAlert (@PeckShieldAlert) May 16, 2022

The price of the “stablecoin” reached $0.51. At the time of writing, the asset trades around $0.68, with a market capitalization of $62 million (CoinGecko).

In the last 24 hours, the DEUS token, used to mint the stablecoin, fell roughly 34% to around $190.

The drop below $1 for DEI coincided with the publication of a proposal to launch a debt-token program with a fixed interest rate from DEUS Treasury:

“The stablecoin market was shaken by the UST collapse. We believe that a robust $1 peg and full collateralization are the answer to the problem of short-term stability.”

The initiative’s stated aim is to implement support for DEI with a 1:1 asset basket. According to the site, the algorithmic stablecoin is “partially collateralised”.

“The history keeps repeating itself. Now another stablecoin has depegged, just like UST. Perhaps we will finally stop building models that simply do not work,” — wrote one user.

History still repeating itself. Now another stablecoin $DEI has depegged. Just like #UST. Can we please stop building models like this that simply do not work? https://t.co/DqMdzkciIO

— Cryptik (@Cryptik19) May 16, 2022

In response to a tweet where investor going by the handle BigBenStats expressed hope for a quick recovery in DEI’s price and mentioned 80% reserve backing.

Earlier, in the wake of the UST incident, Ethereum co-founder Vitalik Buterin stated that the term “algostablecoin” had become propaganda, serving to “legitimise uncollateralized stablecoins”.

Agree hard on this, with the one quibble that \”algostable\” has become a propaganda term serving to legitimize uncollateralized stables by putting them in the same bucket as collateralized stables like DAI/RAI, and we need to really emphasize that the two are very different.

— vitalik.eth (@VitalikButerin) May 14, 2022

He urged not to compare such assets with fully backed, \”stablecoins\” like DAI.

Earlier, in March, a hacker attacked Deus Finance DAO with instant loans. The loot amounted to about $3 million, and the protocol presumably lost more.

In April, the project was attacked again via a similar vector. The hacker withdrew assets valued at approximately $13.4 million from the smart contracts.