DEI, a stablecoin used as collateral for third-party instruments, has failed to maintain its dollar peg. The dollar ($) pegged stablecoin is even falling below 60 cents.

Significant decline in stablecoin

The stablecoin is built on the Fantom-based decentralized financial (DeFi) protocol DEUS Finance and has now reached an all-time low. This low is now at $0.52. Logically, the market cap, which was close to $100 million, also dropped to approximately $52 million.

It is striking that the governance token of DEUS Finance (DEUS) has risen to approximately $255, coming from approximately $163.

However, the project seems to be recovering somewhat. Currently, 1 DEI is trading at around $0.66. This follows fears of stablecoins sparked by the UST and LUNA debacle and a decision by Deus Finance developers to pause DEI redemptions. However, the latter will be restored in the next 24 hours, according to the official Telegram channel.

The DEI Mechanism

Users can mint 1 DEI coin by depositing 1 dollar as collateral. This collateral can be in various digital assets such as USD Coin (USDC), Fantom (FTM), DAI, WBTC or DEUS.

DEI, like many other stablecoins, possesses a mechanism to mint and destroy the tokens. Striking DEI will burn a DEUS collateral unless other tokens are used as collateral. On the other hand, when exchanging DEI, DEUS is struck. This automatically balances it.

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