DEI becomes latest algorithmic stablecoin to lose $1 peg, falling under 70 cents

DEI, an algorithmic cross-chain fractional-reserve stablecoin, has lost its peg to the U.S. dollar over the past 24 hours as selling pressure takes hold. The stablecoin, which operates within decentralized finance (DeFi") project Deus, has nosedived to as low as 52 cents early Monday, recently changing hands at $0.68, according to data from CoinMarketCap. To ensure its $1 peg, DEI's collateral ratio is constantly monitored and adjusted via arbitrage bots. The composition of DEI consists of 10% DEUS tokens and 90% in other stablecoins. By contrast, stablecoins like Tether (USDT-USD) or USD Coin (USDC-USD) are backed by dollar-denominated assets/reserves. "Traders likely exchanged DEI tokens for USDC amid a small amount of liquidity on decentralized exchanges, which caused price fluctuations," CoinDesk explained. "Lower prices led to more traders selling DEI for other tokens, presumably to protect against risks, which further contributed to a price drop." DEI's swoon comes shortly after TerraUSD