Source: CoinGeckoSynthetix USD’s “death spiral” risksWhen the sUSD token dropped to $0.91 on April 1, Rob Schmitt, the co-founder of the risk tokenization platform Cork Protocol, explained the potential “death spiral scenario” of the stablecoin. Schmitt said the stablecoin’s design shares similarities with Terra’s TerraUSD (UST) stablecoin, which collapsed in 2022.
However, the executive said there are mechanisms to push it back in line if it goes above or below its peg.“These mechanisms are being transitioned right now, hence the drift,” Warwick added. Cointelegraph approached Warwick for further comment but had not heard back by publication. Related: Ukraine floats 23% tax on some crypto income, exemptions for stablecoinsStablecoin loses dollar peg amid market sell-offApart from sUSD, another stablecoin has also recently strayed from its dollar pegs as the crypto market has seen downturns.
He explained that the dips happened because the primary driver of sUSD buying had been removed.“New mechanisms are being introduced but in this transition there will be some volatility,” Warwick wrote. The Synthetix founder added that since sUSD is a pure crypto collateralized stablecoin, the peg can drift.
or
Share This Story
Article Details
Author / Journalist: Cointelegraph by Ezra Reguerra
The story "Synthetix USD stablecoin loses dollar peg, drops to 5-year low of $0.83" has 531 words across 25 sentences, which will take approximately 3 - 5 minutes for the average person to read.
Which news outlet covered this story?
The story "Synthetix USD stablecoin loses dollar peg, drops to 5-year low of $0.83" was covered 1 weeks ago by Coin Telegraph, a news publisher based in United States.
How trustworthy is 'Coin Telegraph' news outlet?
Coin Telegraph is a fully independent (privately-owned) news outlet established in 2013 that covers mostly crypto news.
The outlet is headquartered in United States and publishes an average of 30 news stories per day.
It's most recent story was published 7 hours ago.
What do people currently think of this news story?
The sentiment for this story is currently Negative, indicating that people regard this as "bad news".
How do I report this news for inaccuracy?
You can report an inaccurate news publication to us via our contact page. Please also include the news #ID number and the URL to this story.
