DeFi

Kava Network’s USDX tumbles to $0.47, the wave of de-peg stablecoins spreads

Kava Network’s decentralized stablecoin USDX has just dropped from the $1 price zone. According to figures from CoinCu, the coin’s market capitalization hovers around $118 million.
USDX is the latest name in the list of de-peg stablecoins

USDX fell to the $0.47 zone on Wednesday and is currently hovering around the $0.75 zone. The reason for this de-peg is still unknown. Unlike algorithmic stablecoins like UST, Kava’s USDX can be minted against a collateralized loan.

USDX price chart. Source: CoinCu

As explained on Twitter by Kava Labs – the team behind this stablecoin, USDX lost its peg because of its direct links to the UST – the stablecoin that has rocked the market recently. UST accounts for the majority of USDX collateralization (alongside other assets like Kava, Cosmos, Wrapped Bitcoin or Ethereum), which is part of the reason for the coin’s recent volatility.

Scott Stuart, co-founder and CEO of Kava Labs said:

Mr. Stuart also added that Kava had isolated the risks that UST can affect the UST system, even though UST de-peg is inherently a big risk for many of the protocols involved.

Besides UST, USDN is a name that has also deviated from the 1 USD zone recently. Before that, USDN also had a de-peg phase after having dramas with the investment fund Alameda.

Even the market-leading “traditional” stablecoin Tether (USDT) on May 12 was de-peg as a wave of panic flooded the market, hitting the coin’s “partially backed” quote. This compares to the “full margin” of two competitors, USDC and BUSD.

Stablecoin Tether breaks its peg and drops to $0.95

However, thanks to adjustments from the Tether company, the USDT price then quickly returned to the 1 USD price zone, showing that the largest stablecoin in the crypto market is not easy to “get FUD.”

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

CoinCu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.

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