Observers fret that one stablecoin losing its dollar peg could act as a “contagion” that spreads to others, but experts say that so far $MIM and $UST are handling the strain. Blockanalia reports
A scandal has rocked investor faith in a popular stablecoin, and as users rush to exit, the clamor is threatening to throw the asset off its dollar peg.
This, in turn, has thrown Terra’s UST stablecoin into flux In addition to a MIM-UST Curve pool linking the assets, Abracadabra offers a “” product that allows for leveraged yield farming with deposits into UST – a dynamic that means MIM is heavily collateralized with UST. “People in the Curve pools have the choice to withdraw their liquidity from the pool in one coin, and that’s what we’re seeing now – a lot of people withdrawing to coins that aren’t UST or MIM,” he said.withdraw
“UST, because it’s backing is so much MIM it’s essentially pegged to it, so the dip that Alameda just caused a few minutes ago, it means UST comes down with MIM,” said Charlie of the relation. Likewise, users can withdraw MIM or UST and redeem the tokens on Terra or Abracadara, which always treats their value as $1, giving them a bonus on redemption if the assets are unpegged.
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