Blast-incubated stablecoin USDB briefly loses peg amid market turmoil

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As a seasoned researcher with a knack for navigating the complexities of the crypto market, this recent turn of events leaves me both intrigued and concerned. The temporary depeg of USDB, a decentralized stablecoin backed by DAI, is an interesting phenomenon that sheds light on the inherent risks associated with such ventures.

A decentralized currency called USDB, which is linked to DAI, has momentarily deviated from its parity with the American dollar, experiencing a decrease of approximately 6% in its value.

In the midst of turmoil in Japan causing market anxiety, the value of USDB, a type of stablecoin operated without a central authority, experienced a sudden decrease of up to 6%.

USDB, created by Blast, provides a 5% return, which is generated through MakerDAO’s on-chain T-Bill protocol. Normally, users can swap USDB for DAI when moving between Blast and Ethereum. However, due to market volatility, the value of USDB dropped to $0.94, but it subsequently recovered to $1, as reported by crypto.news. At the moment, Blast has not made any comments about this situation.

At the end of June, experts specializing in cybersecurity at the web3 company Resonance Security voiced worries about Blast’s reliance on external protocols for earning returns, as this setup carries inherent risks. They pointed out that MakerDAO has not released a security evaluation of their smart contracts for three years.

Japan’s stock market faces worst day since 1987

On August 5th, there was a depegging of USDB, coinciding with turmoil in both the cryptocurrency and traditional markets. This chaos was particularly evident in Japan’s stock market, which suffered significantly on this day, marking its worst performance since 1987. Specifically, the Nikkei index plunged by 12% on the Tokyo Stock Exchange, representing a drop of 20% from its peak in July and leading to a temporary halt in trading.

After Japan experienced an economic dip, South Korea’s KOSPI index dropped by 8% – marking its most significant decline since March 2020. As uncertainty prevailed, South Korean officials attempted to reassure investors, promising action to manage increased market turbulence using a pre-prepared strategy.

In the recent market sell-off, even the entire cryptocurrency sector experienced a decline. Notably, Bitcoin (BTC) dipped below $50,000 momentarily, and Ethereum (ETH) dropped to around $2,264. As per Coinglass data, the total value of crypto liquidations over the past 24 hours surpassed the billion-dollar mark.

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2024-08-05 10:26