Over the past few days, Terra’s stablecoin UST has depegged from the $1 dollar mark, in a series of almost impossible events. The now failed UST coin had many backers, many believers. One of these was Kava Labs, developers of Kava network’s stablecoin USDX.
On Wednesday, following UST’s collapse, the USDX followed suit, crashing to depths of $0.47. 24 hours later, the stablecoin had made some recovery to $0.89 before swinging low again to $0.56.
While Terra USD’s implosion was, although almost impossible, but easier to understand, USDX’s dip was not. At least, not at first. Terra USD is a stablecoin backed by a sophisticated algorithm. USDX, on other hand, is collateralized.
Founder Claims Coin Will Repeg
According to a thread of posts by Scott Stuart, UST tokens were a portion of USDX’s armor of collaterals. The fall of the Terra-linked stablecoin inevitably impacted USDX’s price. While Kava’s stablecoin trades yet well below $1 at present, Stuart is confident it will repeg soon.
Kava is confident of the solvency and liquidity of the auction system. User funds are safe,” assured Stuart when the decline first began.
The CEO insists Kava’s stable token will repeg as soon as UST is finally out of its system.
In addition, the Kava community has put up majority votes to begin the process of removing UST from Kava Mint. It is only a matter of time, according to the executive, before USDX finds the $1 mark again.
Almost in an ironic fashion, Terra’s founder Do Kwon similarly promised UST’s restoration shortly after it depegged. However, for Stuart, Kava USDX has made impressive recovery since the CEO’s statements.
At writing, Kava’s USDX trades at $0.72, up 6.3% in the past 24 hours.