– Kava Network’s native decentralized stablecoin USDX has lost its parity with the US dollar.
– This stablecoin has a market cap of more than $115 million, according to CoinGecko.
– USDX dipped to almost 0.55 on Wednesday, and is currently changing hands at $0.65 well below its supposed dollar peg.
– Kava Labs, the development team behind the stablecoin, said that USDX lost the peg because of its exposure to terraUSD (UST) an algorithmic stablecoin that recently collapsed.
– UST accounted for some of the collateral backing USDX, along other assets including kava, cosmos, wrapped bitcoin and ether.
– As UST plummeted to $0.10, losing more than 90% of its value in a week, it caused collateral liquidations that dragged USDX along.
– The liquidations probably contributed to USDX dislocating from the one-dollar peg, according to Scott Stuart, co-founder and CEO of Kava Labs.
– Stuart claims USDX will return to the peg because it is not an algorithmic token like UST.