Decentralized stablecoin USDB, backed by DAI, has temporarily lost its peg to the U.S. dollar, dropping 6% in value.
USDB, a decentralized stablecoin, has come under heavy pressure as its price in a moment dropped by as much as 6% amid market panic triggered by chaos in Japan.
Developed by Blast, USDB offers a 5% yield sourced from MakerDAO’s on-chain T-Bill protocol. Typically, users can redeem USDB for (DAI) when bridging from Blast to Ethereum. However, market instability caused USDB’s price to plummet to $0.94, though it later bounced back to the $1 mark, according to data from crypto.news. As of press time, Blast has not issued a statement regarding the matter.
In late June, cybersecurity analysts at web3 firm Resonance Security raised concerns over Blast’s dependence on external protocols for generating yield, which brings inherent risks, noting that MakerDAO “has not published a security audit of their smart contracts in three years.”
Japan’s stock market faces worst day since 1987
The USDB depegging occurred as both crypto and traditional markets faced chaos, with Japan’s stock market experiencing its worst day since 1987. On Monday, Aug. 5, the Tokyo Stock Exchange’s Nikkei index plummeted by 12%, marking a 20% decline from its all-time high in July and prompting a brief trading halt.
Following Japan’s downturn, South Korea’s benchmark KOSPI also fell by 8%, recording its worst session since March 2020. Amid the panic, South Korean authorities tried to calm investor fears, with the finance minister pledging to address heightened market volatility with a contingency plan.
The entire crypto market also faced a downturn amid the sell-off. Bitcoin (BTC) briefly fell below the $50,000 mark, while Ethereum (ETH) dropped to $2,264. According to data from Coinglass, the total volume of crypto liquidations in the past 24 hours has exceeded $1 billion.
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