How do kava team recover the peg?

Question

Kava Official

Higer

How do kava team recover the peg?

#blockchain #cryptocurrency #english #kava

0

14.05.2022

5 ответов

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Who-is-Who

Mike
So USDX in Kava is currently depegged. This is due...

this damage wont repair with removing ust those mint usdx with ust surely swaped to busd and ran away from platform and liquiding them wont recover the damage then platform need do some alternative for returning to peg again

0

14.05.2022

Higer Автор вопроса

Who-is-Who
this damage wont repair with removing ust those mi...

agree

0

14.05.2022

Ritesh S.

Who-is-Who
this damage wont repair with removing ust those mi...

Might be

0

14.05.2022

Rakunso

Mike
So USDX in Kava is currently depegged. This is due...

Good job you should write more Kava content👍👏

0

14.05.2022

Mike · Accepted Answer

So USDX in Kava is currently depegged. This is due to people minting USDX with UST, which like BUSD, is fixed to $1 within the platform. For example, if I have 1 UST worth $0.50 I can mint $1 worth of USDX. This promptly depegged it as the demand for USDX increased substantially as people sought to exploit the protocol for profit to mint USDX for higher than UST and sell it. A vote to remove UST in Kava promptly occurred, which reached quorum pretty much instantly as it was a threat to the network and is due to pass in less than a week. USDX is not UST. It is not algorithmically backed like UST was, there will be no 'death spiral'. There is also a hardcoded limit as to how much UST can be present in the network at any given time. The only way to raise this limit is through governance vote. Once UST is voted off, through natural arbitrage people will seek to buy and sell USDX looking for profit until it eventually regains its peg over time. Looking back in time when USDX was in it's infancy, it took about 2 weeks to go to $1 previously from 70c. I'm not saying it'll be quicker or slower, but that's just historical data. There's no reason I can think of why it wouldn't return to peg naturally once UST is voted off or for Kava to behave any differently than what it's been doing for the past 2 years.

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How do kava team recover the peg?

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