Fantom's Scream Fighting For Survival

The failure of Terra Luna/UST has led to some believing governments so intervene and protect investors. It appears another protocol is facing the same fate as Terra in similar fashion.

Stable Coin Not So Stable?

Scream's platform that was accepting stable coins fUSD and DEI 1 of each for $1 was expected to be a dollar peg. However with the FUD surrounding stable coins both fUSD and DEI lost peg. Worse off difference from peg did not have Scream adjust its pricing leading to a form of arbitrage for crypto traders. This lead to a massive siphone of funds in Scream as traders purchased fUSD and DEI outside of Scream and deposited it to trade for other stable coins that held close to peg such as USDT, FRAX, DAI, MIM and USDC.

Scream Lost It All?

Investors who provided stable coin liquidity into Scream can no withdraw their assets. Instead they have nothing to withdraw as the coins were siphoned out. Scream is trying to proactively setup a system to no longer have such a siphoned event occur again.

In order to salvage what they have left their priority right now is to make fUSD close to $0.81 by reducing any bad debt that is associated with fUSD. Meanwhile over on Deus Finance the DAO is in the process of voting for a bond sale to help boost DEI back to $1. In all honesty this all sounds like a spiral down feedback loop similar to the fate of Terra's Luna/UST. Where basically stable coins had lost all its faith and everyone that held it would sell for massive losses only to push down the value of the entire platform.

Conclusions

A quick glance at FTM chain the total TVL has dramatically dropped in the past few months. In fact it is as low as it was first tracked on DefiLlama. This is not good. In addition Scream itself TVL is back to its November 2021 lows.

From a staggering +$1 billion down to a meager $66 million there is considerable amount of FUD within the Fantom chain. Hopefully Fantom's plans to stabilize the stable coins fUSD and DEI will help lead make to more investments. Yet until then cryptocurrency investors are facing a lot of head wind.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!

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