Iron Bank Euro (IBEUR) Faces Crisis as Value Drops 60%
The low-cap alternative stablecoin, Iron Bank Euro (IBEUR), is in a crisis as its value plummeted by 60% on Monday. With a $3.7 million issuance, IBEUR dropped from $0.97 to as low as $0.39 due to disruptions in its main trading pool. This caused an imbalance in the asset’s markets.
Although IBEUR briefly surged back up to $0.82, it soon entered into a downtrend again. As of writing, IBEUR is trading at $0.70 or €0.64.
Uncertainty Surrounds IBEUR’s Ability to Recover
Despite a partial recovery, there are doubts about whether IBEUR can quickly regain its previous price level. Sources close to the project revealed that IBEUR is not actively maintaining its peg and lacks the necessary treasury liquidity to stabilize the asset.
The Keep3r Network Telegram chat administrator, Funk, explained potential paths to repegging IBEUR, including trading liquid assets for IBEUR at a discount and using the acquired IBEUR to pay down outstanding borrows with Iron Bank.
Depeg Triggered by Single Trader
A single trader withdrawing almost $900,000 in USDC liquidity from the Curve pool that supports IBEUR trading triggered the depeg incident. This withdrawal caused an imbalance in the pool as it lacked sufficient USDC liquidity.
Funk suggested waiting for the curve pool to readjust and halting the credit borrowing contract with 2.5 million borrowed IBEUR for farming single-sided activities on the pools.
Hot Take: Iron Bank Euro Struggles to Repeg After Major Value Drop
Iron Bank Euro (IBEUR) is facing a crisis as its value dropped by 60%, leaving it struggling to repeg to its intended value. The stablecoin experienced disruptions in its trading pool, resulting in an imbalance and a significant decrease in price.
Despite a brief recovery, uncertainties surround IBEUR’s ability to regain stability. The lack of peg maintenance and treasury liquidity further complicates the situation. Potential solutions involve trading liquid assets for IBEUR at a discount and utilizing acquired IBEUR to pay down outstanding borrows.
The depeg incident was triggered by a single trader’s withdrawal of USDC liquidity, causing an imbalance in the pool. Waiting for the pool to readjust and halting credit borrowing contracts are suggested measures to address the issue.
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