The price of the stablecoin protocol Maker’s governance token MKR has erased all of its gains from this week, after spiking up by close to 90% on Wednesday.
At the time of writing (12:18 UTC), MKR was trading at USD 1,117, down by 27% for the past 24 hours and down by 25% for the past 7 days.
The short-lived gains for MKR came as terraUSD (UST), the Terra (LUNA) network’s algorithmic stablecoin, lost its peg, falling from USD 1 as recently as Sunday, to a low of USD 0.2 on Wednesday.
Meanwhile, Maker’s stablecoin DAI managed to maintain its USD 1 peg throughout the drama.
The strong relative performance of DAI appears to have lured some traders to jump in on MKR, presumably hoping that it would pay off as one of its main competitors gets decimated. From a price of less than USD 1,200 on Tuesday, MKR surged up by more than USD 1,000 to a high of USD 2,300 around 09:00 UTC on Wednesday.
MKR price and volume (daily chart):
The surge in price happened on unusually strong volume, with more than USD 705m worth of MKR traded across exchanges over the past 24 hours at the time of writing. The volume is up from USD 179.5m the day before, still significantly above the USD 50m to 60m that has typically been seen in the past month, per data from CoinGecko.
Like UST, DAI is not backed up by US dollar reserves, but instead by other digital assets. A difference, however, is that while UST has always been undercollateralized, DAI is overcollateralized. As a result, UST is considered to be more vulnerable to ‘bank runs’ than a stablecoin like DAI.
Competition between the two stablecoins has in past been fierce, with Terra founder Do Kwon tweeting earlier this year “by my hand DAI will die.”
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