Fantom Price Spikes on Speculation of Andre Cronje’s Return, But TVL Drops
According to CoinMarketCap data, Fantom (FTM) is up 16.78% at $0.42, ranking among the top gainers over the last 24 hours. Fantom rebounded upon reaching oversold levels of $0.22 on May 12. After a brief consolidation, Fantom started a positive climb, reaching intraday highs of $0.4512 on May 22, after three consecutive days in the green. Aside from favorable technicals, the recent climb was also likely sparked by speculation that a former developer and Yearn Finance creator, Andre Cronje, was returning to Fantom.
Andre Cronje released the Fantom fUSD optimization proposal. AC address has recently added nearly 100 million FTM, which is considered to be returning to Fantom. FUSD suffered a severe de-pegging, and Fantom TVL also dropped sharply by about 69%. https://t.co/dpBe7y9AQ4
— Wu Blockchain (@WuBlockchain) May 22, 2022
Cronje and lead developer Anton Nell unexpectedly quit Fantom in early March. The move triggered a significant sell-off of FTM, which the token has failed to recover from.
Likewise, the total value locked in the Fantom ecosystem was badly hit in March after the developers’ exit. Fantom’s TVL remains at around $1.3 billion at press time, down from highs of $8.19 billion reached in March.
As reported by Chinese journalist Collin Wu, “Andre Cronje released the Fantom fUSD optimization proposal. AC address has recently added nearly 100 million FTM, which is considered to be returning to Fantom. FUSD suffered a severe de-pegging, and Fantom TVL also dropped sharply by about 69%.”
Ads
Fantom’s stablecoin, FUSD, has been de-pegged and seems to be wallowing in its losses. At the time of publication, Fantom USD (FUSD) is currently trading at $0.6804, well below its $1 peg, according to data from CoinMarketCap. Reports indicate that FUSD might have tumbled after Fantom introduced changes to its stablecoin mechanism.
Another stablecoin in the Fantom ecosystem, Deus Finance’s stablecoin, Dei (DEI), lost its peg with the U.S. dollar, tumbling as low as $0.55. The drop came amid several algorithmic stablecoins losing their pegs in recent weeks.
Fantom Foundation speaks on FUSD de-peg
In the wake of the UST collapse, which brought Terra’s ecosystem to its knees, the Fantom Foundation has come out to allay investor fears concerning FUSD de-pegging.
On May 18, it wrote:
fUSD is not UST. fUSD is an over-collateralized stablecoin (similar to DAI) backed by staked FTM. UST had nothing backing it. Users create fUSD by borrowing against their staked FTM. If the value of the FTM goes below the minimum collateral ratio, then the FTM is progressively auctioned off to users who bid using fUSD (to keep peg). UST had no auctioning process. An in-depth blog post detailing how fUSD functions will be released over the coming weeks.
