Dego Finance (Dego) Price took a free fall in the middle of the Fud community (fear, uncertainty and doubt) after an announcement on Wednesday June 4.
The announcement involved the stablecoin USD1, launched by the Trump family of the Liberty Financial family.
DEGO’s price drops by 60%: what caused the accident?
The DEGO Prize, the DEGO’s native token of finance, fell by almost 60% following the announcement of the project that he would support USD1, a stablecoin by World Liberty Financial (WLFI), as part of a new liquidity initiative on the BNB channel.
“We are officially buying $ USD World Liberty Financial as a liquidity reserve and supporting the liquidity program launched by World Liberty Financial (WLFI) on the BNB channel. This decision reflects our commitment to build a stronger challenge ecosystem – and by exploring deeper collaborations with USD1 when we assemble the decentralized Lego of web3, “read the announcement.
The team designed this decision as a strategic step to strengthen DEFI infrastructure. Notwithstanding, the market reaction was rapid and brutal.
Dego’s price has collapsed, and the relative resistance index (RSI), a momentum indicator, fell to territory occurring.
This drop suggests fear and confusion among holders. Some members of the community supported the justification for the decision, but recognized why this decision was worrying.
“The team adding DEGO liquidity on USD1 allows users to negotiate DEGO with stablecoin, improving market access and price stability … By chance, this liquidity creates FUD,” noted a user.
In crypto, the addition of liquidity generally means providing a pool of assets, such as the DEGO associated with USD1 with a decentralized exchange (DEX) to facilitate trading.
This should allow users to buy and sell the DEGO without more easily relying on other volatile cryptos, potentially stabilize its price. However, several factors have probably contributed to the Fud.
Among them, there are only half of the liquidity of the USD1 on Pancakeswap Dex comes from three portfolios, which raises questions about “real demand”. Beincryptto said three portfolios hold 93% of its market capitalization.
If USD1 itself lacks organic use and is supported by some major players (probably market manufacturers or the team behind), this could create skepticism among the investors of the Cari.
Consequently, investors may fear that the liquidity pool for DEGO / USD1 is artificial or handled. Such concerns could lead to uncertainty about the true value of DEGO.
The market perceives that 1 USD is not widely adopted or reliable, making it a defense with a risky or questionable decision, hence the Fud.
Dego Finance assures the community in the middle of panic
In this context, it is concern that DEGO can be a scam project, highlighting the growing mistrust of certain retail investors.
Addressing the fears of the community, Dego Finance published an official declaration on Thursday, June 5, following a net sale to calm the nerves of investors.
“We are aware of the recent price volatility following the announcement on June 4, which naturally aroused concerns in the community. First and foremost, we want to emphasize: there was no change in the fundamentals of DEGO, the Tokenomics or the long -term vision, “explained DEGO Finance.
The team awarded the drop in prices to the feeling of the short-term market rather than any underlying flaw of the project.
“The sale seems to be motivated by short -term market reactions, and we actively examine the data on the chain and the external factors to ensure transparency,” said the team.
Dego Finance is committed to working closely with “key partners and exchanges to maintain stability”. The project also stressed that its long -term mission remains intact: building a resilient and decentralized incubator stimulating innovation in the DFI culture, AI and memes.
The company has also promised updates and future developments, urging the community to remain engaged as more and more information becomes available.
Meanwhile, it should be noted that this is not the first time that the DEGO has undergone a high price accident. In 2021, the token dropped 51% in just three minutes after being listed on Binance Launchpool. It seems that the cause of this decline is not clear to date.
The last reaction of the market reflects a persistent fragility in the confidence of investors, with DEGO merchant tokens for $ 1.26 at the time of writing this article.
The post Dego Finance is blocking 60% while the FUD Sparks of the USD1 Liquidity Initiative Fud appeared first on Beincrypto.
