French company Just Mining has suffered the costs of falling stablecoin terra usd (UST). His boss Owen Simonin is back at this event at BFM Business.
The collapse of stablecoin terra usd (UST) has consequences on the crypto ecosystem, including for companies whose customers are exposed to this stablecoin. The French company Just Mining has particularly suffered costs as explained to BFM Crypto in its vertical lending, the company has been particularly exposed to the tone of 30% in the luna blockchain to generate interest in the protocol, as part of the products its. of lending.
In decentralized finance, there are liquidated pools that allow many stablecoins to be traded, including UST, DAI, etc. When UST collapsed, their holders sold too many of them thus destabilizing the liquidity pool. This resulted in higher than expected exposure at UST, which rose from 30 to 40%.
On the set of BFM Bourse this afternoon, his boss Owen Simonin gave details of what happened. Just Mining has 65,000 clients, and 4,000 of them are positioned in this lending product.
“Once there was the first peg, on May 10, it shifted part of the funds to decentralized finance, and it overexposed us, by more than 40%, even more than 45% at one point. And right away , we took the position.to use the company’s share of equity to return below 40% exposure and freeze it.When we saw that it continued to decline, we launched an extraordinary contingency plan to engage customers to educate them on the situation and take emergency action, ”Owen Simonin said.
In fact, Just Mining injected the company’s own funds a second time to fill the peg shortfall in this part of the contract, up to 1,250 dollars per client, covering 73% of all its clients in the contract. this: about 3,000 clients out of the 4,000 are positioned and “there are only 27% of clients with risk associated with the position we have in the lending product.”
As a reminder, stablecoin terra usd (UST) is a algorithmic stablecoin, which maintains its parity in the dollar with algorithms and cryptocurrency. In terms of stablecoins, when the underlying price rises or falls, the value of the stablecoin must be aligned with the latter. The promise is to permanently maintain parity, for example 1 UST = 1 dollar. This peg in a currency is also called a “peg”. When there is a gap between the value of the underlying and the stablecoin, it is called “de-peg” or “loss of parity”.
The latter also takes the opportunity to concern that this “is not a discretionary management product: we can diversify funds for the client but we cannot make a decision for them.” The company gave its clients the option to stay or leave their position: 27% of subject clients exited in a very short term, the former exiting with a loss of 17% and 8% for those exiting early. night, others decided to go out the next day or stay, Owen Simonin said.
Will Just Mining last? This situation affects only one of the sixty services offered by the company. “Although we have created equity, we are not required to do so according to the contract, but it is part of our moral position. We want to be partners of our customers,” his boss explained.
“We’ve made a portion of the money without asking for any platform product and even the implementation and operation of the structure. Naturally, it’s a cost for many.” Now, for the latter, it’s time for “operationality, we should step back and why not recreate a more stable product”, explains the latter who thinks that the fatal loss of terra usd value will have repercussions in decentralized finance.
Just Mining is not the only company concerned with this situation, all those offering staking or lending of cryptocurrencies can also be called to contact in the coming days.