Following the announcement on Wednesday, June 4th, the price of Dego Finance (Dego) fell free fall amid the community FUD (fear, uncertainty, doubt).
The announcement included USD1 Stablecoin, launched by the Trump Family’s World Liberty Financial.
Dego’s price drops by 60%: What causes the crash?
Dego Price, a native token for Dego Finance, has fallen nearly 60% following the announcement of a project by World Liberty Financial (WLFI) to support USD1, a Stablecoin, as part of the BNB chain’s new liquidity initiative.
“We officially purchase $1 World Liberty Financial as a liquidity reserve and support the liquidity program launched by World Liberty Financial (WLFI) in the BNB chain. This move reflects our commitment to creating a stronger defi ecosystem.
The team framed the move as a strategic step to strengthening the Defi infrastructure. Nevertheless, the market response was quick and cruel.
Dego prices have collapsed, And the relative strength index (RSI), a momentum indicator, was dropped Unsold territory.
This drop suggests fear and confusion among holders. Some community members supported the basis behind the decision, but acknowledged why the move is of concern.
“The team that adds Dego liquidity to USD1 allows users to trade Dego for Stablecoin, improving market access and price stability.
In crypto, adding liquidity usually means providing a pool of assets such as Dego paired with USD1 and Decentralized Exchanges (DEX) to facilitate trading.
This can make it easier to buy and sell degos and stabilize prices without relying solely on other volatile cryptography. However, several factors may have contributed to FUD.
Among them, over half of USD1 liquidity in Pancakeswap Dex comes from three wallets, raising questions about “real demand.” Beincrypto reported that three wallets hold 93% of their market capitalization.
If USD1 itself lacks organic usage and is supported by a small number of large players (probably the market maker or the team behind it), this can generate skepticism among dego investors.
Therefore, investors may be concerned that the liquidity pool of Dego/USD1 is being artificially or manipulated. Such concerns can lead to uncertainty about the true value of the Dego.
The market recognizes that USD1 is not widely adopted or trusted, making pairing with the Dego a dangerous or suspicious move and therefore a FUD.
Against this backdrop, there is concern that Dego may be a scam project, highlighting the growing distrust among certain retail investors.
DegoFinance, which dealt with community fears, issued an official statement on Thursday, June 5th following a rapid selling to calm investors’ nerves.
“We are aware of the recent pricing volatility announced on June 4th, which has sparked concerns across the community. First and foremost, there has been no change in Dego’s fundamentals, talknomics or long-term vision,” explained Dego Finance.
The team believes the price drop is due to short-term market sentiment rather than a fundamental flaw in the project.
“The sale appears to be driven by short-term market responses, and we are actively reviewing both data and external factors on the chain to ensure transparency,” the team explained.
DegoFinance is committed to working closely with its ‘primary partners’ to maintain stability. The project also emphasized that its long-term mission remains the same. It is to build a resilient, distributed incubator that drives innovation in Defi, AI, and Meme Culture.
The company also promised future updates and developments, urging the community to continue to engage as more information becomes available.
On the other hand, it is worth noting that this is not the first time Dego has suffered a steep price crash. In 2021, tokens fell 51% in just three minutes since they were listed on Binance Launchpool. The cause of the decline reportedly remains unknown to this day.
The latest market response reflects the prolonged vulnerability of investor trust, with Dego Token Trady trading at $1.26 at the time of this writing.
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