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Yala's stablecoin YU plummeted to $0.44 on November 17, yet another case of decoupling.
To be honest, this wave is mainly due to the operation issues of the project party. YU itself has designed an arbitrage mechanism to maintain price stability—when it falls below 1 USD, smart money can play it this way: first buy 1 YU from a decentralized exchange for 0.44 USDC, then immediately go to the official website to exchange it back for 1 USDC at a 1:1 ratio. This buy and sell directly profits from the price difference, and theoretically, this influx of arbitrage will pull the price back to the peg.
But the reality is that the mechanism has failed. It may be due to insufficient reserves from the project party or issues with the exchange channels, which prevent arbitrageurs from smoothly completing their closed-loop operations. The most feared situation for a stablecoin to lose its peg is this—no matter how ingenious the design is, if the execution fails, it will still go wrong.