Conversation in The crypto world is centered around Stablecoin this week as their advertised stability is questioned.
TerraUSD (UST), one of the largest stablecoins, fell 70% to 0.2998 after falling from the $ 1 value on Monday when it was not expected to deviate from the dollar-equivalent value. It became a dollar. Its founder, De Kwon, Plan to save that stablecoinHowever, concerns from community members continue.
in the meantime, US Treasury Secretary Janet Yellen In an annual testimony in front of the Senate Banking Commission on Tuesday, UST pushed for more stablecoin regulation while struggling to maintain pegs.
“This UST situation could give governments like the United States an excuse to crack down on Stablecoin even harder,” said George Harrap, co-founder of Solana-focused portfolio dashboard Step Finance, on TechCrunch. Told to. “I’ve seen this before, but Stablecoin is in the spotlight of regulatory agencies and could increase.”
A big question arises in the crypto market, overwhelmed by bearish sentiment: what does this all mean for the future of Stablecoin?
Some industry participants are not completely concerned. “I don’t think this UST situation will affect Stablecoin as a basic proposal,” Jon Wood, a contributor to Harvest Finance, a decentralized finance (DeFi) yield protocol, told TechCrunch. “Stablecoin is a core part of the crypto ecosystem and it is impossible to run DeFi without Stablecoin. The big ones have been around for a long time to be widely used and trusted. “
“The recent breakdown of UST was a big collapse, but it wasn’t the first or the only.” Evan Kuo
Stablecoin, by its literal definition, means stable at a 1: 1 ratio of holding foreign currencies such as the US dollar. However, not all stablecoins are built on the same foundation and may be backed by different reserves. For example, the two largest stablecoins by market capitalization, Tether (USDT) and USDC (USDC), are backed by flat-equivalent reserves issued by central enterprises.
On the other hand, UST is an algorithm stablecoin mainly supported by its sister cryptocurrency, LUNA, but it is also supported by Bitcoin.Former founder Do Kwon Told TechCrunch The plan was implemented over time to support it in other cryptocurrencies. It’s unclear if the roadmap is still in place as UST is trying to recover from the collapse.
A spokesperson for Kwon declined to comment on Wednesday, saying that Terraform Labs “is currently paused at the media op because it’s a little bowed.”
“Sure, there was a tooth growth problem. Tether has the problem of questioning the collateral ratio, but it’s still very widely used,” Wood said. “USDC has been criticized for being centralized. Maker’s DAI over-secured securities have been considered too” niche “, but have been working on that peg for years. All of this doesn’t go anywhere. “