Fiat-Backed stablecoins are a very different animal to CBDCs, says Bowen Zhou, the founder CEO of Moneta Digital.
Speaking from my own opinion, I would like to tackle a few commonly chattered topics by some of my biggie friends and players in the financial space.
Let’s start by getting rid of the big fat elephant in the room. What a ride it has been for Terra LUNA, UST and the ever-debatable algorithm stablecoins.
Do Kwon sure tested the water with his algorithmic stablecoins. This stuff works in a hot market where everyone buys in on the idea of speculations, just like any other great concepts in a bull market or even in an uptrend market, TVLs, high APYs, yada, yada, yada. However, what we have seen in the past week, has been devastating but 100% expected.
It is like any Ponzi-hyped project doomed to burst the bubble. The value of UST first cliff-dived 60% in value to a low near $0.40. In the following days it became useless as its value became pennies to the dollar. It was delisted from most exchanges that once supported it.
Furthermore, the bleeding did not stop there; Luna has lost a staggering 99.99% of its value near $0.00013.
Depegging
The main reason is that the price of its governance token, LUNA, has plummeted due to a significant market sell-off. UST has been unable to maintain its peg to the LUNA algorithm stability. If the Terra Foundation or VCs do not bail out Terra’s ecosystem, this will be one of the biggest fiascoes in the history of…
