- TerraUSD’s failure has shattered the hopes of algorithmic stablecoins.
- Co-founder of Tether and Ethereum says the structure of UST is defective.
- The issuer of USDC states that the UST structure is a very high-risk foundation for a stablecoin.
The recent market crash of the crypto industry has devastated the hopes of millions of people around the world. It has shattered the life savings of many investors and majorly affects the UST and LUNA holders. As Terra USD slopes down to nearly zero being a stablecoin, it has thwarted the hopes of stablecoins.
As a result, influential people in the industry have started throwing comments on the structure of algorithmic stablecoins. The failure of TerraUSD has made the long-term viability of algorithmic stablecoins a challenge. Reeves, the co-founder of Tether (USDT), believes the demise of Terra’s stablecoin is expected.
Significantly, many suspected that after the fall of Terra’s stablecoin will lead other stablecoins to crash down but surprisingly it didn’t occur. The big ones like USD Coin (USDC) and Tether (USDT) have been in the space for the long-run and it’s truly accepted worldwide without criticism. However, according to BLOCKv co-founder and popular stablecoin Tether, “probably be the end” of so-called algorithmic stablecoins.
JUST IN: Tether (USDT) co-founder says the $UST crash will probably be the end of "most algorithmic stablecoins."
— Watcher.Guru (@WatcherGuru) June 2, 2022
A Warning Before-Hand
Some experts in the industry have already come up with their foresee analysis that TerraUSD will fall in value. Likewise, the Chairman and CEO of Circle, Jeremy Allaire, the issuer of USDC have stated that the UST structure is a very high-risk foundation for a stablecoin.
An interesting part following Allaire’s condemnation as these stablecoins are the “holy grail” to cryptocurrencies, a popular-figure claims UST is unfit. The co-founder of Ethereum, Vitalik Buterlin also believes that the structure of algorithmic stablecoins is defective. He also added saying:
“While there are many automated stablecoin designs that are fundamentally flawed and doomed to fail, and many more that can survive theoretically but are extremely risky, there are also many stablecoins that are extremely robust in theory and have withstood extreme crypto market conditions in practice.”
