The collapse of the algorithmic stablecoin TeraUSD has raised questions about the future existence of similar crypto assets and Tether co-founder Reeve Collins believes the UST crash could spell the end of most algorithmic stablecoins, If not all. In an interview at the World Economic Forum in Davos, Reeves said that TeraUSD’s collapse was “not a surprise” to him, adding that the algorithmic stablecoin has yet to see its worst. In his view, other algorithmic stablecoins could soon follow UST, eventually ending their kind.
“It is unfortunate that the money… was lost, however, it is no surprise. It is an algorithmic-backed, stablecoin. So it is just a bunch of smart people trying to figure it out. That’s how to put something in dollars,” said Collins. Speaking to CNBC.
“… a lot of people pulled out their money over the past few months because they realized it wasn’t sustainable. So that crash kind of had a cascade effect. And that would probably be the end of most egos. stable coins“He added further.
Stablecoins are a type of cryptocurrency usually tied to real-world assets. TeraUSD or UST, an algorithmic stablecoin, should have been pegged to the US dollar.
While stablecoins prefer tie rope And USD coin To maintain its dollar peg backed by real-world assets such as fiat currencies and government bonds, the UST was governed by an algorithm.
Meanwhile, Jeremy Allaire, CEO of Circle – one of the companies that issued the USDC stablecoin, said that he thinks people will continue to work on algorithmic stablecoins.
“I have compared algorithmic stable coins to the ‘Fountain of Youth’ or ‘Holy Grail’. Others have referred to this as financial alchemy. And so there will be financial alchemists who work on magic potions to make these things.” Let’s do more to find … the Holy Grail of a stable value, algorithmic digital currency. So I fully expect to continue exploring that,” Allaire told CNBC.