The crypto winter could cause more casualties in the stablecoin camp. TerraUSD (UST) unpegged on May 10 triggering a market sell-offnow tether (USDT) seems to be losing its footing. It fell against the dollar.
As the name suggests, the algorithmic stablecoin UST is algorithmically backed. Terra (LUNA), the token corresponding to the ecosystem, down more than 95% UST has continued to hover around $0.50 since May 10.
Cointelegraph’s resident experts share their explanations for why the UST crashed Yesterday’s market report video. TerraLabs Plan Algorithmic stablecoins continue to roll out But stablecoins are struggling.
data from Cointelegraph Market Pro Confirmation that various stablecoins are more volatile than usual. The world’s largest stablecoin Tether USDT fell below $0.99, Gemini GUSD exceeded $1, while USD Coin (USD/USD) is also appreciated.
Paolo Ardoino, CTO of Bitfinex and Tether, clarified the difference between stablecoins and their algorithmic counterparts:
“If you want to be an algorithmic stablecoin, it has to be 300% backed by solid crypto assets — not 105% or 110% or even less. It doesn’t make sense.”
For UST to work, Ardoino says you need 3x the investment, or more than $50 million:
more sauces https://t.co/w51pFcLJey
– Paul Ardoino (@paoloardoino) May 12, 2022
In an earlier tweet, Ardoino remind Crypto enthusiast says “Tether cashes in on $1 USDT redemption” – as he spreads calm in the industry. For crypto veterans like Whale Panda, the difference between stablecoins is clear; Tether FUD is “peak FUD”:
confusing $USDT and $UST and panic.
People don’t understand the difference between undercollateralized algorithmic stablecoins and backed stablecoins.
panic dumping $USDT for dollar dollar and plain old Dollar.
Warning: This article will attract “Tether truth people”
— Whale Panda (@WhalePanda) May 12, 2022
The price of USDT has recovered from a very brief drop this morning to $0.95, but has yet to reach dollar parity.In recent developments, Tether plans to Transfer $1 Billion from Tron to Ethereum and Avalanche. The company said in a statement that this will not change the total supply of Tether tweet.
Jan3 CEO Samson Mow and Hyper-Bitcoinization Pioneers Also assembled the troops behind USDT:
USDt will not lose the peg. Know when the player is just trying to cause a panic.
— Samson Mo (@Excellion) May 12, 2022
As Nic Carter of Castle Island Ventures downplayed the stablecoin saga, he joked about stablecoins even as he prepares to participate:
Might be a bad time…but are we still doing this next week? pic.twitter.com/JyjbpagK8a
— Nick Carter (@nic__carter) May 11, 2022
At the time of writing, USDT has recovered to within 2 basis points of $1.another one article The explanation shared by the Tether team states that they are “on track to process $2 billion today.” Danger is avoided.