Untethered: Here’s everything you need to know about TerraUSD, Tether and other stablecoins
More casualties could be caused by the crypto winter among stablecoin holders. Market sell-offs were triggered by Tuesday’s de-pegging TerraUSD (UST), and Tether (USDT), which has fallen against the U.S. dollar, appears to be losing its footing.
As the name suggests, the algorithmic stablecoin UST has been algorithmically backed. LUNA, which is the ecosystem’s corresponding token has dropped over 95% since Tuesday while UST remains around $0.50.
Yesterday’s special edition of “The Market Report”, Cointelegraph’s resident experts gave their explanations as to why UST crashed. UST continues to struggle despite Terraform Labs’ plan for an algorithmic stablecoin.
Cointelegraph Markets Pro data confirmed that stablecoins show greater volatility than normal: USDT, which is the world’s most valuable stablecoin, traded below $0.99, Gemini Dollars (GUSD) exceeded $1 and USD Coins (USDC) also appreciated.
In a conversation with Scott Melker, Paolo Ardoino (chief technology officer at Bitfinex) and Tether shed light on the differences between asset-backed stablecoins as well as their algorithmic counterparts.
“If you are going to create an algorithmic stablecoin (for example), it must be 300% backed solid assets, solid crypto assets — and not 105% or 110% or even less. […] This is absurd.
Ardoino stated that UST would require a 3x investment or more than $50 billion to be successful.
More sauce https://t.co/w51pFcLJey
— Paolo Ardoino (@paoloardoino) May 12, 2022
As he encouraged calm within the crypto industry, Ardoino tweeted earlier that Tether would honor USDt redemptions at $1$. Whale Panda, a crypto veteran, said that the Tether FUD (fear uncertainty and doubt) is the best stablecoin.
People confuse $USDT with $UST and panicking. People don’t know the difference between an algorithmic stablecoin under collaterized and a backed one. Panic buying $USDT for $USDC or plain old $USD. Peak fud time. Warning: This post may attract “Tether truthers”.
WhalePanda (@WhalePanda), May 12, 2022
Although the USDT price has rebounded from its brief dip to $0.95 in the morning, it has not yet reached dollar parity. Recent developments have shown that Tether intends to transfer 1 billion USDT from Tron into Ethereum and Avalanche. The company stated in a tweet that this will not affect the total supply of Tether.
Tether dropped to $0.95 at 8 :15 UTC Source: CoinMarketCap
Samson Mow, the CEO of Jan3 who was also a pioneer in hyperbitcoinization, rallied the troops behind USDT.
USDt won’t lose its peg. Be aware of when players are trying to incite panic.
— Samson Mow (@Excellion), May 12, 2022
Related: Transactions hit their highest point since January, as Ether whales are busy
Nic Carter, Castle Island Ventures, made fun of the stablecoin saga and joked about a stablecoin conference he was going to attend.
It might seem like a bad time… but can we keep going next week? pic.twitter.com/JyjbpagK8a
— May 11, 2022, nic carter (@nic__carter).
At the time of writing, USDT was within two basis points of one dollar. Tether team shared an article explaining that they are “on track to process $2 Billion today.” Danger avoided.
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