The crypto winter could claim more casualties in the stablecoin camp. TerraUSD (UST) depegging on May 10th triggered sell-offs in the markets and now Tether (USDT) appears to be losing ground. It has slipped against the US dollar.
The algorithmic stablecoin UST, as the name suggests, is algorithmically secured. Terra (LUNA), the ecosystem’s corresponding token, is down over 95% since May 10, while UST continues to languish around the $0.50 mark.
Cointelegraph’s resident experts shared their explanations for UST’s crash in a market report video yesterday. TerraLabs’ plan for the Algo stablecoin continues to roll out, but the stablecoin is struggling.
Data from Cointelegraph Markets Pro confirmed that various stablecoins have shown greater than usual volatility. The world’s largest stablecoin, Tether USDT, traded below $0.99, Gemini GUSD surpassed $1, while USD Coin (USDC) was also higher.
Paolo Ardoino, CTO of Bitfinex and Tether, sheds light on the difference between stablecoins and their algorithmic counterparts:
“If you want to make an algorithmic stablecoin, it needs to be 300% backed by solid crypto assets — not 105% or 110% or even less. That makes no sense.”
For UST to work, Ardoino shared that you would need triple the investment, or over $50 million:
More sauce https://t.co/w51pFcLJey
— Paolo Ardoino (@paoloardoino) May 12, 2022
In previous tweets, Ardoino remind Crypto enthusiasts that “Tether acknowledges USDT redemptions at $1” – while spreading calm in the industry. For crypto veterans like Whale Panda, the distinction between stablecoins is clear; the Tether FUD is “Peak FUD”:
confusing people $USDT and $UST and panic.
People don’t understand the difference between an undercollateralized algorithmic stablecoin and a collateralized stablecoin.
Panic dumping $USDT to the $USDC and just old $USD.
Peak Fud Time.
Warning: This post will attract Tether Truthers
— WhalePanda (@WhalePanda) May 12, 2022
USDT price has recovered from its very brief drop to $0.95 this morning but it has yet to reach dollar parity. In recent developments, Tether has planned to move 1 billion USDT from Tron to Ethereum and Avalanche. This will not change Tether’s overall offering, the company said in a tweet.
Samson Mow, CEO of Jan3 and pioneer of hyperbitcoinization, also rallied the troops behind USDT:
The USDt will not lose its bond. Recognize when players are just trying to create panic.
— Samson Mow (@Excellion) May 12, 2022
Related: Etherwhales get busy as transactions hit highest level since January
Since Castle Island Ventures’ Nic Carter has taken the stablecoin saga lightly and joked about a stablecoin, even he will be in attendance:
might be bad timing… but are we still doing this next week? pic.twitter.com/JyjbpagK8a
— nic carter (@nic__carter) May 11, 2022
USDT has recovered to within 2 basis points of a dollar at the time of writing. Also, an article shared by the Tether team stated that they are “on track to process $2 billion today.” danger averted.
https://cointelegraph.com/news/untethered-here-s-everything-you-need-to-know-about-terrausd-tether-and-other-stablecoins Here is everything you need to know about TerraUSD, Tether and other stablecoins