In the aftermath of last week’s historic collapse of Terra’s stablecoin, UST, and native token, LUNA, crypto leaders have emerged to offer their perspectives.
And they’re not holding back.
Vitalik Buterin, creator of Ethereum, critiqued the entire premise of UST, citing it as, from inception, intentionally misleading and inherently flawed.
“‘Algostable’ has become a propaganda term serving to legitimize uncollateralized stables by putting them in the same bucket as collateralized stables like RAI/DAI,” Buterin tweeted yesterday.
Agree hard on this, with the one quibble that “algostable” has become a propaganda term serving to legitimize uncollateralized stables by putting them in the same bucket as collateralized stables like DAI/RAI, and we need to really emphasize that the two are very different.
— vitalik.eth (@VitalikButerin) May 14, 2022
UST isn’t backed by cash or assets like other leading stablecoins. Instead, an algorithm ties UST’s value to LUNA via a burning/minting mechanism designed to keep UST at $1. That mechanism collapsed last week, wiping out UST and LUNA, and with them some $40 billion in value.
Previous to this week, Terra ensured investors UST was just as stable as asset-backed stablecoins. Do Kwon, the beleaguered Terra co-founder, has, throughout the crisis, kept in his Twitter bio: “Master of Stablecoin.”
“We need to emphasize that the two,” Buterin said, referring to algorithmic stablecoins and asset-backed stablecoins, “are very different.”
After days of uncharacteristic silence, Do Kwon reemerged on Friday with a
