Highlighting The Risks of Algorithmic Stablecoins
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LUNA crash highlights the risks associated with algorithmic stablecoins. The altcoin crashed from $115 to $0, wiping out $60 billion from its market value. TerraUSD did not rely on the traditional pattern of having physical assets as its backup. An acclaimed crypto researcher on X has recalled the infamous events surrounding the LUNA crash a few years ago that exposed many crypto users to significant losses. Introducing his thread, the researcher described the incident as a LUNA crash that shook the crypto world. He considers it a classic case of the risks associated with algorithmic stablecoins. $LUNA crashes from $115 to $0, shaking the crypto world. ~$60 billion vanished from the market’s value. The largest individual loss hit nearly $10 million! Let’s remember this story and discuss the risks of crypto 👇🧵 pic.twitter.com/M7nlJJLSFO — ardizor 🧙♂️ (@ardizor) October 26, 2024 According to the researcher, LUNA suddenly crashed from $115 to $0, wiping out $60 billion from its market value. One individual lost nearly $10 million, highlighting the extent of the potential risks associated with crypto investment. Related: Terraform Labs’ Bankruptcy Hearing: Impact on LUNA, LUNC, USTC Prices Recalling the LUNA scandal, the researcher described Terra, the infrastructure behind LUNA, as a blockchain protocol and payment platform designed for algorithmic stablecoins. Terraform Labs, co-founded by Do Kwon and Daniel Shin, launched in 2018 and was renowned for UST, its Terra stablecoin, and the associated LUNA reserve asset. Terraform’s innovative approach attracted several investors. The stablecoin solution did not rely on the traditional pattern of having physical assets as its backup. Instead, the UST sustained its value through complex algorithms and market mechanisms. Over time, Anchor Protocol, a DeFi solution built on the Terra Blockchain, became a cornerstone of the Terra ecosystem, offering up to 20% annual return on UST deposits. Related:…
Filed under: News - @ October 27, 2024 6:51 pm