TerraUSD collapse will ‘probably be the end’ of most algorithmic stablecoins, crypto exec says
- Date: 02-Jun-2022
- Source: CNBC
- Sector:Financial Markets
- Country:Middle East
TerraUSD collapse will ‘probably be the end’ of most algorithmic stablecoins, crypto exec says
Algorithmic stablecoins like , which collapsed and sent shockwaves through the cryptocurrency market, are unlikely to survive, the co-founder of digital currency tether told CNBC. Stablecoins are a type of cryptocurrency that is usually pegged to a real-world asset. TerraUSD or UST, is an algorithmic stablecoin which was supposed to be pegged to the . Whereas stablecoins like tether and USD Coin are backed by real-world assets such as fiat currencies and government bonds in order to maintain their dollar peg, . UST lost its dollar peg and that also led to a sell-off for its sister token . The debacle has led to warnings that algorithmic stablecoins might not have a future. "It's unfortunate that the money ... was lost, however, it's not a surprise. It's an algorithmic-backed, stablecoin. So it's just a bunch of smart people trying to figure out how to peg something to the dollar," Reeve Collins, the co-founder of digital token company BLOCKv, told CNBC at the World Economic Forum in Davos, Switzerland, last week. "And a lot of people pulled out their money in the last few months, because they realized that it wasn't sustainable. So that crash kind of had a cascade effect.