Bankman-Fried recently tweeted about how alleged stablecoins ought to have disjoined and better-refined definitions in the wake of Luna Foundation Guard ’ sulfur TerraUSD ( UST ) losing its US dollar ( USD ) peg and taking Terra ( LUNA ) down with it .
“ A good compass point person brought up recently : very ‘ stablecoin ’ is used to mean multiple different things.
One thing it can mean is ‘ stablecoin backed 1:1 by a US dollar in a US bank account. ’
That ’ s what current draft of US regulations are looking to license, as a first base step. ”
The FTX CEO then mentions early stablecoin tiers which are susceptible to volatility and risk because they ’ ra not backed strictly by dollar reserves but a mix of assets and debts .
“ Another is ‘ stablecoin backed > = 1:1 by liquid debt assets, treasuries, and USD ’. Non-zero price risk, but generally they stay very close to $ 1 because they can be redeemed .
For model [ Tether ] USDT has stayed within a few % of $ 1 during this crash, and [ I ’ molarity ] hearing $ 1b+ successfully redeemed .
A third is ‘ stablecoin backed > = 1:1 by a identical volatile asset. ’
Those are ‘ algorithmic ’ stablecoins. If the underlie crashes, they can go down. A draw. e.g. UST. ”
When it comes to solutions, Bankman-Fried suggests applying distinct definitions to the different versions of what presently falls under the broader stablecoin terminology umbrella .
“ very we shouldn ’ metric ton use the lapp parole for all of these things. What we call ‘ algorithmic stablecoins ’ aren ’ metric ton truly stable in the lapp way that fiat-backed stablecoins are .
They ’ ra more like structured products, and they need top if they want to justify the risk .
This might not seem vitamin a authoritative to people in crypto, because we already know that algorithmic stablecoins are reasonably different from fiat-backed ones. But in the policy space, that message often gets lost. We need to be denotative about it. ”
In reaction to a question asking if FTX might come to the aid of LUNA in light of Bankman-Fried gaining entree to admin keys of the SushiSwap ( SUSHI ) decentralized exchange ( DEX ) in September of 2020, the CEO says it ’ s improbable .
“ This one might be hood – the real, honest answer is that, credibly, either UST or LUNA have to go to 0 ( or both ) .
There ’ s no way to save both of them. ( And it ’ s not clear as of now that there ’ s any way to save UST ’ s peg even if you sacrifice LUNA. ) ”
At prison term of write, TerraUSD is down 41.7 % and is presently valued at $ 0.49 .
meanwhile, Terra has imploded, falling from above $ 80 a week ago to a dollar by May 11th. LUNA is toss off 99.03 % on the day and priced at $ 0.006645 at fourth dimension of write .
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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