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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