On Monday evening, the Terra UST stablecoin, which should be worth $1 lost its peg and sunk as low as 30 cents. It has yet to recover from its death spiral and currently stands at 56 cents on the dollar. As we’ll show, the crash should not come as a surprise.
Because an algorithmic stablecoin crashed, it’s important not to dismiss all other stablecoins, some of which can provide real utility for payments.
Until April, the top three stablecoins, Tether, USDC and Binance USD were all asset-backed, not algorithmic. USDC and Binance USD are 100% backed by treasuries and bank balances, while Tether also holds a mix of other assets, such as commercial paper.
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