After the fall of Terra to Earth, prepare for the era of the stablecoin

Did May's algorithmic stablecoin crashes kill the concept, or is there still a role for crypto- fiat currencies?

Stablecoins were supposed to be the boring uncle of the crypto world - safe, sensitive, and boring. Probably not what Satoshi Nakamoto had in mind, but they are meant to be a haven of calm and reassuring usefulness, away from the turmoil of pure cryptocurrencies.

With values ​​pegged to fiat currencies, stablecoins were meant to be useful rather than offering get-rich-quick schemes. They play an important role in the cryptocurrency ecosystem by providing a safer place to store capital without having to fully cash out, and by allowing assets to be denominated in fiat currencies rather than volatile tokens. /p>

However, the events of May demonstrated that the stability of cryptography is still elusive. With governments slow to respond, Terra's LUNA token – which has since been renamed Luna Classic (LUC) – plummeted to near zero in value, wiping out $60 billion along the way. The obvious conclusion would be that the stablecoin experiment failed. But I believe the fall of Terra to Earth is the precursor to a new era where stablecoins will become established, accepted, and beneficial components of the global economic system. And the regulations that have only just been put in place already seem to have passed their expiry date.

While that seems unlikely right now, the failure of a few stablecoins doesn't negate the whole concept. Other stablecoins have been built on solid foundations and work as expected.

What is happening is an algorithmic stablecoin cleanup. These are rooms that were never fit for purpose because they were built on insecure foundations. There have always been critics: some have called Terra a Ponzi scheme and argued that it, and other algorithms, would only have value if more and more people bought them.

Algor...