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Tether CTO Paolo Ardoino compared the algorithmic stablecoin TerraUSD (UST) to a “card lock” that was supposed to collapse at any moment. According to him, the project is simply “poorly designed.”
CTO @Tether_to, @paoloardoino on $UST:
“It’s all fun and games until you are a 10 billion stablecoin. And then it becomes much harder the faster you grow, the more you grow, right, because if you are a stablecoin, especially an algorithmic stablecoin..” https://t.co/UNuvNhZoP9
— REIMAGINE — Web3 Events and Media (@REIMAGINE_2021) May 18, 2022
“I don’t know Do Kwon. But let’s give him the presumption of innocence. He created this project with arrogance and the idea that he was right, and many supported it, of course, for economic reasons. However, the project itself was not correct. It was poorly designed, like many others,” he stated on the Reimagine podcast.
According to Ardoino, he and many other specialists understood that launching the UST was a “bad idea.” The technical director stressed that Kwon himself was aware that this “card lock” could collapse at any time, but did not have the opportunity to publicly declare this.
Earlier, Tether CTO said that algorithmic stablecoins like TerraUSD are dangerous for the market. On the podcast, he repeated that thought.
According to Ardoino, UST could not maintain parity with the US dollar due to high capitalization, since collateral was not enough to correct the situation in the volatile market.
At the same time, sales of BTC from the Luna Foundation Guard reserve fund put enough pressure on the price of bitcoin that “the market collapsed even more.”
“In fact, they found themselves in a cascading situation where the need to protect parity forced them to sell collateral, which provoked additional collapses. [котировок]which forced them to sell even more collateral and so on,” Ardoino explained.
He stressed that the collapse of the UST will attract even more attention of regulators to the segment. However, in his opinion, politicians should first correctly classify assets, since stablecoins like USDT are fully backed by reserves.
Recall that in the first quarter of 2022, the issuer of the USDT stablecoin – Tether Holdings Limited – reduced reserves in commercial securities by 17%. By the end of the second quarter, the company intends to reduce the amount of collateral in these assets by another 20%.
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