Forbes: Algorithmic Stablecoins Could Eventually Disappear as a Category
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Main page Opinion, Stablecoins

Popular publication Forbes has reported that the collapse of the Terra ecosystem can be compared to the bankruptcy of Mt.Gox, the attack on The DAO, the bursting of the ICO bubble and the collapse of the crypto market recorded in March 2020.

According to the publication, algorithmic stablecoins could eventually disappear as a category.

Forbes journalists have said that a combination of greed and the immaturity of the technology led to the perfect storm.

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The incident is but another reminder of how get-rich-quick schemes can overshadow common sense, which remains characteristic of the young cryptocurrency market. This is another reason to rethink whether innovation is a disguise for excessive leverage.

Morgan Creek founder Mark Yusko has said in this regard:

"Leverage can never make a bad investment good, but it can, and often does, make a good investment bad. And so that’s what we're seeing in the past couple of months, particularly in the past week, just an unwinding of ridiculous levels of leverage. And in the case of the Terra problem from this past week—the Luna problem—it’s just a bad idea, bad structure. You can’t collateralize an asset, that’s supposed to be stable, with an unstable asset."

Journalists have compared the collapse of UST-LUNA to the 2008 US mortgage crisis.

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