Crypto markets have lost around 30 percent of their total market capitalization in the past seven days. As crypto prices continue to fall and traders scramble to close their volatile holdings, the stable coin market is rising: According to CoinTelegraph, the total supply of stable coins has increased by around 190% in the past 90 days. However, not all stablecoins are created equal.
In the midst of the review bloodbath, centralized stablecoins are doing better than ever – Tether (USDt) and Centre’s USD Coin (USDC) are # 3 and # 10, respectively, on CoinMarketCap’s list of largest coins by market cap. Data from CoinGecko shows that the two coins together account for roughly 80% of the total stable coin market cap.
I look forward to meeting you at iFX EXPO Dubai in May 2021 – make it happen!
While these centralized stablecoins performed well during the crypto market crash, algorithmic stablecoins are a different story. Algorithmic stablecoins maintain their value by automatically increasing or decreasing their own supply or the supply of the asset to which they are tied. However, according to CoinTelegraph, some of these coins have lost their pens.
“This too will pass”?
For example, TerraUSD (UST) pegged to the LUNA coin was at $ 0.95 at press time after falling to $ 0.92 on Sunday May 23. THORChain, the Twitter account linked to the decentralized liquidity log, said the asset was being “stress tested” and urged supporters to “support the builders.”
Terra founder Do Kwon and “team / supporters have their finger on the pulse and move fast,” wrote THORChain.
Do Kwon said in a tweet on May 23 that while the Terra economy was under stress, “none of the basics in [the Terra ecosystem] have changed. Assertion of the project was. “The ecosystem is at serious risk from having survived one of the worst market crashes in cryptography,” he wrote.
17 / In my opinion, nothing has changed in the basics of this ecosystem:
1) The same apps are being developed
2) The same robust community exists
3) The ecosystem is in serious danger from having survived one of the worst market crashes in cryptography
What will the banks of the future look like? To the article >>
– Thu Kwon @ (@ d0h0k1) May 23, 2021
“Building pure, unbiased and decentralized money is the long game,” said Kwon.
The Terra Twitter account wrote: “Our community will emerge strengthened from this short-lived market turmoil. This too will pass. “
I mean, I’m assuming it is an algorithmic stable coin that has to constantly burn / mint UST / LUNA to keep its hook. I’ve always seen a dollar come back, so don’t worry.
– Kunal @ (@ expl0sev) May 21, 2021
However, not everyone is convinced. One Terra supporter wrote: “What scares me is that UST has not maintained its peg to the dollar. It keeps hitting a high below a dollar and then falling again. Any explanations? (sic) ”
Another user stated, “Since this is an algorithmic stable coin, UST / LUNA must be constantly burned / minted to keep the hook.” I’ve always seen a dollar come back, so don’t worry. (sic) ”
Other algorithmic stablecoins are even further from their $ 1 target pegs. CoinTelegraph reported that Ampleforth (AMPL) fell to $ 0.48 on May 23, its lowest level in an entire year. On the other hand, the Ether-backed RAI algorithm stablecoin managed to stay relatively close to its target limit of $ 3 throughout the market crash.