The chief technology officer of TerraUSD (UST) and Bitfinex said that Terra was poorly designed and was not an easy runner. Arduino compared TerraUSD (UST), the algorithmic stablecoin within the Terra ecosystem, to a poorly designed one that could fall at any moment.
According to members of the crypto community, several questions have been raised about Terraform Labs founder Make Kwon’s actions and comments. Additionally, Kwon was also involved in an algo-stable coin project labeled Basis Cash that failed.
Arduino made the remarks on the Reimagine Unplugged podcast from Reimagine, a media company specializing in web-based content and events. Kwon’s misguided sense of self-belief was a cause for concern, according to the chief technology officer:
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“Do Kwon is unknown to me? Nevertheless, let’s keep an open mind. It was not per se a rug pull. It was a poorly conceived project, as many projects are poorly designed, but he was arrogant, thinking he was right. Many were supporting him, of course, probably for economic reasons.”
According to Ardoino, it had grown too big to maintain its peg given that its collateralization, which at the time mainly was Bitcoin (BTC) as it was attempting to build its reserves, was not large enough to support the stability but still had the potential to cause a crash in the market.
He said the peg had to be defended, which requires them to sell collateral, and collateral sales must cause further crashes, which in turn need them to sell more collateral, and so on,”
Arduino said that before policymakers can begin to build a regulatory framework for stable coins, they must first clarify the difference between stablecoins backed by assets and those primarily backed by algorithms:
“There needs to be a proper categorization of stablecoins. Right now we have UST as an algorithmic stablecoin, and Tether as a centralized stablecoin. These are really two different beasts with different advantages and disadvantages.”
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