According to Tether co-founder Reeve Collins, the collapse of the UST could be the end of algorithmic stablecoins.
Tether co-founder Collins spoke about the IHR at the World Economic Forum in Davos, Switzerland. Collins said the UST debacle was the “probably the end” of algorithmic stablecoins, and such a collapse was not surprising:
“The collapse of the coin is unfortunate…but not a surprise. This is an algorithmic stablecoin. So a group of smart people is trying to figure out how to peg a coin to a dollar. (…) And many people have withdrawn their money in the last few months because they have realized that it is not sustainable. So this collapse had a gradual effect. And it will probably be the end of most algorithmic stablecoins.”
Previously, many market commentators have shared their views on the possible collapse of the IHR. Similarly, Jeremy Allaire, CEO of Circle, the issuer of USD Coin (USDC), the second largest stablecoin in the market, said that UST has a high-risk framework for a stablecoin.
Ethereum co-founder Vitalik Buterin disagrees with Collins’s view. According to him, stablecoins are not flawed by design.
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