UST is not Do Kwon’s first failed stablecoin a cryptocurrency with extremely low volatility, sometimes used as a means of portfolio diversification. Examples include gold-backed cryptocurrency or fiat-pegged cryptocurrency. project, as he was previously behind Basis Cash, a token that never stabilized. Is history repeating itself now with UST?
Do Kwon, the mind behind the blockchain a distributed ledger system. A sequence of blocks, or units of digital information, stored consecutively in a public database. The basis for cryptocurrencies. project Earth and the algorithmic stable coin a coin can refer to a cryptocurrency that can operate independently or to a single unit of such cryptocurrency. UST, native to that ecosystem, was previously involved in the creation of another stable coin that failed.
In the midst of the controversy over the UST crash this week, a informs of CoinDesk has revealed that Kwon, founder and CEO of Terraform Labs was one of the pseudonymous writing under a false name, such as “Satoshi Nakamoto.” identities behind the failed algorithmic stablecoin, Basis Cash cash is the most liquid form of money: physical coins and banknotes in the most narrow sense of the term. (BAC).
According to the report, Kwon was one of the co-founders of the project, although few knew it, since he took refuge under the pseudonym “Rick Sanchez.” . In fact, he and some of the original team of Earth would have collaborated to launch BAC in 2020. But, similar to what we’re seeing now with UST, that first stablecoin didn’t take off and failed in its goal of staying at $1.
Just like UST, Basis Cash sought to maintain parity with the dollar through code, not through reserves or cash collateral. But the asset was always volatile, contrary to what the stablecoin concept assumes, even reaching a price of USD $150 the year of its launch, according to data from Coinmarketcap . By the time BAC edition is priced at USD $0.007.
Recap: The Collapse of UST
There remains no doubt that the collapse of the stablecoin USD Land (UST) es una de las historias más sonadas esta semana en el criptoespacio. UST, que se supone debe mantener paridad con el dólar estadounidense, ha estado enfrentado dificultades para mantener su precio estable, y esta semana ha caído muy por debajo de su nivel esperado de USD $1.
While the community of Earth and the organizations that support the opposite of Resistance, it is a threshold that crypto’s price doesn’t fall below. such an ecosystem have led several efforts to rescue the asset and revive it, the moves so far seem insufficient, since UST remains trading at a few cents on the dollar; at USD $0.6 as of press time.
The incident has been especially striking because of the size of UST, which is the largest decentralized decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. stablecoin by market an area or arena, online or offline, in which commercial dealings are conducted. capitalization. Unlike other stablecoins, UST is not collateralized by dollar reserves. Instead, it relies on a burn and mint mechanism linked to LUNA, the native token of Earth to maintain their parity.
In addition to this mechanism, Terra has been acquiring large sums of Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. and other cryptocurrencies to back its stable coin. The project’s BTC reserves reached USD $3.5 billion a few weeks ago, before the recent collapse of UST prompted Earth a deploy part of these funds as a way to redistribute capital capital is most commonly defined as the large sum of money you would use to invest. and save the UST and LUNA market.
Kwon shared on Wednesday a new plan to rescue UST and return it to parity with the dollar. This is a community proposal to increase LUNA’s mintage limit.
A failed stablecoin test
According to CoinDesk who spoke to sources close refers to the closing price; similar to the same term used in stock trading. to the project, Kwon is said to have created Basis Cash as a sort of experiment before launching UST. “ Basis Cash was not tested at this time, and we weren’t even sure [that it would work] “, dijo Hyungsuk Kang, ex ingeniero de Terraform Labs (TFL). Kwon “ I just wanted to try it out “ he added.
Kang left Earth to build a competitor called Standard Protocol the set of rules that define interactions on a network, usually involving consensus, transaction validation, and network participation on a blockchain. . For its part, or another BAC developer, who preferred to remain anonymous, confirmed to CoinDesk that other members of the TFL team were also behind the project in question.
Originally called “ Basecoin “, Base was first a centralized a centralized organizational structure is one in which a single node or a small number of them are in control of an entire network. stablecoin project that raised USD $133 million in 2017 before closing its doors due to regulatory concerns a year later. However, the proposition seemed to have caught the attention of Kwon, who, along with other developers, sought to rescue the proposal in 2020 amid the rise of DeFi.
El informe rescató un antiguo mensaje publicado en el canal de Telegram now removed, from Basis Cash by “Rick” (aka Do Kwon) in August 2020.
Yo degens, does anyone remember what Basis was? It was one of the first algorithmic ‘DeFi’ stablecoins with big ambitions, but was shut down due to SEC [US Securities and Exchange businesses that allow customers to trade cryptocurrencies for fiat money or other cryptocurrencies. Commission] related risks. Today we are bringing Basis back from the grave.
Basis Cash emerged then as the promise of a decentralized stablecoin”. with an algorithmic central bank “according to its website. However, it never became anywhere near as popular as UST, whose market capitalization is close to $10 billion, even after its collapse. By comparison, the highest capitalization BAC saw was $30 million.
Is history repeating itself?
In addition to its linking mechanism, BAC apparently had other features similar to UST; including the promise of a wide variety of uses for the then burgeoning decentralized finance space. “ In the long a situation where you buy a cryptocurrency with the expectation of selling it at a higher price for profit later. term, we expect to see Basis Cash used widely as a primitive base layer, so that there is organic demand for the asset in many commercial and DeFi a movement encouraging alternatives to traditional, centralized forms of financial services. environments. “, wrote the account an account is essentially a whose purpose is to track the financial activities of a specific asset/ of Telegram at the time, as quoted by CoinDesk .
However, the project does not seem to have been as serious as the proposed Earth . Kwon and his other co-founder went by the name of “Rick” y “Morty“, inspired by the popular animated series “ Rick and Morty ” . While he was the mind behind most of the core ideas of the stablecoin and his model of token a digital unit designed with utility in mind, providing access and use of a larger crypto economic system. Kwon then reportedly walked away from the project, as he discovered CoinDesk.
It seems unlikely that Kwon founded both stablecoin projects with malicious intent, as they point out. some reports who have crossed out Earth ponzi scheme. However, the case does shed light on the failed attempts of algorithmic stablecoins and the rocky road this innovative token model has faced.
Kwon, who declined to comment on his relationship with BAC, apparently comprometido in this case, to restore UST’s parity and push UST back to Earth (LUNA), and has even suggested turning UST into a guaranteed stablecoin. Will the attempts be able to save the – so far – promising project or will history repeat itself?
- Terra founder Do Kwon announces plan to save UST as LUNA slips 90%.
- Treasury’s Janet Yellen signals UST collapse in latest call to regulate stablecoins
- Binance briefly suspended Terra token withdrawals amid UST collapse
Article by Hannah Estefania Perez / DiarioBitcoin
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