Home Business Crypto: “Time To Call Stablecoins Something Else”

#crypto #stablecoins #altcoins#knightsbridgeDAO

$KNIGHTSUSD $CROWNSUSD

Cryptocurrency exchange founder Sam Bankman-Fried is weighing in on the future of stablecoins after 2 rubbish cryptos suffered staggering losses this wk” — Paul Ebeling

Mr. Bankman-Fried recently tweeted about how stablecoins ought to have separate and better-refined definitions in the wake of Luna Foundation Guard’s TerraUSD (UST) losing its US dollar (USD) peg and taking Terra (LUNA) down with it.

“A good point someone brought up recently: really ‘stablecoin’ is used to mean multiple different things.

One thing it can mean is ‘stablecoin backed 1:1 by a US dollar in a US bank account.’

That’s what current drafts of US regulations are looking to license, as a first step.”

The FTX CEO then mentions other stablecoin tiers which are susceptible to volatility and risk because they are not backed strictly by dollar reserves but a mix of assets and debts and lots of other junk.

“Another is ‘stablecoin backed >= 1:1 by liquid debt assets, treasuries, and USD’. Non-zero price risk, but generally they stay very close to $1 because they can be redeemed.

For example [Tether] USDT has stayed within a few % of $1 during this crash, and [I’m] hearing $1b+ successfully redeemed.

A third is ‘stablecoin backed >= 1:1 by a very volatile asset.’

“A good point someone brought up recently: really ‘stablecoin’ is used to mean multiple different things.

One thing it can mean is ‘stablecoin backed 1:1 by a US dollar in a US bank account.’

That’s what current drafts of US regulations are looking to license, as a first step.”

The FTX CEO then mentions other stablecoin tiers which are susceptible to volatility and risk because they’re not backed strictly by dollar reserves but a mix of assets and debts.

“Another is ‘stablecoin backed >= 1:1 by liquid debt assets, treasuries, and USD’. Non-zero price risk, but generally they stay very close to $1 because they can be redeemed.

For example [Tether] USDT has stayed within a few % of $1 during this crash, and [I’m] hearing $1b+ successfully redeemed.

A third is ‘stablecoin backed >= 1:1 by a very volatile asset.’

Those are ‘algorithmic’ stablecoins. If the underlying crashes, they can go down. A lot. e.g. UST.”

When it comes to solutions, Mr. Bankman-Fried suggests applying distinct definitions to the different versions of what currently falls under the broader stablecoin terminology umbrella.

“Really we shouldn’t use the same word for all of these things. What we call ‘algorithmic stablecoins’ aren’t really stable in the same way that fiat-backed stablecoins are.

They’re more like structured products, and they need upside if they want to justify the risk.

This might not seem as important to people in crypto, because we already know that algorithmic stablecoins are pretty different from fiat-backed ones. But in the policy space, that message often gets lost. We need to be explicit about it.”

In response to a question asking if FTX might come to the aid of LUNA in light of Bankman-Fried gaining access to admin keys of the SushiSwap (SUSHI) decentralized exchange (DEX) in September of 2020, the CEO says it’s unlikely.

“This one might be tough – the real, honest answer is that, probably, either UST or LUNA have to go to 0 (or both).

There’s no way to save both of them. (And it’s not clear as of now that there’s any way to save UST’s peg even if you sacrifice LUNA.)”

At time of writing, TerraUSD is down 41.7% and is currently valued at $0.49.

Meanwhile, Terra has imploded, falling from above $80 a week ago to a dollar by May 11th. LUNA is down 99.03% on the day and priced at $0.006645 at time of writing.

For live price action click here.

Have a happy prosperous weekend, Keep the Faith!

You may also like

logo-white

Your Trusted Source for Capital Markets & Related News

© 2023 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.