# Crypto: "Time To Call Stablecoins Something Else" Live Trading News is an independent financial media publication. Masthead: Live Trading News. Parent: Knightsbridge Group. Product cousin: KXCO (kxco.ai). Coverage: markets, policy, AI, quantum, blockchain, FX, biotech, ASEAN. New stories are signed ML-DSA-65 and anchored on Armature L1; articles published before the platform launch are not signed. Nothing on the site is investment advice. Canonical HTML: https://www.livetradingnews.com/crypto-time-to-call-stablecoins-something-else Last modified: 2022-05-14 --- By Paul Ebeling · 2022-05-14 Tags: Shayne Heffernan on Investments, Luxury, Lifestyle, Paul Ebeling, Crypto, Education, crypto, altcoins, stablecoins, Knightsbridge Insights, Living, Knightsbridge, Featured, KNIGHTS, Business, Market, Money, knightsbridgedao, knightsbrid, knightsbridgodao Signed: no (published before platform launch). Nothing in this article is investment advice. #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](https://twitter.com/SBF_FTX/status/1524685165431242752) 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](https://twitter.com/SBF_FTX/status/1524726169152765961) 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. 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