Cardanois preparing to launch an algorithmic stablecoin in 2023. Community members are worried about the ‘algorithmic stablecoin’, which is reminiscent of the Terra-LUNA collapse and thus the TerraUSD (UST) collapse. The stablecoin project of the Cardano ecosystem djedIn addition to being pegged to the US dollar, it will be backed by Cardano (ADA). Besides, it will use a different token as its reserve currency. Djed also stressed that it will be over-collateralized, providing on-chain evidence of reserve.
Despite all the assurances from the dev team, members of the Cardano community continued to share their concerns. Many members recalled the crash of TerraUSD (UST), which crashed in May.
Why a community member, despite what’s going on in the Terra ecosystem? algorithmic stablecoin He stated that he could not make sense of the fact that he was insistent on it. If a different member Tether He stated that they would continue to use it and offered his opinion.
The Cointelegraph team reached out to the developers of the Djed project and asked some questions. The focus of the questions was of course concerns about algorithmic stablecoins. As a matter of fact, team members have not yet answered the questions.
Koinfinans.com As we have reported, Tether made a statement on the subject. According to the company, stablecoin projects like Terra have a number of mechanisms to maintain stability, but this mechanism has ultimately failed.
“Unlike stablecoin projects, where each coin is fully collateralized, algorithmic stablecoins seek to maintain their value based on different market instruments that often change in value.”
USD Coin issuer Circle believes that algorithmic stablecoins with complex collateral structures and technological stabilization mechanisms do not have the same use-value as full-reserved, regulated dollar assets.
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