Floki Inu Soars to New Heights in the Cryptocurrency Market
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2022-05-16 | Selina Mathew
The Ethereum creator and Binance CEO both rushed to Twitter this weekend to criticize Terra—and the UST token's basic basis.
Following the unprecedented collapse of Terra's stablecoin, UST, and native token, LUNA, last week, crypto heavyweights have stepped up to share their thoughts.
They're not holding back either.
The Ethereum developer, Vitalik Buterin, criticized the fundamental idea of UST, calling it purposely deceptive and intrinsically faulty from the start.
Buterin tweeted yesterday, "'Algostable' has become a propaganda phrase aiming to legitimize uncollateralized stables by lumping them in with collateralized stables like RAI/DAI."
Unlike other popular stablecoins, UST is not backed by cash or assets. Rather, an algorithm binds the value of UST to LUNA through a burning/minting mechanism that keeps UST at $1. Last Monday, that mechanism crumbled, wiping out UST and LUNA, along with $40 billion in value.
Terra has previously assured investors that UST was equally as reliable as asset-backed stablecoins. Do Kwon, the troubled Terra co-founder, has preserved the phrase "Master of Stablecoin" in his Twitter bio throughout the turmoil.
"We need to underline that the two are extremely distinct," Buterin added, referring to algorithmic and asset-backed stablecoins.
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