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The financial commentator frances coppola is convinced that algorithmic stabilisers like terrausd (ust) will always be vulnerable to sudden collapses, no matter how much the technology improves"it would cause some sort of lehman time, if you will, in the crypto space." Check out the full discussion on our youtube channel and remember to subscribe!
They can improve their game theory, they can improve their risk evaluation.
'they can improve their gambling theory, they can enhance their risk assessment, but i think there will always be states in the world that they haven't thought about,' pointed out coppola in a discussion with mike mcglone, material strategist at bloomberg.
Terra's stablecoin, which relied on an algorithm to maintain a link to the US dollar, collapsed last week, causing turmoil in the crypto markets. According to the analyst, the concerns around leading stablecoin Tether (USDT), which briefly lost its peg to the dollar as a result of Terra’s collapse, shouldn’t be overestimated.
According to the analyst, the concerns around leading stablecoin tether (usdt), which briefly lost its peg to the dollar following the terra collapse, should not be overestimated.
As mcglone pointed out, Tether was already detached briefly in April 2019 when the New York State Attorney General filed a lawsuit against his sister company, Bitfinex. The market has said, We don't care.
Coppola, on the other hand, pointed out that while investors were redeeming Tether en mass amid Terra’s collapse, other stablecoins such as USD Coin (USDC) and BINANCE USD (BUSD) performed as safe-haven assets, thus proving to be more trusted.
Coppola, secondly, pointed out that while investors were buying back en masse in the midst of terra's collapse, other stabledoins such as the dollar coin (usdc) and the dollar binance (busd) behaved as safe haven assets, thereby proving more reliable. However, Coppola believes that Tether is unlikely to suffer a terra-like collapse, as it is supported by real assets held on its reserves.
She pointed out that in the event of a crisis, Tether would be able to avoid a directed mass bank by suspending redemptions according to its policy.
According to Coppola, the main source of systemic risk for the crypto market is not stableoins but crypto trades. According to Coppola, the major source of systemic risk for the crypto market is not stablecoins but crypto swaps.
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