Are decentralized stablecoins a failed experiment?

Abiky

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Quote from: tvplus006 on May 30, 2022, 05:04:00 AM

As we have seen, there is a big difference between stablecoins secured by collateral assets and algorithmic stablecoins. And as we can see, it is decentralized algorithmic stablecoins that have problems with their peg backed dollar, while DAI does not face such problems. At the moment, another algorithmic stablecoin DEI is suffering a fiasco, the price of which has dropped to 64 cents per dollar.

Of course. Both algorithmic and collaterized stablecoins have their differences. But most people don't know this, so one decentralized stablecoin losing its peg would make the public believe others are doomed as well. I think there's a future for algorithmic stablecoins as they could improve decentralized finance for the better. It'll be up to developers to introduce mechanisms that will help protect algorithmic stablecoins from losing their peg in a highly-efficient manner. What happened with UST should serve as a pivotal point for other algorithmic stablecoins to improve for the better.

DAI is the best decentralized stablecoin right now, but I think there's still room for growth for other decentralized stablecoins to take the world of decentralized finance ("De-Fi") by storm. Regulations will surely come in, but they won't be 100% effective due to the way decentralized stablecoins are designed. Who knows what the future holds for this exciting industry? Just my opinion

diminizio

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stable coins seem to have been created on one concept only, namely centralization. It's much easier with less risk. I think that continuing to experiment with decentralized systems for stable coins will only scare the community away from stable coins so they will soon be abandoned. Since the UST incident at that time I think some people have also started to get traumatized by decentralized stable coins.

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For now I think it's true. Almost all experiments on stable decentralized coins have been unsuccessful. Only Terra UST was quite popular at that time, but it became a weakness for the stability of the coin itself. Terra UST is backed by bitcoin, but bitcoin itself is so wildly priced that it makes it so difficult for stable coins to adapt that they fail to become stable decentralized coins.

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Failed experiment or not have you seen any decentralized stable coin that messed up lil UST? That's the question I have for you, so what do you say? The only decentralized stable coin in the market is DAI and it's growing very fast, if anyone have seen a dead dex stable coin pls do share.

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Quote from: Abiky on May 13, 2022, 08:45:23 AM

...With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? ..

As we have seen, there is a big difference between stablecoins secured by collateral assets and algorithmic stablecoins. And as we can see, it is decentralized algorithmic stablecoins that have problems with their peg backed dollar, while DAI does not face such problems. At the moment, another algorithmic stablecoin DEI is suffering a fiasco, the price of which has dropped to 64 cents per dollar.

yazher

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What their lack is promotions and support but still they have plenty of time to come up with something new that is not present in the current decentralized stablecoins out there. After all, people are not using centralized stable coins often since they're just using them temporarily to avoid some complicated problems in the future. As we know, stablecoins that are centralized are not reliable because they can shut down at any moment at once when they found some major problem with it. that's why investors don't really keep it for long rather they quickly convert it to some reliable coins out there.

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Quote from: asyakashi on May 30, 2022, 12:45:09 AM

So far the only stable coin that has worked is USDT but it's a stable centralized coin that won't be decentralized. Seeing Terra UST fail in the market I think everyone's view of a stable decentralized coin is very bad. There may be DAI which is also stable decentralized coin but that is less popular and less interested. I don't think we will ever see a decentralized stable coin again in the future.

USDT is indeed the only stablecoin that has been very trusted so far.
Even USDT is used as a medium of exchange in countries that use dollar bills and the upward and downward movement of their money is also seen from USDT.
USDT is not much different from monero either so it's no wonder this stablecoin is never left to throw away and USDT will always be used in the future.

asyakashi

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So far the only stable coin that has worked is USDT but it's a stable centralized coin that won't be decentralized. Seeing Terra UST fail in the market I think everyone's view of a stable decentralized coin is very bad. There may be DAI which is also stable decentralized coin but that is less popular and less interested. I don't think we will ever see a decentralized stable coin again in the future.

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It seems that building a stable decentralized coin is not easy so far no one has really succeeded in building a stable decentralized coin. Especially with the Terra UST incident which I think will traumatize people with DeFi-based coin Stable. In my opinion, if Decentral stable coin is built it should be backed up by real assets that have more potential to profit at any time so that it is not easy to get attacks like LUNA.

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Quote from: Abiky on May 28, 2022, 08:42:46 PM

It seems to me that TRON's USDD algorithmic stablecoin is the next one on the list to lose its peg. There's a 30% interest rate given to USDD holders on the TRON blockchain. This is even higher than what the Anchor Protocol offered on the Terra blockchain. If things are done right, decentralized stablecoins hold promise to bring banking to the unbanked.

Actually this usdd is on a great timing for people to get scared of a once incident of terra. Who would not be scared as many suicides has been declared during the ust collapse right? Now Justin Sun is a big guy, even though his project is one of the top notch out there, he should not be careless and boastful to challenge defi users that his stablecoin wouldnt have the same fate as terra cause he will never know whose gonna exploit their platform.

People should be aware of stablecoin algorithm to be more careful this time.

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Quote from: Godday on May 28, 2022, 09:58:15 PM

I don't think we can fully come to such a conclusion. Maybe it's true that stable coin is still a project that has its pros and cons after seeing what LUNA has gone through. But that happens if the project backs up the $1 figure on the stable and them with other coins. Maybe it will be different if you back up the coin with dollars or gold. I don't know how stable the coin system has been in the market today but I think we can see and learn from what has happened to LUNA.

What happened to LUNA is an example to everyone and so is their stablecoin at this point. On any other occasion everyone can back up their money into better stablecoins like USDT and BUSD at any time without having to choose UST beforehand and so does Gold in real life as its value never shrinks by hundreds of percent in the market.

Godday

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I don't think we can fully come to such a conclusion. Maybe it's true that stable coin is still a project that has its pros and cons after seeing what LUNA has gone through. But that happens if the project backs up the $1 figure on the stable and them with other coins. Maybe it will be different if you back up the coin with dollars or gold. I don't know how stable the coin system has been in the market today but I think we can see and learn from what has happened to LUNA.

Abiky

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Quote from: cryptoaddictchie on May 23, 2022, 12:20:20 AM

I think its inevitable with such case of terra ust. Their apy is really high compared to other stablecoin and thats make it more quite risky. Of course I hate to say it, that I am one of victim of it but other stablecoin too lack audit. Cant say that its a failed experiment but the lack of sufficient security measures were missed on this. Whales have managed to outrace them using their fund and thats the weakness they exploited. Decentralized or not once someone realize a flaw then it will literally be a bad result on the other end.

High percentage rates (APY) translates into higher inflation rates. The higher the inflation, the less valuable the currency you're holding into will be. What happened with UST is a result of complete mismanagement from the Terra team. If they would've done things right from the start, none of this would've happened in the first place. I'm afraid other algorithmic stablecoins will have the same fate as UST unless developers decide to improve them for the better.

It seems to me that TRON's USDD algorithmic stablecoin is the next one on the list to lose its peg. There's a 30% interest rate given to USDD holders on the TRON blockchain. This is even higher than what the Anchor Protocol offered on the Terra blockchain. If things are done right, decentralized stablecoins hold promise to bring banking to the unbanked. Whenever they'll become a success or a failed experiment is yet to be seen. It's still too early to determine this, so I'd say we should give decentralized stablecoins some time to mature before rushing ourselves to any conclusions. Just my opinion

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Quote from: Abiky on May 13, 2022, 08:45:23 AM

With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? Do you think there's still room for improvement? Your input will be greatly appreciated. Thank you very much.

I think its inevitable with such case of terra ust. Their apy is really high compared to other stablecoin and thats make it more quite risky. Of course I hate to say it, that I am one of victim of it but other stablecoin too lack audit. Cant say that its a failed experiment but the lack of sufficient security measures were missed on this. Whales have managed to outrace them using their fund and thats the weakness they exploited. Decentralized or not once someone realize a flaw then it will literally be a bad result on the other end.

Abiky

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Quote from: Nivia1st on May 16, 2022, 11:03:51 PM

not completely fail. The problem with UST and other stablecoins losing peg is that they don't have a 1:1 reserve. if they had it in the first place the selloff issue resulting in the loss of the peg would never have happened. maybe with this problem the stablecoin ecosystem can be better.

Yes. But even centralized stablecoins with a 1:1 reserve might lose the peg if the issuer isn't as legit as it claims to be. While Tether is the biggest stablecoin on the market, it's still lacking transparency. The issuer of the stablecoin is quite shady, unable to provide proof that Tether is really backed by USD stored in bank accounts. Without solid evidence sustaining its claim, how can we be so sure Tether will maintain the peg to "infinity and beyond"?

With decentralized stablecoins, the risk is higher because they're only backed by algorithms, or in some cases, they're collaterized by other crypto assets. Whenever they'll become widely successful in the future or a failed experiment, it's yet to be seen. As long as decentralized stablecoins have their flaws, people will continue to trust centralized stablecoins with their money. Hopefully, decentralized stablecoins will improve to make "De-Fi" bigger and stronger than ever. Just my opinion

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Quote from: aprilnot on May 16, 2022, 11:24:57 PM

if you look at what happened to UST, yes it was a big failure. and maybe because of this problem regulators will tighten their oversight of stablecoins in the future. this will give concern to everyone that stablecoins are not really stable and there will always be a possibility of de-peg in the future.

Regulators could do whatever they want with the coins, it will not really change anything too much. Of course it will be quite good for people to act carefully about the stablecoins because we are talking about 100+ billion dollars invested into these stablecoins, and regulators will want to protect people about those.

However, it is not based in big nations, they are based in places like Bahamas or something in order to be safe from those regulators. Meaning if USA bans it, you could still get it via Binance or something and still participate, plus we are not just from one nation, hence it will not really make too much noise for anyone neither.

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Well, many questions are arising in our minds after the incident of ust well according to my knowledge ust unstability was the mistake of luna's team, when they withdrew money from their liquidity pool due to high sell pressure ust skewed and usdn skewed also which causes to depegged it, well, pegged tokens are losing their trust on people, they should do something about curve pools to make their stability full assure

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if you look at what happened to UST, yes it was a big failure. and maybe because of this problem regulators will tighten their oversight of stablecoins in the future. this will give concern to everyone that stablecoins are not really stable and there will always be a possibility of de-peg in the future.

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Quote from: Abiky on May 13, 2022, 08:45:23 AM

For long, decentralized stablecoins have claimed to maintain their peg backed by either collaterized assets or algorithms. It's this point in time where a so-called decentralized stablecoin named "TerraUSD" lost its peg with no point for recovery within the short term. This is not the first time a decentralized stablecoin loses its peg, as a similar situation happened with NuBits (USNBT) some time ago. Even now, another decentralized stablecoin called "Neutrino USD" (USDN) lost it's 1:1 peg with the US Dollar.

With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? Do you think there's still room for improvement? Your input will be greatly appreciated. Thank you very much.

not completely fail. The problem with UST and other stablecoins losing peg is that they don't have a 1:1 reserve. if they had it in the first place the selloff issue resulting in the loss of the peg would never have happened. maybe with this problem the stablecoin ecosystem can be better.

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After what happened in UST, questions like this will appear.
I mean all of the stablecoins are affected because of this UST which got de-pegged to dollar.

TBH, I'm not a fan of stablecoins and I didn't think of holding it either for some reasons. UST got de-pegged and USDT Tether which is the largest stablecoin right now in market cap has been de-pegged temporarily as well. What happened in UST will have a domino effect against all the stablecoins until to the point that people will not trust stablecoins anymore thus, they will not buy it and that is the time where we can say that it is a failed experiment already.

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