Are decentralized stablecoins a failed experiment?

Abiky

legendary

Activity: 3220

Merit: 1363

www.Crypto.Games: Multiple coins, multiple games

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

full member

Activity: 585

Merit: 100

Binance #SWGT and CERTIK Audited

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.

vanesha

full member

Activity: 649

Merit: 100

Binance #SWGT and CERTIK Audited

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.

MetaMii

member

Activity: 65

Merit: 12

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.

tvplus006

legendary

Activity: 2268

Merit: 1655

To the Moon

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

hero member

Activity: 2268

Merit: 588

You own the pen

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.

Ojengonggu

full member

Activity: 756

Merit: 105

Trphy.io

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

sr. member

Activity: 1918

Merit: 256

Just.bet - Decentralized On-chain Casino

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.

Blowon

hero member

Activity: 1932

Merit: 511

Vave.com - Crypto Casino

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.

cryptoaddictchie

legendary

Activity: 2254

Merit: 1377

Fully Regulated Crypto Casino

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.

bestcoins1

hero member

Activity: 2338

Merit: 737

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

sr. member

Activity: 1512

Merit: 397

PredX - AI-Powered Prediction Market

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

legendary

Activity: 3220

Merit: 1363

www.Crypto.Games: Multiple coins, multiple games

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

cryptoaddictchie

legendary

Activity: 2254

Merit: 1377

Fully Regulated Crypto Casino

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

legendary

Activity: 3220

Merit: 1363

www.Crypto.Games: Multiple coins, multiple games

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

SirLancelot

hero member

Activity: 2646

Merit: 582

Leading Crypto Sports Betting & Casino Platform

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.

Faisal2202

hero member

Activity: 1386

Merit: 513

Payment Gateway Allows Recurring Payments

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

aprilnot

full member

Activity: 1204

Merit: 102

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.

Nivia1st

full member

Activity: 821

Merit: 100

Volare.network

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.

LogitechMouse

legendary

Activity: 2576

Merit: 1043

Need A Campaign Manager? | Contact Little_Mouse

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.

JeffBrad12

hero member

Activity: 2954

Merit: 533

Leading Crypto Sports Betting & Casino Platform

A bit surprised to see that if there was someone who still called that decentralized stable token has ever exist. I didn't even believe with the decentralized stable token. The real USD must be used to backed the centralized token like stable token. There's no decentralized stable token. Stable token was just a stable token that fully controlled by party who issued it. Terra can control UST through halting the blockchain. I think that all of decentralized stable tokens that used other than fiat backed mechanism was failed experiment.
DEI, UST and so many experiment stable tokens have been fallen since last year

WalkerIVIV

hero member

Activity: 2436

Merit: 503

Cryptocasino.com

stablecoin should just getting pegged with real USD I think.
no point in using other instrument if at the end of they day they also have dynamic value, just imagine a bearish market hits and the reserved fund for the stablecoin gots disturbed it’s just not really a great strategy for these stablecoins.
instead these decentralized stablecoins could just also add pegging to other traditional stablecoin just in case, and increase pegging in real dollars.
current strat of decentralized stablecoin is really weak in my opinion.

jeha2015

full member

Activity: 548

Merit: 168

Play Bitcoin PVP Prediction Game

Quote from: ryzaadit on May 13, 2022, 01:29:22 PM

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

IMO, never hold with a long term for the asset who are not 100% backup by the asset and the audit still unknown + don't trust asset who can frozen you. $LUNA issue make people are worried and not trusted with the word of "stable-coin".

it is the fact, soon later this fact will spreaded in market. we know everymoment USDT minted and did every mint real usd backed this?alot fud always occur to open this back and crypto community still can't accept this. if reall back with real usd maybe its supply only few/

makishart

legendary

Activity: 3108

Merit: 1029

Decentralized stable token was only gimmick, i don't know why people are still believing with it. Mostly of tokens that claimed to be fully decentralized stable token used centralized asset with no volatility like fiat to backed this but once this token has not backed by the fiat money and it can be like what happened with UST. I will never consider the stable token with fully decentralized. It's only peg with the blockchain to make it becomes decentralized but you must aware if almost all of stable token developers have control over their stable tokens

masterrex

full member

Activity: 1820

Merit: 107

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.

IMO, I believe in the saying that there's always a room for improvement, in that case, those so-called decentralized Stablecoins that you mentioned has been serve their purpose to send a strong message to other decentralized platforms to make sure that if they want to issue such a decentralized Stablecoin it should be pegged or back with stable asset just to make sure it was stable and can withstand any possible scenario or attacked! just like what happened to Terra Luna's UST Stablecoin. Anyway, some decentralized Stablecoin has remained strong and consistent for years already and DAI is one good example.

Abiky

legendary

Activity: 3220

Merit: 1363

www.Crypto.Games: Multiple coins, multiple games

Quote from: ryzaadit on May 13, 2022, 01:29:22 PM

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

IMO, never hold with a long term for the asset who are not 100% backup by the asset and the audit still unknown + don't trust asset who can frozen you. $LUNA issue make people are worried and not trusted with the word of "stable-coin".

If only the industry was more regulated, headaches like UST's "de-pegging" from the US Dollar would've been avoided in the first place. While this would make saving money on stablecoins no different than saving money at a bank, it would bring a level of confidence among investors and traders alike. Let's face it, there's no stablecoin that's guaranteed to hold the peg except centralized ones backed by real world reserves. But even a centralized stablecoin like Tether can be shady at times. People need to learn that crypto does come with its risks, instead of being all "reds and roses".

May the current situation be a good lesson to all of those who invested their life savings on LUNA/UST. Who knows if this motivates other developers to improve algorithmic stablecoins for the better? Just my thoughts Grin

Marvell1

legendary

Activity: 2408

Merit: 1102

Leading Crypto Sports Betting & Casino Platform

Quote from: Findingnemo on May 13, 2022, 12:15:43 PM

I can see LUNA everywhere and the actual reason for the fail is the team who continue to print the token out of nowhere, the decentralized stable coins supposed to maintain the value st $1 all the time and the only reason the value can drop to zero is the asset which are pegged with, so I think the investors have to wakeup and choose the right coin not the random one.

As far as I know the team didn't print any more luna tokens, that was done by the original algorithm (ust-luna mechanism). Ust is always maintained at a stable price of 1 $ to do this, the Luna must always be burned and vice versa when Ust decreases in price, this mechanism will automatically print more Luna to make up for Ust price. UST is what causes Luna to drop thousands of times from its peak, Luna will continue to burn when the UST price stabilizes again.
The Luna tokens we are trading are those that were transferred to the exchange last year and are held by holders, all tokens minted later are in the token mine.

lixer

hero member

Activity: 2688

Merit: 588

Quote from: ryzaadit on May 13, 2022, 01:29:22 PM

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

Very good point. Those centralized stablecoins are the ones I would even fear the most since they are centralized and anyone who owns the coins can be in control of it and decide what happens tomorrow.

But, that wouldn’t be the same with the stablecoins that are decentralized, they would be a far more stable choice to go with it and you wouldn’t have the fear of anything such as coins being frozen and so on. Almost every big coin we know in the market today has been at this stage once where they faced one issue or the other, but they still overcame it and kept moving hard and better.

ryzaadit

legendary

Activity: 2660

Merit: 1261

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

IMO, never hold with a long term for the asset who are not 100% backup by the asset and the audit still unknown + don't trust asset who can frozen you. $LUNA issue make people are worried and not trusted with the word of "stable-coin".

TreyARC

jr. member

Activity: 110

Merit: 1

At this point I think we are going to see a regulated crypto world soon, things will take place in a faster manner from now on, be prepared, many projects will end up like Luna and I believe this is just the beginning, BUSD looks safer but BUSD relies entirely on Binance exchange, if the exchange goes down BUSD goes down.

Hispo

legendary

Activity: 1162

Merit: 2025

Leading Crypto Sports Betting & Casino Platform

At this point I would not put any money into any stablecoin but DAI or BUSD.
We will have to either go for either fully audited centralized tokens or over-collateralized decentralized tokens, at least for a long time...

Findingnemo

hero member

Activity: 2366

Merit: 793

Bitcoin = Financial freedom

I can see LUNA everywhere and the actual reason for the fail is the team who continue to print the token out of nowhere, the decentralized stable coins supposed to maintain the value st $1 all the time and the only reason the value can drop to zero is the asset which are pegged with, so I think the investors have to wakeup and choose the right coin not the random one.

Since I am not a fan of stable coin I never suggest anyone to hold it but to the best of my knowledge DAI seems the trusted stable coin of all and nothing else.

bittraffic

hero member

Activity: 3038

Merit: 617

It was attacked purposely and eventually someone will do it anyway, its good to learn that those algorithmic stablecoins are going to be affected with just simple attack by rich. Therefore POS is not ideal.

This is why BTC being POW is difficult to attack because energy is fully distributed everywhere in the world unlike wealth. If ETH turned to POS its likely that it will also be attacked when Blockrock the largest in the world could buy all the ETH in the market to become a validator. The worse in crypto attack will begin.

viananda2525

full member

Activity: 1130

Merit: 133

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.

i am agree stable coins now failed to pegged to $1 no matter their algoritm or mechanisme to set it stable $1. i am believe there is no real collateral from stable coins project, they just use an algorithm which is could not work while we see unexpected market movement . we see from several project build stable coin, most of them totaly failed.even usdt many time under $1. this is early warning to becarefull with this project to avoid same accident with luna or ust.

avikz

legendary

Activity: 3080

Merit: 1500

Is there any centralized stablecoin available in the market which has already been audited their reserve? USDT Tether is the first ever large scale stablecoin (centralized) and they are still the biggest one in terms of volume. I don't think they have ever got audited.

So the entire stablecoin ecosystem is thriving based on trust! For Terra, the trust is somehow gone and we are seeing the price dipping every single hour. Otherwise I don't see a logical reason for not maintaining the peg with reserve asset.

Abiky

legendary

Activity: 3220

Merit: 1363

www.Crypto.Games: Multiple coins, multiple games

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.

Topic: Are decentralized stablecoins a failed experiment? (Read 253 times)