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Algorithmic stablecoin

Here’s the full scope of UST’s de-pegging on the stablecoin market

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Here’s the full scope of UST’s de-pegging on the stablecoin market

Following the collapse of TerraLUNA in May, never-before-seen attention has since been placed on stablecoins. In fact, there are many who still harbor doubts about the ‘stability’ of this class of cryptocurrency assets. 

According to Dune Analytics, algorithmic stablecoins have seen the most growth over the past year. Algorithmic stablecoins, including Ampleforth, USDD, Frax, Alchemix, and even the collapsed UST, have logged a collective hike of 115.22 %. Fiat-collateralized stablecoins, on the other hand, have appreciated by 29.28 % over the same period.

Of all kinds of stablecoins (Algorithmic, fiat-collateralized, and crypto over-collateralized), algorithmic stablecoins’ supply, however, remains the lowest. According to Dune Analytics, the supply of algorithmic stablecoins in the last year stood at 2,253,938,177.

For crypto over-collateralized stablecoins, supply over the past year was pegged at 8,585,410,440. With 97,074,596,562 logged as total supply this past year, fiat-collateralized stablecoins led the pack with the most supply. The reason for this is not far-fetched. Centralized bodies float this category of stablecoins, and they have stronger reserves.

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Source: Dune Analytics

Furthermore, with 90% of the total market share, fiat-collateralized stablecoins are the most used in this category of cryptocurrency assets. In fact, this has been the case for over two years now. 

Source: Dune Analytics

RIP algorithmic stablecoins

With only a 2% share of the entire stablecoin market, algorithmic stablecoins have had a difficult year, one aggravated by the collapse of Terra’s UST.

Since the stablecoin de-pegged in May, the adjusted on-chain volume of algorithmic stablecoins has fallen by 91%. At the time of writing, algorithmic stablecoins in the market had an adjusted on-chain volume of 51,165,168.98.

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Source: Dune Analytics

Also, since the collapse of UST in May, the velocity of algorithmic stablecoins has dwindled. The velocity of a cryptocurrency asset refers to the number of times such an asset moves from one transaction to another.

With a reading of 0.029 at press time, the velocity for algorithmic stablecoins has dropped by over 500% since May.

Source: Dune Analytics

USDT runs the market

According to Dune Analytics, fiat-collateralized stablecoins have a total supply of $97,074,596,562, with $95,456,754,764 as the available supply. Leading centralized stablecoins include Tether USDT (USDT), USD Circle (USDC), True USD (TUSD), Paxos Standard (PAX), and Binance USD (BUSD). 

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USDT has controlled the fiat-backed stablecoin market over the last two years as its market capitalization has grown by 265% since October 2020. USDC continues to trail behind it with a market capitalization of $51,677,605,035, followed by BUSD with a market capitalization of $20,000,915,736.

PAX and TUSD have not seen much growth in market capitalization in about two years.

Source: Dune Analytics

BUSD is up to something

On 5 September, Binance announced the launch of BUSD Auto-Conversion for its users, which would convert their existing balances and new deposits of USDC, USDP, and TUSD stablecoins to BUSD at a 1:1 ratio.

Since then, the stablecoin’s market capitalization has grown by 3%. Furthermore, its trading volume has also gone up by 124% in about 6 days.

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Source: Santiment

'undepeggable'

Stablecoin USDN Trades Below $1 Parity For 14 Days In A Row, Token Taps $0.91 Low This Week

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Stablecoin USDN Trades Below $1 Parity For 14 Days In A Row, Token Taps $0.91 Low This Week

Approximately 14 days ago, the stablecoin neutrino usd (USDN) tapped a high of $0.994 per unit, and ever since then, USDN has not been able to rise above the $0.97 per unit range. The dollar-pegged asset is associated with the Waves blockchain protocol, and recently the Neutrino Protocol decided to add a token called SURF to USDN’s reserve basket in order to “improve the mechanics of recapitalizing USDN reserves.”

Waves Stablecoin USDN Falters, Team Adds SURF to Improve Algorithmic Stablecoin’s Reserve Mechanics, Waves Founder Dismisses Critics

Another stablecoin has shown a deviation away from U.S. dollar parity, as USDN tapped a low of $0.94 per unit on September 5, 2022. Coingecko.com statistics indicate neutrino usd dropped even lower the day before, slipping to $0.918 per coin. 30-day metrics show USDN dropped to $0.905 on August 26. It’s not the first time USDN has deviated away from the $1 parity. Prior to the August 26 low, year-to-date, neutrino usd has seen three more significant drops below the $1 price value.

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Prior to August 26, on July 14, USDN’s price dropped to $0.938 per token and on May 11, USDN slipped to $0.824 per coin. On April 4, neutrino usd dropped even lower than the losses recorded on May 11, as USDN dropped to $0.787 per coin that day. In more recent times, the Neutrino Protocol added a token called SURF (Smart Utility Recapitalization Feature) to USDN’s basket of reserves. There are now four different tokens leveraged for USDN reserves as SURF joins the USDN stablecoin, NSBT, and WAVES.

Neutrino Protocol calls itself “an algorithmic price-stable assetization protocol acting as an accessible defi toolkit.” The team believes SURF will improve USDN’s backing ratio (BR) by achieving “BR equilibrium and provide additional incentives for the community and investors.” Some crypto proponents have said Waves developers are creating ways to make USDN “undepeggable,” and SURF is a solution toward that effort. Adding SURF to the USDN reserve mix has come under scrutiny and criticism as well.

Some individuals have said Waves is a Ponzi scheme and USDN has been compared to Terra’s UST. However, Waves founder Sasha Ivanov discussed the criticism with Coindesk on August 31 and he dismissed the comparison of USDN to Terra’s UST. “UST was backed by nothing – LUNA [the token] was burned to create UST. It was never intended to be backed up by anything other than the algorithm,” Ivanov told the reporter. “The opposite is true of USDN. WAVES tokens are held in a smart contract to collateralize USDN.”

Tags in this story

‘undepeggable’, $1 Parity, Algorithmic stablecoin, depegging, deviation, discrepancy, Neutrino Protocol, neutrino usd, Neutrino usd (USDN), NSBT, Sasha Ivanov, Smart Utility Recapitalization Feature, Stablecoin, Stablecoin USDN, Stablecoins, surf, USDN, USDN stablecoin, WAVES, Waves Stablecoin

What do you think about USDN remaining below the $0.97 per unit range and its deviations away from the $1 parity? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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$1 Parity

Tron’s Stablecoin USDD Falls To $0.97, USDC Deployed To Defend The $1 Parity

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Tron’s Stablecoin USDD Falls To $0.97, USDC Deployed To Defend The $1 Parity

After the Terra UST fallout and the current crypto market volatility, many eyes have been focused on the Tron-based algorithmic stablecoin USDD. On June 13, the crypto asset tron (TRX) dropped significantly in value and Tron’s founder Justin Sun spoke about traders shorting the digital currency. Sun explained that the Tron DAO Reserve would deploy $2 billion to “fight them” and said he didn’t think the shorters could last 24 hours. Furthermore, the stablecoin USDD took a small dive on Monday, dropping to $0.977 per unit during the crypto market carnage.

Another Stablecoin Wobbles, While the Crypto Economy’s Value Drops Massively — Tron DAO Reserve Deploys USDC to Defend USDD Peg

On one of the blackest Mondays in the world of crypto assets, the stablecoin USDD fell to $0.97 per unit and the Tron DAO Reserve had to deploy funds to defend the $1 parity. “For the market extreme condition, [Tron DAO Reserve] has received 700 million USDC to defend [the] USDD peg. Now USDD collateralization rate is nearly 300%,” the organization tweeted.

While a quick dip to $0.97 isn’t the biggest deal to some investors, and USDD moved back to the $0.99 region, the same thing happened to UST the day before the massively larger de-peg. It is also being said that Tron’s native asset TRX is being heavily shorted by traders and Justin Sun explained that $2 billion would offset the shorters causing a short squeeze.

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“Funding rate of shorting TRX on Binance is negative 500% APR,” Sun tweeted. “[Tron DAO Reserve] will deploy 2 billion USD to fight them. I don’t think they can last for even 24 hours. [A] short squeeze is coming,” he added.

Sun Believes Overcollateralization Will Make Market Participants ‘More Comfortable’ With USDD

Then the Tron DAO Reserve announced a number of purchases meant to defend the peg. After the 700 million USDC was purchased, the organization bought another 100 million USDC, and then another 100 million more USDC after that.

“Currently USDC supply on TRON has reached $2.5 billion,” the Tron DAO Reserve remarked after adding 650 million USDC to the reserve. Tron’s claim is that USDD backing will be overcollateralized by at least 130% and Sun believes this method will make investors more comfortable with the stablecoin.

“We want to have USDD to be overcollateralized, which I think will make market participants more comfortable about using us in the future,” Sun told Bloomberg on June 5.

Tags in this story

$1 Parity, Algorithmic stablecoin, defend the peg, H.E. Justin Sun, justin sun, overcollateralization, Stablecoin, Stablecoins, Terra, Terra UST, Tron (TRX), Tron Blockchain, Tron DAO, TRON DAO Reserve, trx, USDD, USDD Reserves

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What do you think about the Tron stablecoin USDD and its fight against the market carnage? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Accusations

A New Terra Network Is Coming With Support From Major Exchanges, LUNA And UST Holders Eligible For Airdropped Tokens

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A New Terra Network Is Coming With Support From Major Exchanges, LUNA And UST Holders Eligible For Airdropped Tokens

According to a recent announcement from the Terra blockchain team, the community voted and passed a proposal that plans to launch a new genesis version of the Terra blockchain without an algorithmic stablecoin. The governance proposal called “Terra Ecosystem Revival Plan 2” has been amended and the final release of the new Terra Core codebase has been released to prepare for the new network.

Terra Ecosystem Rebirth to Happen on May 27, Latest Version of Terra Core Has Been Released and Audited

On May 27, a new blockchain will launch that’s based on the Terra blockchain network but does not include an algorithmic stablecoin like terrausd (UST). The old chain token will be called “Luna Classic (LUNC)” and the new token will take the old name “Luna (LUNA).” The Terra team announced the May 27 launch and explained that the governance proposal passed on May 25. According to the team, the latest Terra Core code has been released and the codebase was audited by SCV Security.

The governance decision further details the new LUNA token distribution which includes 30% for the community pool, 35% for pre-attack LUNA holders, 10% for pre-attack aUST holders, post-attack LUNA holders will get 10% and post-attack UST holders are eligible for 15% of the supply. Additionally, the Terra team mentioned that the Terraform Labs wallet, Luna Foundation Guard’s wallet, and the community pool distribution module account will be removed from the LUNA airdrop.

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The Terra team’s Twitter thread adds:

The removal of these wallets from the airdrop whitelist will make Terra a fully community-owned chain. We believe this is an important step to empowering our ecosystem.

Controversy, a Class-Action Lawsuit, and Mirror Protocol Accusations

There’s been a lot of controversy surrounding the Terra blockchain network and the face of the project Do Kwon. Just recently, a LUNA investor who lost $2.4 million was arrested for visiting Kwon’s home and knocking on his door. Then there’s a Twitter account called “@fatmanterra (Fatman)” that has said a class action lawsuit is being planned in order to get compensation for the class of LUNA and UST victims.

Fatman said the action will be free to join and the team is researching jurisdictions like Singapore where investment protection is laxer. Fatman said:

I am happy to announce that three law firms have offered to commit over $15m (maybe more) to this historic fight for justice – they are looking to fund the case and will collect fees on a contingency basis. This could never have happened without all of you.

But that’s not all Fatman has been doing, as the Twitter account has published accusations about specific Terra-based projects and partners. In one specific thread written by Fatman, the social media account says Terra’s Mirror Protocol, a decentralized and synthetic stock exchange, was “really just a farce designed to enrich Do Kwon/VCs.” The Twitter thread discusses how Mirror Protocol’s governance system was allegedly rigged.

Centralized Exchange Platform’s Binance, Bybit, and Huobi Plan to Support New LUNA Token

The Terra team doesn’t seem to be bothered by the controversy surrounding the project and the litany of accusations on social media. Moreover, many rumors have been flying around social media concerning Kwon’s and the Terra development team’s decisions. Kwon has been responding to question after question about the new Terra chain, eligibility, and the airdropped LUNA tokens.

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The Terra team details that it is working closely with centralized exchange partners like Bybit and Binance in order to support LUNA holders who left funds on exchanges. Huobi Global revealed it would support the new LUNA chain. Binance tweeted about the rebirth of the new Terra network as well.

“The Terra community just passed a vote to ‘Rebirth Terra Network,’” Binance said. “We are working closely with the Terra team on the recovery plan, aiming to provide impacted users on Binance with the best possible treatment. Stay tuned for further updates.”

Tags in this story

Accusations, Airdrop, airdropped LUNA, airdropped tokens, Algorithmic stablecoin, Binance, Bybit, Codebase, controversy, do kwon, eligible, Fatman, Fatman Terra, Huobi, Investors, LUNA, new LUNA chain, rigged, SCV Security, Stablecoin, terra (LUNA), Terra Blockchain, Terra Core, Terra Core code, Terra’s Mirror Protocol, UST

What do you think about the new Terra blockchain project? What do you think about the controversy surrounding the Terra ecosystem? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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