Clearly not all stablecoins are stable as crypto experienced a major liquidation moment this past week. How this will affect blockchain regulation in DC remains to be seen, but there is opportunity.
To recap, the stablecoin known as TerraUSD (a.k.a UST -its ticker) went down 90+% and the governance token associated with its peg – Terra LUNA – cratered a similar percentage. Together, the size of the loss is reminiscent of Lehman Brothers and its bankruptcy during the Great Financial Crisis in 2008.
Market cap comparison:
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- Lehman Brothers – $60 billion at its peak in 2007. Filed for bankruptcy and effectively went to zero in late 2008.
- TerraUSD – $18.6 billion market cap as of May 8, 2022. Approximately $2 billion as of today according to CoinMarketCap.
- Terra LUNA – The backing governance token for TerraUSD reached a peak market cap of $41.05 billion as of April 3, 2022. Today, it’s $1.8 billion.
It should be noted that the remaining value for TerraUSD and Terra LUNA could be fleeting as traders try to play an arbitrage opportunity. But, overall the future of both appears bleak.
For now, the promise of providing stability in volatile crypto markets with stablecoins appears to be damaged. False advertising? How will government policymakers react?
Continue reading “Stablecoin Debacle Speaks To Potential For Congressional Action”