Tether and Bitfinex CTO Paolo Ardoino said that the Terra project wasn't a rug pull but just a 'bad idea' that many people knew was unsustainable. He says Do Kown 'created this project with arrogance.'
The CTO went on to state the UST had become too big to maintain its peg, as its collateralization was not large enough to support the stablecoin but was still “big enough to crash the market even further.”
“They were basically in a cascade situation where they had to defend the peg so they have to sell the collateral and selling the collateral was causing additional crashes and these additional crashes were pushing them to sell more or collateral and so on and so forth,” he said. Questioned on what the regulatory landscape for stablecoins could look like moving forward, Ardoino suggested that policymakers first need to clearly define the difference between stablecoins fully backed by assets as opposed to those primarily backed by algorithms:
“I believe that the first thing that needs to happen is proper categorization of stablecoins so right now, Terra UST is an algorithm stablecoin, while Tether is a centralized stablecoin. So two different beasts with two different assurances, two different backings and so on.”
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