#stablecoins are as bad as #CBDCs .
That’s what #Terra_Luna has shown us.
#USDC #Tether #BUSD , …
They are all SHIT!
Let me elaborate on that statement.
They DEFINITELY have use as an indicator on how much you hold expressed in $USD. They are also handy to see how much worth is being transacted (swapped, exchanged,…) in a DeFi – setting.
The “shitty” part comes with trust.
Trusting that the underlying developers do not fuck-up.
Stablecoins whose value try to imitate the USD are, like the $USD itself, INFLATIONARY in nature. They lose purchasing power over time.
Stablecoins also “maintain” value by being backed by a variety of stocks, options, high-value Crypto (Bitcoin) and other assets. To maintain value are either the amount of coins increased or additional assets being bought in.
This requires trust with the foundation/developers/”guard”/group behind the project to do it fairly. Audits are A MUST! What happens when this is not the case? We had a simulation with Terra $LUNA. Assets ($BTC) was MASSIVELY dumped and reduced it to nothing. The market took a blow but is recovering.
The project itself? DEAD. All holders lost their money. It evaporated when they were looking at it. Nothing to stop it. All gone.
A “foundation/developers/”guard”/group” is the same as a Central Bank. If they pull the plug, it’s gone.
Hence why stablecoins are as bad CBDC’s. Same setup. Same risks.
Now is the best of times to get your fundamentals straight.
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