Unchained Why Terra Collapsed and Whether an Algo Stablecoin Can Ever Succeed - Ep.352
May 17, 2022
In this engaging discussion, Nic Carter, a partner at Castle Island Ventures, Eric Wall, a former CIO at Arcane Assets, and Erik Voorhees, founder of ShapeShift, delve into the downfall of Terra and its algorithmic stablecoin. They debate the misconceptions surrounding UST's stability and the market dynamics that led to its collapse. Opinions vary on whether algo stablecoins can succeed, with Erik sharing how his views evolved. The trio also addresses the arrogance of Terra's founder, risks of liquidity issues, and the critical lessons the crypto industry must learn.
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Voorhees' Initial Skepticism
- Eric Voorhees was a LUNA owner before the collapse.
- He was skeptical about algorithmic stablecoins but supported experimentation.
UST Compared to *Speed*
- Eric Wall compared UST to a bus in the movie Speed, heading for a crash.
- He saw it as an uncollateralized stablecoin tied to a shitcoin's demand.
Carter's Dismissal and Over-Collateralization Belief
- Nick Carter analyzed Basis and Terra and deemed them unworkable.
- He believes decentralized stablecoins require over-collateralization.