Unchained The 5 Biggest Lessons From Terra/Luna's Collapse, According to Tascha Che - Ep.354
May 20, 2022
Tascha Che, founder of Tascha Labs and a prominent figure in the stablecoin market, dissects the Terra/Luna collapse, sharing five crucial lessons. She explains how stablecoin issuers operate and why algo stablecoins excite her. Tascha discusses the risks of undercollateralized stablecoins and the importance of actual demand for stability. Interestingly, she argues that smaller stablecoins may be more effective and advocates for cross-chain agreements to enhance crypto ecosystem resilience. Additionally, she reflects on the potential regulatory implications post-collapse.
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Stablecoin Business Model
- Stablecoin issuers profit by transforming volatility.
- They act like insurers or banks, offering stable prices while managing risk.
Why Terra/Luna Failed
- Undercollateralized stablecoins can function, as seen with some fiat currencies.
- Key difference: Stablecoins lack uncorrelated demand supported by real economic activity, unlike fiat.
Network Effects Matter
- Fast stablecoin expansion without real network effects is dangerous.
- A stablecoin's value proposition relies solely on its $1 peg, unlike fiat currencies.