The lessons of stablecoin experimentation are playing out in real time this week. The false equivalency between $USD and stables is being revealed through empirical data and their associated mechanisms. At the center of the meltdown is Terra’s LUNA clocking in a whopping 98% price drop in 48 hours.

Stablecoins integrate us from our sovereign systems to a digital world. Terra is a 2017 era stable which essentially uses crypto as collateral to peg its price to the dollar.

In light of the colossal crash, many have accused Terra’s design to be irresponsibly cavalier by not providing practical guardrails against such a plunge. Unfortunately, Terra is exposed to the hazards of the market like any other participant. It’s evident that whales were holding major positions in USDT, were forced to discharge, and reduce exposure. Terra’s margin was called and the liquidation phase was authorized. But do they have the reserves to hold the peg?

I believe they do, and if correct, would unveil an opportunity to ride the floor back upward. However, it may not be so simple in the near term. Regulators will capitalize on this blunder to push FUD and a Central Bank issued digital dollar into the ecosystem.

As always, there’s immense opportunity for underlying assets to become the new anchors of the ecosystem. As USDT endures a reputation and PR onslaught, smart money moves to stronger protocols. Although it’s not a flawless refuge, Bitcoin continues to show its resiliency during market uncertainty: Weak hands to strong hands.

The lessons of stablecoin experimentation are playing out in real time this week. The false equivalency between $USD and stables is being revealed through empirical data and their associated mechanisms. At the center of the meltdown is Terra’s LUNA clocking in a whopping 98% price drop in 48 hours.

Stablecoins integrate us from our sovereign systems to a digital world. Terra is a 2017 era stable which essentially uses crypto as collateral to peg its price to the dollar.

In light of the colossal crash, many have accused Terra’s design to be irresponsibly cavalier by not providing practical guardrails against such a plunge. Unfortunately, Terra is exposed to the hazards of the market like any other participant. It’s evident that whales were holding major positions in USDT, were forced to discharge, and reduce exposure. Terra’s margin was called and the liquidation phase was authorized. But do they have the reserves to hold the peg?

I believe they do, and if correct, would unveil an opportunity to ride the floor back upward. However, it may not be so simple in the near term. Regulators will capitalize on this blunder to push FUD and a Central Bank issued digital dollar into the ecosystem.

As always, there’s immense opportunity for underlying assets to become the new anchors of the ecosystem. As USDT endures a reputation and PR onslaught, smart money moves to stronger protocols. Although it’s not a flawless refuge, Bitcoin continues to show its resiliency during market uncertainty: Weak hands to strong hands.