Are decentralized stablecoins a failed experiment?

[Abiky]

For long, decentralized stablecoins have claimed to maintain their peg backed by either collaterized assets or algorithms. It's this point in time where a so-called decentralized stablecoin named "TerraUSD" lost its peg with no point for recovery within the short term. This is not the first time a decentralized stablecoin loses its peg, as a similar situation happened with NuBits (USNBT) some time ago. Even now, another decentralized stablecoin called "Neutrino USD" (USDN) lost it's 1:1 peg with the US Dollar.

With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? Do you think there's still room for improvement? Your input will be greatly appreciated. Thank you very much.

[avikz]

Is there any centralized stablecoin available in the market which has already been audited their reserve? USDT Tether is the first ever large scale stablecoin (centralized) and they are still the biggest one in terms of volume. I don't think they have ever got audited.

So the entire stablecoin ecosystem is thriving based on trust! For Terra, the trust is somehow gone and we are seeing the price dipping every single hour. Otherwise I don't see a logical reason for not maintaining the peg with reserve asset.

[viananda2525]

For long, decentralized stablecoins have claimed to maintain their peg backed by either collaterized assets or algorithms. It's this point in time where a so-called decentralized stablecoin named "TerraUSD" lost its peg with no point for recovery within the short term. This is not the first time a decentralized stablecoin loses its peg, as a similar situation happened with NuBits (USNBT) some time ago. Even now, another decentralized stablecoin called "Neutrino USD" (USDN) lost it's 1:1 peg with the US Dollar.

With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? Do you think there's still room for improvement? Your input will be greatly appreciated. Thank you very much.

i am agree stable coins now failed to pegged to $1 no matter their algoritm or mechanisme to set it stable $1. i am believe there is no real  collateral from stable coins project, they just use an algorithm which is could not work while we see unexpected market movement . we see from several project build stable coin, most of them totaly failed.even usdt many time under $1. this is early warning to becarefull with this project to avoid same accident with luna or ust.

[bittraffic]

It was attacked purposely and eventually someone will do it anyway, its good to learn that those algorithmic stablecoins are going to be affected with just simple attack by rich. Therefore POS is not ideal.

This is why BTC being POW is difficult to attack because energy  is fully distributed everywhere in the world unlike wealth. If ETH turned to POS its likely that it will also be attacked when Blockrock the largest in the world could buy all the ETH in the market to become a validator. The worse in crypto attack will begin.

[Findingnemo]

I can see LUNA everywhere and the actual reason for the fail is the team who continue to print the token out of nowhere, the decentralized stable coins supposed to maintain the value st $1 all the time and the only reason the value can drop to zero is the asset which are pegged with, so I think the investors have to wakeup and choose the right coin not the random one.

Since I am not a fan of stable coin I never suggest anyone to hold it but to the best of my knowledge DAI seems the trusted stable coin of all and nothing else.

[Hispo]

At this point I would not put any money into any stablecoin but DAI or BUSD.
We will have to either go for either fully audited centralized tokens or over-collateralized decentralized tokens, at least for a long time...

[TreyARC]

At this point I think we are going to see a regulated crypto world soon, things will take place in a faster manner from now on, be prepared, many projects will end up like Luna and I believe this is just the beginning, BUSD looks safer but BUSD relies entirely on Binance exchange, if the exchange goes down BUSD goes down.

[ryzaadit]

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

IMO, never hold with a long term for the asset who are not 100% backup by the asset and the audit still unknown + don't trust asset who can frozen you. $LUNA issue make people are worried and not trusted with the word of "stable-coin".

[lixer]

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

Very good point. Those centralized stablecoins are the ones I would even fear the most since they are centralized and anyone who owns the coins can be in control of it and decide what happens tomorrow.

But, that wouldn’t be the same with the stablecoins that are decentralized, they would be a far more stable choice to go with it and you wouldn’t have the fear of anything such as coins being frozen and so on. Almost every big coin we know in the market today has been at this stage once where they faced one issue or the other, but they still overcame it and kept moving hard and better.

[Marvell1]

I can see LUNA everywhere and the actual reason for the fail is the team who continue to print the token out of nowhere, the decentralized stable coins supposed to maintain the value st $1 all the time and the only reason the value can drop to zero is the asset which are pegged with, so I think the investors have to wakeup and choose the right coin not the random one.

As far as I know the team didn't print any more luna tokens, that was done by the original algorithm (ust-luna mechanism). Ust is always maintained at a stable price of 1 $ to do this, the Luna must always be burned and vice versa when Ust decreases in price, this mechanism will automatically print more Luna to make up for Ust price. UST is what causes Luna to drop thousands of times from its peak, Luna will continue to burn when the UST price stabilizes again.
The Luna tokens we are trading are those that were transferred to the exchange last year and are held by holders, all tokens minted later are in the token mine.

[Abiky]

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

IMO, never hold with a long term for the asset who are not 100% backup by the asset and the audit still unknown + don't trust asset who can frozen you. $LUNA issue make people are worried and not trusted with the word of "stable-coin".

If only the industry was more regulated, headaches like UST's "de-pegging" from the US Dollar would've been avoided in the first place. While this would make saving money on stablecoins no different than saving money at a bank, it would bring a level of confidence among investors and traders alike. Let's face it, there's no stablecoin that's guaranteed to hold the peg except centralized ones backed by real world reserves. But even a centralized stablecoin like Tether can be shady at times. People need to learn that crypto does come with its risks, instead of being all "reds and roses".

May the current situation be a good lesson to all of those who invested their life savings on LUNA/UST. Who knows if this motivates other developers to improve algorithmic stablecoins for the better? Just my thoughts

[masterrex]

For long, decentralized stablecoins have claimed to maintain their peg backed by either collaterized assets or algorithms. It's this point in time where a so-called decentralized stablecoin named "TerraUSD" lost its peg with no point for recovery within the short term. This is not the first time a decentralized stablecoin loses its peg, as a similar situation happened with NuBits (USNBT) some time ago. Even now, another decentralized stablecoin called "Neutrino USD" (USDN) lost it's 1:1 peg with the US Dollar.

With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? Do you think there's still room for improvement? Your input will be greatly appreciated. Thank you very much.

IMO, I believe in the saying that there's always a room for improvement, in that case, those so-called decentralized Stablecoins that you mentioned has been serve their purpose to send a strong message to other decentralized platforms to make sure that if they want to issue such a decentralized Stablecoin it should be pegged or back with stable asset just to make sure it was stable and can withstand any possible scenario or attacked! just like what happened to Terra Luna's UST Stablecoin. Anyway, some decentralized Stablecoin has remained strong and consistent for years already and DAI is one good example.

[makishart]

Decentralized stable token was only gimmick, i don't know why people are still believing with it. Mostly of tokens that claimed to be fully decentralized stable token used centralized asset with no volatility like fiat to backed this but once this token has not backed by the fiat money and it can be like what happened with UST. I will never consider the stable token with fully decentralized. It's only peg with the blockchain to make it becomes decentralized but you must aware if almost all of stable token developers have control over their stable tokens

[jeha2015]

The problem is always the pegged asset.

Even USDT it self, have some rumor they're not 100% backup by real money (USD). Some rumor or speculation USDT only have backup by real asset around 50-65% from the total circulation. Also, your USDT asset can be froze by them.

IMO, never hold with a long term for the asset who are not 100% backup by the asset and the audit still unknown + don't trust asset who can frozen you. $LUNA issue make people are worried and not trusted with the word of "stable-coin".

it is the fact, soon later this fact will spreaded in market. we know everymoment USDT minted and did every mint real usd backed this?alot fud always occur to open this back and crypto community still can't accept this. if reall back with real usd maybe its supply only few/

[WalkerIVIV]

stablecoin should just getting pegged with real USD I think.
no point in using other instrument if at the end of they day they also have dynamic value, just imagine a bearish market hits and the reserved fund for the stablecoin gots disturbed it’s just not really a great strategy for these stablecoins.
instead these decentralized stablecoins could just also add pegging to other traditional stablecoin just in case, and increase pegging in real dollars.
current strat of decentralized stablecoin is really weak in my opinion.

[JeffBrad12]

A bit surprised to see that if there was someone who still called that decentralized stable token has ever exist. I didn't even believe with the decentralized stable token. The real USD must be used to backed the centralized token like stable token. There's no decentralized stable token. Stable token was just a stable token that fully controlled by party who issued it. Terra can control UST through halting the blockchain. I think that all of decentralized stable tokens that used other than fiat backed mechanism was failed experiment.
DEI, UST and so many experiment stable tokens have been fallen since last year

[LogitechMouse]

After what happened in UST, questions like this will appear.
I mean all of the stablecoins are affected because of this UST which got de-pegged to dollar.

TBH, I'm not a fan of stablecoins and I didn't think of holding it either for some reasons. UST got de-pegged and USDT Tether which is the largest stablecoin right now in market cap has been de-pegged temporarily as well. What happened in UST will have a domino effect against all the stablecoins until to the point that people will not trust stablecoins anymore thus, they will not buy it and that is the time where we can say that it is a failed experiment already.

[Nivia1st]

For long, decentralized stablecoins have claimed to maintain their peg backed by either collaterized assets or algorithms. It's this point in time where a so-called decentralized stablecoin named "TerraUSD" lost its peg with no point for recovery within the short term. This is not the first time a decentralized stablecoin loses its peg, as a similar situation happened with NuBits (USNBT) some time ago. Even now, another decentralized stablecoin called "Neutrino USD" (USDN) lost it's 1:1 peg with the US Dollar.

With failed promises to maintain stability, does this means decentralized stablecoins are a failed experiment? If not, why? Do you think there's still room for improvement? Your input will be greatly appreciated. Thank you very much.

not completely fail. The problem with UST and other stablecoins losing peg is that they don't have a 1:1 reserve. if they had it in the first place the selloff issue resulting in the loss of the peg would never have happened. maybe with this problem the stablecoin ecosystem can be better.

[aprilnot]

if you look at what happened to UST, yes it was a big failure. and maybe because of this problem regulators will tighten their oversight of stablecoins in the future. this will give concern to everyone that stablecoins are not really stable and there will always be a possibility of de-peg in the future.

[Faisal2202]

Well, many questions are arising in our minds after the incident of ust well according to my knowledge ust unstability was the mistake of luna's team, when they withdrew money from their liquidity pool due to high sell pressure ust skewed and usdn skewed also which causes to depegged it, well, pegged tokens are losing their trust on people, they should do something about curve pools to make their stability full assure