After the collapse of Terra, the future of stablecoins in question

In this article, Cyril Sabbagh delves into the Terra LUNA saga, explaining how and why it unfolded, and shares his perspective on stablecoins in a broader sense.

Explore the fascinating world of stablecoins, a category of cryptocurrencies designed to maintain a stable value, often pegged to traditional currencies such as the dollar or euro, with the aim of replicating their value.

In a broad sense, there are two types of stablecoins: non-algorithmic ones that use a reserve system to maintain parity with the reference currency, and algorithmic ones that rely on algorithmic mechanisms to ensure stability.

However, the recent collapse of the cryptocurrency LUNA and the UST stablecoin has highlighted the risks associated with such projects.

This episode underscores the importance of designing robust projects and considering hidden arbitrage opportunities.

Despite this, certain stablecoins like Circle’s USDC and Maker’s DAI continue to inspire confidence due to their collateralization mechanisms.

Ultimately, contemplating the future of stablecoins leads us to consider the challenge of maintaining stability while preserving the decentralized principles inherent in the crypto ecosystem.


This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.

The information relayed in this article must be considered and analyzed in light of all the risks identified in the fund’s pre-contractual documentation, which you can find via the following link.

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