Cardano’s Creator Declares that Algorithmic Stablecoins Are Necessary for Bitcoin (BTC) to Realize Its Mission
Charles Hoskinson, the inventor of Cardano, believes that algorithmic stablecoins are crucial to realizing Bitcoin’s original long-term objective.
The inventor of Cardano was replying to a tweet by Jesse Powell, CEO of Kraken, who said that the market may be losing trust in U.S.-based financial products after the USDT and USDC lost their dollar peg earlier today.
Circle, a USDC issuer, has disclosed that $3.3 billion of its $40 billion in USDC reserves are held at the troubled SVB.
When asked about his company’s exposure to SVB, the CEO of Kraken said, “We have no exposure to SVB.”
Algorithmic stablecoins, a subset of stablecoins, depend on algorithms to maintain their dollar peg. With algorithmic stablecoins, the algorithm governs the connection between the two tokens that are often used.
The failure of algorithmic stablecoins such as TerraUSD has diminished faith in this category of stablecoins (UST). The volatility of the cryptocurrency market seems to have also affected this report.
The Frax community has voted against retaining a partially supported, semi-algorithmic stablecoin in favor of fully backing its FRAX stablecoin with U.S. Dollar equivalents. Due to the USDC depeg, FRAX was trading at $0.914 below its dollar peg at the time of writing.
Despite this short-term constraint, the inventor of Cardano is optimistic about the long-term prospects of algorithmic stablecoins as the “most critical research stream” to accomplish Bitcoin’s original aim.
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