The Lunacy of Luna

By Gideon6ix | CryptoNuances | 10 Jun 2022

The Lunacy of Luna
Investors Keep on Buying Stablecoins Anyway

by: Devin Green




Imagine investing thousands in a failed project only to witness the project manager launching a clone of that failed product. This cloned project takes over while the original project gets rebranded and forgotten about. Almost immediately, millions of dollars are raised and then lost. This nightmare scenario may sound crazy, but that is precisely what Do Kwon (Kwon Do-Hyung) did with Luna 2.0.

Several networks are already taking advantage of the short-term memory of investors and launching their own versions of the Luna Terror- I mean Terra, of course.

On May 5th, 2022, Tron released the stablecoin Decentralized USD (USDD). USDD intends to keep a 1:1 parity with the U.S. dollar-based on an algorithm…sound familiar? USDD currently has a Marketcap of USD 668,567,964 and has seen a High of USD 1.03 and a Low of USD .0980173. This coin has depegged several times in its short history, but investors can’t seem to get enough.

Cardano (ADA) has teamed up with blockchain payments ecosystem COTI to release Djed sometime in June 2022. It may be hard to believe, but the project will be controlled through an algorithm and backed by undefined collateral and a reserve token called SHEN. This newly created token is also not paired to any government-issued fiat.

If you think algorithmic stablecoins based, but not backed by actual USD are not risky enough, take a deep sigh of relief. Tether announced the release of MXNT on May 26th, 2022, MXNT will be pegged to the Mexican Peso. MXNT is the newest edition to Tethers stable of stablecoins, including USD₮, the Euro-pegged EUR₮, and the offshore Chinese Yuan-pegged CNH₮.

These projects are just a few examples of the rush to push stablecoins in the crypto market. Stablecoins are prevalent due to the turbulent nature of the Cryptocurrency market. Investors yearn for a coin that could perform like a traditional stock. Even well-meaning developers are taking advantage of investors’ fear by creating stablecoins that are anything but reliable.

Stablecoins not backed by actual currency threaten investors, but developers seem insistent on pairing intangible assets with other unstable assets. So long as this trend continues, there is no reason to think that a new stablecoin can prevent extreme losses. I think I will stick with USDC for now.



If you want to know more and follow me on my journey, please Follow, Like, and Comment. More crypto articles written by me like this one, are available.

All the best,

Gideon 6ix




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