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The $1.3tn cryptocurrency industry was on Thursday hit by one of its toughest challenges when stablecoin Tether — a critical cog in the market — failed to maintain its link with the US dollar. The company refuses to provide details on the Treasury holdings that back the stablecoin claiming their fear of revealing the ‘secret sauce.’
Tether tumbled as low as 95.11 cents yesterday, far below the $1 peg that it seeks to maintain. Its price later recovered, but the slip-up, days after the failure of smaller algorithmic stablecoin rival TerraUSD, (and its paired coin Luna) sent bitcoin — the world’s biggest digital asset — sinking to its lowest level since late 2020.
Ratings group Fitch said the troubles at Tether and TerraUSD “highlight the fragile nature of private stablecoins, and will accelerate calls for regulation”.
In todays video we look at how algorithmic stablecoins like Terra work, we discuss their importance in DeFi and smart contracts.
The Terra Whitepaper: assets.website-files.com/611153e7af981472d8da199c/618b02d13e938ae1f8ad1e45_Terra_White_paper.pdf
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