Emin Gün Sirer, founder of Avalanche (AVAX) and current Ava Labs CEO, was not shocked by UST’s resilience. Every stablecoin, even fully-collateralised fiat-backed stablecoins, has sometimes depegged. Some of the weak algo stablecoins have also rebounded if they have a real team behind them.
Even fully-collateralized fiat stablecoins have depegged. Even some of the weak algo stablecoins have recovered.
Some thoughts. 🧵👇
— Emin Gün Sirer🔺 (@el33th4xor) May 10, 2022
Generally, the UST de-pegging occurred as witnessed in other previous cases. As the dust settles, the CEO is negative about all copycats yet optimistic about UST.
A Potential Doom in Traditional Finance
He also said that the crypto and Defi industries had just endured a significant bank run and that the sector was ‘very resilient.’
In addition, he remarked, ‘had this happened in TradFi, there would have been talk of doom and bailouts galore. One thing we know though, the bankers’ bonuses would still be paid.’
Decentralised Stablecoins Needed
Mr Gün Sirer also said that decentralised stablecoins were required since fiat-backed ones were subject to legal confiscation and acquisition. A decentralised economy, in his view, needs a decentralised stablecoin that cannot be frozen or seized by authorities.
However, he stressed that teams in the United States might not be able to produce an algorithmic stablecoin owing to legislative obstacles in the nation. According to his analysis, only Korean, Singaporean, or Swiss teams have the appropriate regulatory framework to build algorithmic stablecoins.
Limited Space for Algo Stablecoins
Regarding the future of algorithmic stablecoins, he said that there was insufficient space for several algorithmic stablecoins. The market had only one place for one product. He said that the market could not support a dozen, a half-dozen, or even two algorithmic stablecoins. This is a market where the most powerful player wins, and the others lose.
If there is to be a successful decentralised stablecoin, it will be the one with the highest value and the most seasoned team.
