Terra was a ‘house of cards’: Circle CEO Jeremy Allaire
Jeremy Allaire, CEO of Circle, which issues the second-largest stablecoin USDC, claims to have foreseen Terra and algorithmic stablecoin UST’s collapse six months ago because it was “a house of cards.”
See related article: Terra shuts down indefinitely after coming back online; LUNA, UST still on life support
Fast facts
“There were two things that surprised me. One was just simply how fast the death spiral happened and how violent of a value destruction it was,” Allaire said in an interview with Protocol. “I was just speechless, just literally had never seen something evaporate that much in 72 hours.”
Allaire added he was surprised at the high-profile support for Terra and UST despite “clear” risks.
USDC differs from UST, as it is collateralized by assets, whereas the latter relies on incentive-based algorithms powered by Terra’s cryptocurrency LUNA to maintain its peg to the U.S. dollar.
UST lost its peg to the greenback last week, resulting in the wipeout of billions of dollars from the Terra ecosystem, dragging the cryptocurrency market down with it.
Collateralized stablecoins USDT and USDC have mostly maintained their peg to the dollar during the market turmoil, while most algorithmic stablecoins such as DAI also maintained pegs with some turbulence.
Algorithmic stablecoins represent the “holy grail” of decentralized digital currencies and will be pursued by others, Allaire added.
See related article: No hard fork, governance vote in Kwon’s updated Terra revival proposal