The Stablecoin Paradox
The recent nosedive of TerraUSD (UST) has thrown a spotlight on what really makes a stablecoin stable. The world of crypto is large and daunting, and the collapse has left many asking: how do we define a ‘usable’ stablecoin in these unpredictable waters? Sang Lee, co-founder of VegaX Holdings, posits that the crux lies in trust. Stability is cool and all, but without trust, everybody’s just left holding the bag!
Utility Over Collateral
Lee argues that for stablecoins to thrive, they need to be reliable units of account, much like the good ol’ U.S. dollar. “If they don’t hold their peg, then what’s the point?” he questions. He seems so right—after all, a unit that loses its value faster than you can say ‘NFT’ isn’t doing anyone any favors.
In Lee’s view, creating a broad use case before building a coin can eliminate this trust dilemma. He insists that a stablecoin should have recognizable utility, or else it may as well be a digital loyalty card.
The Trust Equation
In the world of crypto, trust is a two-way street. You trust a currency if others believe in it. Yet, if everyone starts losing faith, your sweet coin becomes a sad coin. The UST saga underscores this lesson effectively: once trust evaporated, so did its utility.
A Fragmented Landscape
Did you know there are currently around 97 stablecoins floating around out there? According to CoinGecko, a hefty majority is pegged to the U.S. dollar. But how many do we actually need? Lee argues for more than just a handful, grumbling about the idea of a “one stablecoin to rule them all” while we’re at it. Honestly, can’t we just agree to live in harmony, people?
The DeFi Dream Team
Among the crypto heavyweights, only Dai (DAI) and Magical Internet Money (MIM) are stepping up to the decentralization challenge. Lee stresses that while immediate decentralization in major stablecoins might be unrealistic, a future pivot should certainly be on the horizon. It’s as if he’s in a race, but the finish line is obscured by both regulatory fog and a hunger for transparency.
A Call to Collaboration
Lee takes a stance that might just save the day: collaboration over competition. He warns the cryptocurrency community to ease up on the fighting and embrace a more constructive conversation. After all, we’re trying to build a more inclusive blockchain ecosystem, not a hostile tech war! As Lee puts it, it’s better to share ideas than to shout that your tech is superior—nobody likes a braggart, especially when the stakes are as high as they are in crypto.
