Circle CEO: Terra (LUNA) Was A House OF Cards That Was Bound To Collapse.
The collapse of the Terra ecosystem has sent shivers across the crypto industry as the markets take a hit downwards. While this may be an isolated incident, people like the CEO of Circle see it as a serious lesson to be noted by market players.
Jeremy Allaire is the co-founder, chairman, and CEO of Circle, a platform that helps developers and businesses to execute payments using stablecoins via eCommerce. For this reason, the CEO is concerned about the failure of Terra’s UST (TerraUSD) to maintain its market value as a stable coin and the price crash of Terra Luna.
Speaking to Bloomberg Crypto, Jeremy Allaire said,
“It’s an extraordinarily difficult problem and no one has solved it. Over-collateralized stablecoins that are decentralized have held the test of time. That’s more like a margin borrowing system as opposed to a stablecoin itself.”
The crypto world has been riveted by the rapid collapse of the TerraUSD stablecoin.
— Bloomberg Crypto (@crypto) May 18, 2022
“House Of Cards”
Various crypto analysts and investors have come out to criticize what they see as Terra’s failure to quickly take charge and prevent the crypto and its sister stablecoin from crashing hard. However, according to Circle CEO, this event was bound to happen one way or another, although Jeremy doesn’t spell out the magnitude that his team expected.
Going on, he opined,
“So our view, and we were looking very closely at the Terra ecosystem and the Luna anchor, UST, our view for the last 6 months is that this was a house of cards, it was very high risk, and there were multiple scenarios that we could see it would be triggered into a death spiral and that’s exactly what happened.”
Current Terra Condition
At the time of this writing, Terra Luna is at position 212 on CoinMarketCap and trading at a measly $0.00018. UST is at position 44 and valued at $0.12 after being de-pegged from USD a week ago. The Terra team, led by Do Kwon, has since drawn up plans to save the Terra ecosystem by forking the chain to create a new LUNA. It’s not clear whether this will work to save the system, especially considering that a number of people in the industry are already against the plan.