Ethereum’s Vitalik Buterin on ‘the only stablecoins you need’; UST’s demise predicted?

Sahana Kiran
Source – Unsplash

TerraUSD or UST, the third-largest stablecoin disrupted the entire market as it lost its peg to the dollar. The asset dropped down to a low of $0.61 defying the ethos of a stablecoin. However, at press time it witnessed a slight recovery and surged to $0.82. LUNA was hit hard by this as it lost nearly 90 percent of its value over the last couple of days. Trading for a low of $11, the community speculated that this was the end of the altcoin.

While the entire crypto community was giving its two cents about the whole situation, a few of them clearly saw this coming. Vitalik Buterin the co-founder of the Ethereum network was one among them. About three weeks ago, the Russian-born Canadian programmer went on to appear in an interview and addressed the onset of stablecoins. During which the Ethereum co-founder pointed out the need for only three stablecoins.

He said, “DAI, RAI, and maybe USDC are the only stablecoins that we really need.”

The Ethereum co-founder further noted how he was all in for innovation. However, he expressed concerns about over-under collateralized projects that market themselves on how optimal they were. Elaborating on the fallacy that the community entails about stablecoins he added,

“…..if a stablecoin’s price stays between $0.99 and $1.01, then it’s good. That mindset is very wrong because whether a stablecoin jumps up and down by 2 percent or 0.2 percent isn’t a function of how good the stablecoin is. It’s a function of how good the market maker is and anyone can hire a good market maker for a short period of time.”

Did everyone foresee UST’s demise?

Richard Heart, the founder of HEX had also shared a tweet back in 2021 itself. Heart’s tweet read,

Or was this staged?

While some feared UST’s demise, a few others pointed out how the entire incident could have been an attack on the Terra ecosystem. An array of them took to Twitter and emphasized the attack on LUNA.

While this is mere speculation, the other part of the community called out the instability of the third-largest stablecoin.