Sam Bankman-Fried, Entrepreneur, Founder and CEO of the FTX crypto exchange, tweeted That the crash of Terra’s UST and Luna was ‘predictable’, leading to a Twitter thread that has since gone viral. He said:
A good point that someone raised recently: ‘Stablecoin’ is used for many different things. As predicted by outside visual skeptics, a stablecoin was blown up during a major market move. Not just the stablecoin he predicted. Which was predictable, if you knew the details. This isn’t a comment about good vs bad – it’s about how important it is to know the details!
SBF’s algorithmic take on stablecoins before the crash
In a Bloomberg interview with Joe Weisenthal, co-host of the Odd Lots podcast, SBF was asked about his views on the rise of algorithmic, partially backed stablecoins. Weisenthal asked:
One of the most interesting developments happening right now is the rise of Luna and UST. Luna has this Treasury reserve containing a lot of bitcoins, which sounds a bit dicey, but some say that any idea of an algorithm-backed stablecoin is a perpetual motion machine – it’s only time before it fails. a matter of. Do you believe there can be a truly decentralized stablecoin? What do you think of these projects?
SBF:
I have some sympathy for the Perpetual Motion Machine crowd over here. They may serve some useful purposes, but if you zoom out, well, and you say, it’s a stablecoin, backed by volatile assets, what’s going to happen in a larger market. right? Like, you know how it goes.
Various comments are coming on the screenshot of this exchange posted on Twitter. Here’s a seemingly reasonable suggestion:
Has anyone thought of mining a decentralized stablecoin backed by a basket of tokens tied to commodities and securities? If done correctly, it can be less volatile than the stablecoins backed by bitcoin.