According to Reeve Collins, co-founder of Tether, the collapse of the UST could mean the end of algorithmic stablecoins.
Tether co-founder Collins spoke about the IHR at the World Economic Forum in Davos, Switzerland. Collins said that the UST debacle was the “likely end” of algorithmic stablecoins, and such a collapse was not surprising:
“The coin’s collapse is unfortunate… but not a surprise. This is an algorithmic stablecoin. So a group of smart people try to figure out how to peg a coin to a dollar. (…) And many people have withdrawn their money in recent months because they have realized that it is not sustainable. So this collapse had a gradual effect. And it will likely be the end of most algorithmic stablecoins.”
Previously, many market commentators shared their views on the possible collapse of the IHR. Similarly, Jeremy Allaire, CEO of Circle, the issuer of USD Coin (USDC), the second-largest stablecoin on the market, said UST has a high-risk frame for a stablecoin.
Ethereum co-founder Vitalik Buterin disagrees with Collins. According to him, stablecoins are not inherently flawed.