Knowledge

UST failure shakes stablecoin economy, wiping out nearly $40 billion

As of press time, the top stablecoins by market capitalization are now worth $160 billion after the economy was valued at nearly $200 billion just last week. Of course, the culmination of the UST’s failure wiped billions of dollars off the stablecoin economy. Not only wreaking havoc on the economy, Terra’s demise also brought about major changes in the stablecoin ecosystem.
The stablecoin economy will have a big change

Just a week ago, the stablecoin economy was approximately $200 billion, but the Terra disaster changed all that. UST used to be the 3rd largest stablecoin until it lost its $1 peg. Tokens pegged to the value of US dollars are currently trading below $0.20. However, its current valuation places it at the 5th largest market cap on CoinMarketCap’s list.

Top stablecoin tokens by market capitalization. Source: CoinMarketCap

Over the past month, most of the top stablecoins by market valuation experienced negative growth. The only two stablecoins in green are USDC (+0.05%) and BUSD (+0.24%). BUSD is currently the third-largest stablecoin with a market cap of $17.6 billion and has also broken into the top 10 cryptocurrencies by capitalization, taking 8th place out of more than 13,400 coins.

Binance’s stablecoin BUSD recently entered the top 10 cryptocurrencies by market capitalization.

Makerdao’s DAI token is the 4th largest stablecoin with a market capitalization of over $6 billion. Makerdao’s MKR native token price has been up 2% in the past 24 hours as the UST fails. In fact, most stablecoins managed to stay stable and up the ranks thanks to the collapse of the UST.

On May 12, 2022, Circle Financial CEO Jeremy Allaire tweeted:

On CNBC’s Squawk Box broadcast, the Circle operator emphasized the need for “a stricter regulatory framework for stablecoins.”

A lot of people have been continuously monitoring the performance of decentralized stablecoins and algorithms since the demise of Terra. Despite the recent UST market carnage, they still believe that centralized giants have a great need for decentralized stablecoins and algorithms.

According to Avalanche (AVAX) founder Emin Gün Sirer, the crypto ecosystem needs decentralized stablecoins. A day before LUNA fell below $0.01, Gün Sirer said:

The AVAX founder also stated that “algorithmic stablecoins can be destabilized for bank runs.” Despite this risk, Gün Sirer explained that there is still a need for decentralized stablecoins in the industry.

“We need a decentralized stablecoin. Fiat-backed stables are subject to legal seizure and capture. A decentralized economy needs a decentralized stablecoin whose backing store cannot be frozen or confiscated,” said Gün Sirer.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Harold

CoinCu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.

Recent Posts

Best New Meme Coins to Join for 2025: BTFD Coin Leads, Popcat Keeps It Purr-fect, and Non-Playable Coin Hits Gamers Hard

Discover the Best New Meme Coins to Join for 2025. BTFD Coin's price rollback offers…

51 minutes ago

Solana memecoins crash while DTX Exchange hits 100,000 TPS on layer-1 blockchain

Discover how DTX Exchange's historic achievement of 100,000 transactions per second on a layer-1 blockchain…

2 hours ago

Strategic Bitcoin Reserve Expected to Cut 35% of US National Debt by 2049

VanEck suggests the U.S. could reduce its national debt by 35% by 2050 through a…

2 hours ago

The New Lead of Presidential Crypto Council Appointed by Trump Is Bo Hines

President-elect Donald Trump named Bo Hines as the executive director of the presidential crypto council.

2 hours ago

Best New Meme Coins with 1000X Potential: BTFD Coin’s Hot BIG50 Discount As Baby Doge Coin, Dogs Takes Gaming to the Next Level

Explore the best new meme coins with 1000X potential. Learn how BTFD Coin leads with…

3 hours ago

BlockDAG Surges Past $170M as BDAG250 Bonus End Countdown Begins – Aave Targets $400 & Solana Shines with Scalability

BlockDAG crosses $170.5M in presale success with BDAG250 bonus and Whitepaper V3 launch! Solana grows…

5 hours ago

This website uses cookies.