MakerDAO founder Rune Christensen recently sparked controversy when divide My thoughts on the two fastest growing stablecoins from DeFi, Terras TerraUSD (UST) and Abracadabra.Moneys Magic Internet Money (MIM).
“Look, UST and MIM are ponies and I respect that. Of course you can earn money with it. But they are not designed to be resilient, and they will drop to zero once the market becomes a reality. Stop trying to trick users looking for real stability into siphoning off liquidity for themselves. “
Rune Christensen – Founder of MakerDAO
Immediately after Christensen made his point, Daniele Sestagalli of Abracadabra, Money and Do Kwon of Terra immediately disagreed.
“I think you fell behind,” Do Kwon sarcasm. The founder of Abracadabra.Money, Daniele Sestagalli too to advise Christensen is “focused on saving the world from pollution” and leaving them “in charge of DeFi in the meantime”.
Kwon’s “lagging” comment could refer to Christensen’s recent absence from the DeFi community. In November, Christensen was criticized in the MakerDAO community when a former employee accused him of returning to the project to “try to fire someone”.
“Christensen was absent for a long time and had a conflict in the meantime,” she says to write in a post in the MakerDAO admin forum. Later, however, the venture capital firm Dragonfly Capital invited Christensen as a venture partner.
The debate also focused on Essay Christensen’s divisive October issue, which discusses how MakerDAO should focus on “clean money” by ensuring that “climate-friendly and sustainable assets that take into account the long-term environmental impact of financial activities” are used as collateral. Christensen argued that MakerDAO should invest collateral in real sustainable assets, but the post raised concerns about MakerDAO’s disorientation.
MakerDAO’s DAI is currently one of DeFi’s most widely used decentralized stablecoins with a market cap of $ 9.39 billion. However, it is partially backed by USDC, a centralized stablecoin issued by Circle.
In October, Terra and Abracadabra.Money announced a partnership aimed at “beating centralized stablecoins” by leveraging their UST and MIM stablecoins. Both projects have since been hugely successful as UST overtook DAI’s longstanding position as the largest decentralized stablecoin in the market.
Both Kwon and Sestagalli have opposed DAI in the past, arguing that it is not decentralized enough because it is partially backed by the USDC.
Terras UST is a seignorage (cumulative profits from currency issuance) based stablecoin that is algorithmically managed and follows an elastic monetary policy to ensure price stability and growth. Unlike MakerDAO’s DAI, it is unsecured and uses the LUNA token to ensure price stability. Meanwhile, Abracadabra.Money’s MIM is an over-collateralized stablecoin similar to the DAI, except that the collateral is comprised of high-yielding assets.
According to Christensen, USTs and MIMs are based on an unfounded stabilization mechanism that can collapse under pressure from extreme market forces. The theoretical argument against these two stablecoins is that the UST is based on continued demand for LUNA, while the MIM is over-focused on “inferior” or newly tied assets. Even so, both have held the rate during some significant market declines.
Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews