The demise of the TerraUSD algorithmic stablecoin and its sibling token Luna last week has consequences for the whole crypto community.
The $45b Terra Face Plant resulted in a crowd of crypto losers
The demise of the TerraUSD algorithmic stablecoin and its companion token, Luna, this week has consequences for the whole crypto community. The initial impact is the first: The fast demise of the used-to-be popular pair of cryptocurrencies sent shockwaves across the industry, leading to a drop in coin values that swept hundreds of billions of dollars from the virtual currencies market and fueled concerns about the sector’s potential fragility.
And there are repercussions. The dramatic collapse of a market favorite like Terra threatens to temper the fundraisings that have driven up the values of crypto businesses in recent years, in addition to delivering devastating losses to individual users and investment firms. Venture capital firms, who’ve already long represented some of the industry’s greatest boosters, may not have the same tolerance for risk anymore, particularly those who have been personally affected.
The investing companies who shorted TerraUSD, notably F9 Research, were among the winners in this scenario. Stablecoins supported by resources rather than algorithms also seemed to be better options. However, you’ll remember the deficits over the past couple of days.
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.
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Jai Hamid
CoinCu News
