Bitcoin Faces a New Threat: Algorithmic Stablecoins.One of the fastest-growing stablecoins—
TerraUSD—may be creating new risks for Bitcoin and the broader crypto market.
Stablecoins act like digital dollars in crypto markets—many traders use them as a kind of parking spot for cash between trades. The largest ones are
USD Coin and
Tether, making up a combined 70% of the $186 billion stablecoin market.
Right behind them, however, is an “algorithmic” coin called
TerraUSD. In the past year, its market cap has soared nearly 870% to $17.9 billion, making it the third largest stablecoin.
Like its more traditional peers, TerraUSD aims to maintain a fixed $1 price.Terra’s protocol allows traders to “burn” TerraUSD in exchange for a dollar’s worth of another cryptocurrency called Luna. The trade makes a profit when TerraUSD’s price falls below a dollar. It also works in reverse—preventing TerraUSD from rising above a dollar.
*Source** The provided information should serve as a research purpose only.
