The Sonic blockchain is progressing with the development of its yield-providing, algorithmic stablecoin amid concerns regarding a possible downturn akin to the Terra-Luna crisis that resulted in the sector’s most extended crypto winter.<\/p>\n
Algorithmic stablecoins utilize<\/a> code-driven systems to maintain their price consistency, as opposed to fiat stablecoins that are directly linked to the value of the respective currency.<\/p>\n In a March 22 post on X, Cronje stated:<\/p>\n \u201cPOC appears promising. Yielding > 200% APR @ 10m tvl, around 23.5% APR @ 100m, steady at about 4.9% at 1bn+. Will scale and assemble a team for a complete launch.\u201d<\/p><\/blockquote>\n Source: <\/em>Andre Cronje<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n The revelation came the day after Cronje acknowledged<\/a> facing Post-traumatic stress disorder (PTSD) related to algorithmic stablecoin due to past experiences:<\/p>\n \u201cPretty certain our team has solved algo stable coins today, but past cycles left me with significant PTSD, so I’m unsure about implementing it.\u201d<\/p><\/blockquote>\n In May 2022, the $40 billion Terra<\/a> ecosystem crumbled, erasing tens of billions of dollars in value within days. Terra\u2019s algorithmic stablecoin, TerraUSD (UST), was providing an annual percentage yield (APY) above 20% on the Anchor Protocol.<\/p>\n As UST deviated from its dollar peg, plummeting to approximately $0.30, Terraform Labs co-founder Do Kwon<\/a> took to X to announce his rescue strategy. Concurrently, the value of the sister token LUNA, which once ranked among the top 10 crypto projects by market capitalization, fell by over 98% to $0.84. LUNA was trading over $120 in early April.<\/p>\n Related: <\/strong><\/em>Sonic TVL increases by 66% to $253M since the rebranding from Fantom<\/strong><\/em><\/a><\/p>\n Sonic claims to be the quickest Ethereum Virtual Machine (EVM) chain, boasting a \u201ctrue\u201d 720 milliseconds (ms) finality<\/a> \u2014 the guarantee that a transaction cannot be reverted after being recorded on the blockchain ledger.<\/p>\n Sonic has attracted significant attention in the cryptocurrency realm since its testnet achieved a 720 ms finality<\/a> on September 8, 2024.<\/p>\n Related: <\/strong><\/em>FTX liquidated $1.5B in 3AC assets two weeks prior to the hedge fund\u2019s collapse<\/strong><\/em><\/a><\/p>\n The Terra (LUNA) token has experienced a decline of over 98% from its peak of 19.54 recorded on May 28, 2022, nearly three years ago, as per CoinMarketCap<\/a> data.<\/p>\n LUNA\/USD, all-time chart. Source: <\/em>CoinMarketCap<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n Notwithstanding the collapse, the token recorded over $21 million in trading volume within the past 24 hours, indicating that \u201cindividuals are still purchasing it even though it\u2019s defunct,\u201d observed<\/a> well-known technical analyst Optimus KevTron.<\/p>\n The downfall of the algorithmic stablecoin issuer caused significant disturbances among both crypto investors and regulatory officials.<\/p>\n To enhance stability, the European Union\u2019s Markets in Crypto-Assets Regulation (MiCA) bill is set to<\/a> ban the issuance of algorithmic stablecoins to prevent another collapse similar to that of the Terra ecosystem.<\/p>\nInvestors continue purchasing collapsed LUNA token years after Terra crash<\/h2>\n