Terra took quite a beating as the Ethereum creator and CEO of Binance criticized Terra and UST token via Twitter.
Following the collapse of UST, Terra’s stablecoin and LUNA, its native token, many crypto advocates have aired their sentiments on the subject.
Vitalik Buterin and Changpeng “CZ” Zhao are among those who are not keeping mum on the issue.
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Buterin: Terra is Misleading
Vitalik Buterin, creator and founder of Ethereum, has criticized not just Terra but the idea of UST as being erroneous and entirely misleading.
In addition, Buterin tweeted: “Algostable has become a propaganda term serving to legitimize uncollateralized stables by putting them in the same bucket as collateralized stables like RAI/DAI.”
UST isn’t backed by assets or USD unlike other stablecoins. UST’s value is dependent on LUNA using a minting process that maintains UST level at $1. However, that same burning mechanism crashed last week and have wiped out both LUNA and UST plus dragged with them over $40 billion in value.
Vitalik Buterin has slammed both Terra and the concept of UST as being false and completely deceptive (CNBC).
On the other hand, Terra has assured their investors that UST is as stable as the other leading stablecoins. In fact, Do Kwon, Terra co-founder, has his bio saying “Master of Stablecoin,” which somehow aims to pacify the turbulence going on with Terra.
Further, Buterin stressed that asset-backed stablecoins and algorithmic stablecoins are entirely two different species.
After a long hiatus, Kwon resurfaced on Friday with a plan to revive LUNA. The plan is to get rid of UST in entirety and then reset LUNA with 1 billion tokens in circulation.
These tokens are meant to be distributed to all the previous holders who have lost massive investments due to last week’s demise and also to current token holders.
Zhao Disappointed with Terra
Changpeng “CZ” Zhao, Binance CEO, also spoke at the 2021 Ethereal Summit. He said Axie Infinity was able to handle the crisis way better than Terraform Labs.
In essence, Zhao is disappointed with how Terra turned out following the collapse of LUNA and UST. He even poked fun on the new plan by the Terra CEO saying the idea is “dead-on-arrival.”
Zhao said Axie Infinity was able to handle the crisis way better than Terraform Labs (Forbes).
Zhao isn’t really one to comment on cryptocurrencies traded on his platform, however he made an exception with this one. He thinks that forking LUNA to create a new version is easier said than done. It won’t add any value. All efforts will just fall flat that way.
The strategy is flawed at the beginning because minting coins just dilutes the value and not add any to it.
Zhao also questioned the transparency of handling UST and LUNA. Apparently, Kwon said that billions of BTC has been sent by Luna Foundation Guard (LFG) in the efforts to save UST.
While LFG did send the billions of BTC to Gemini and Binance, it’s unclear whether those reserves were actually sold to purchase UST.
Crypto total market cap at $1.26 trillion on the daily chart | Source: TradingView.com
Zhao probed further asking where all the BTC has gone. Binance has delisted both UST and LUNA but it was back on the spot and margin markets on the same day. However, it was exclusively pitted against BUSD, Binance’s own stablecoin.
Featured image from CryptoGazette, chart from TradingView.com