Flatcoiners should take a cue from TerraUSD’s fate By Cointelegraph
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The post-COVID-19 era has brought the issue of inflation to the forefront, leading to increasing interest within the Web3 space for creating flatcoins, a close “cousin” of stablecoins designed to mitigate inflation risk.
Many existing flatcoins, like Terra’s TerraUSD (UST) stablecoin, are algorithmically backed and therefore serve as a stark reminder of the risks associated with algorithmic backing, as demonstrated by the collapse of LUNA and UST. So, while the idea behind flatcoins may seem appealing, they raise significant reservations conceptually and in terms of design. Ultimately, the success of flatcoins will depend on whether developers can deliver on their promise.
Peter Han holds a Ph.D. in finance from the University of Illinois Urbana-Champaign, concentrating in financial intermediation and fintech, in addition to a master’s degree in financial engineering. He holds a BA in English and BS in mathematics from China’s Tianjin University. He worked for PwC in Beijing before joining IoTeX, where his work focuses on tokenomics-related research aimed at enhancing IoTeX’s tokenomics design.
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The post-COVID-19 era has brought the issue of inflation to the forefront, leading to increasing interest within the Web3 space for creating flatcoins, a close “cousin” of stablecoins designed to mitigate inflation risk.
Many existing flatcoins, like Terra’s TerraUSD (UST) stablecoin, are algorithmically backed and therefore serve as a stark reminder of the risks associated with algorithmic backing, as demonstrated by the collapse of LUNA and UST. So, while the idea behind flatcoins may seem appealing, they raise significant reservations conceptually and in terms of design. Ultimately, the success of flatcoins will depend on whether developers can deliver on their promise.
Peter Han holds a Ph.D. in finance from the University of Illinois Urbana-Champaign, concentrating in financial intermediation and fintech, in addition to a master’s degree in financial engineering. He holds a BA in English and BS in mathematics from China’s Tianjin University. He worked for PwC in Beijing before joining IoTeX, where his work focuses on tokenomics-related research aimed at enhancing IoTeX’s tokenomics design.
Continue Reading on Coin Telegraph
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