Sonic unveils high-yield algorithmic stablecoin, reigniting Terra-Luna ‘PTSD’

2 days ago 24

The Sonic blockchain is moving connected the implementation of its yield-generating, algorithmic stablecoin contempt fears implicit a imaginable illness akin to the Terra-Luna meltdown that led to the industry’s longest crypto winter.

Algorithmic stablecoins employ code-based mechanisms to guarantee their terms stability, arsenic opposed to fiat stablecoins pegged straight to the worth of the underlying currency.

The Sonic blockchain is moving connected the implementation of an algorithmic stablecoin with up to 23% yearly percent complaint (APR), according to Andre Cronje, co-founder of Sonic Labs and laminitis of Yearn.finance.

Cronje wrote successful a March 22 X post:

“POC looks good. Yielding > 200% APR @ 10m tvl, astir 23.5% APR @ 100m, dependable astatine astir 4.9% astatine 1bn+. Will standard up and get squad for a afloat release.”

The announcement came a time aft Cronje admitted to experiencing Post-traumatic accent upset (PTSD) related to algorithmic stablecoin owed to erstwhile cycles:

“Pretty definite our squad cracked algo unchangeable coins today, but erstwhile rhythm gave maine truthful overmuch PTSD not definite if we should implement.”

In May 2022, the $40 cardinal Terra ecosystem collapsed, erasing tens of billions of dollars of worth successful a substance of days. Terra’s algorithmic stablecoin, TerraUSD (UST), was yielding an implicit 20% yearly percent output (APY) connected Anchor Protocol.

As UST mislaid its dollar peg, crashing to a debased of astir $0.30, Terraform Labs co-founder Do Kwon took to X to stock his rescue plan. At the aforesaid time, the worth of sister token LUNA, erstwhile a top-10 crypto task by marketplace capitalization, plunged implicit 98% to $0.84. For reference: LUNA was trading northbound of $120 successful aboriginal April.

Sonic claims to beryllium the world’s fastest Ethereum Virtual Machine (EVM) chain, with a “true” 720 milliseconds (ms) finality — the assurance that a transaction is irreversible, which happens aft it is added to a artifact connected the blockchain ledger.

Sonic has garnered attraction successful the crypto manufacture since its testnet achieved a 720 sclerosis finality connected Sept. 8, 2024.

Investors are inactive buying collapsed LUNA token years aft Terra crash

The Terra (LUNA) token is down implicit 98% from its all-time precocious of 19.54 recorded connected May 28, 2022, astir 3 years ago, CoinMarketCap information shows.

Despite the collapse, the token saw implicit $21 cardinal worthy of trading measurement implicit the past 24 hours, which shows that “people are inactive buying it adjacent though it’s dead,” noted fashionable method expert Optimus KevTron.

The illness of the algorithmic stablecoin issuer created shockwaves among some crypto investors and lawmakers.

To make much stability, the European Union’s Markets successful Crypto-Assets Regulation (MiCA) measure will prohibit the issuance of algorithmic stablecoins to debar different illness akin to the Terra ecosystem’s.