> Now if dai, usdc or usdt had failed, that would be a big deal. The “Dai” peg did break — both in early 2020 [1], and a few days after launching. DAI’s now 60

> Now if dai, usdc or usdt had failed, that would be a big deal. The “Dai” peg did break — both in early 2020 [1], and a few days after launching. DAI’s now 60% backed by Tether like instruments. It’s basically a strictly worse version of Facebook’s Libra, assuming Libra weren’t crippled by state regulators (Libra is now Diem). Every major algorithmic stablecoin has imploded at least once in times of market volatility. Preston Byrne has written a wonderful article explaining why the concept is clearly unsound and theoretically flawed [2]: When you make a “coin” which is in form and substance a repackaged exposure to another underlying cryptocurrency, as Dai is simply repackaged Ether, and Basecoin is simply an abstraction of demand for “Base bonds,” and peg that exposure to some meatspace asset like an ounce of gold or a U.S. dollar, a sudden move against the underlying collateral – in this case, 12% – can trigger a sell-off that breaks that peg, and breaks it hard. It’s perhaps a testament to the frothiness of the cryptocurrency markets — or the sheer number of low information investors — that this concept doesn’t die. No matter how many times the “stablecoin” peg breaks, no matter how many times it costs investors millions of dollars in losses, it just refuses to die. If there were any justice in this world, the concept would’ve been fundamentally discredited years ago. Unfortunately, when stablecoins break, they get propped up by biased investors in closely linked pseudo equities who limp the imploded stablecoin along by injecting more capital and then powering on the hype machine. [1]: https://blog.makerdao.com/the-market-collapse-of-march-12-2020-how-it-impacted-makerdao/ https://blog.makerdao.com/the-market-collapse-of-march-12-20... [2]: https://prestonbyrne.com/2018/01/11/epicaricacy/ https://prestonbyrne.com/2018/01/11/epicaricacy/