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I hope, for your sake, you're not putting too much faith in the "algorithmic" part of this because when it comes to a central bank maintaining a peg, it's basic
by jmyeet 5y ago
I hope, for your sake, you're not putting too much faith in the "algorithmic" part of this because when it comes to a central bank maintaining a peg, it's basically exactly the same thing. You should look into what open market operations actually looks like in practice.
Actually the stablecoin is worse. In the case of this article the reserve funds are seemingly crowdfunded. Central banks can just print money if they have to. This of course leads Crypto Andys eschewing the printing of money with disdain but it's actually a feature not a bug.
- bo1024 5y agoNo dog in the fight, just want to understand. From my quick look at open operations it just sounds like backed stablecoins e.g. USDT, which again is very different from how an algorithmic stablecoin is set up (not supposed to be backed at all).
- mattwilsonn888 5y agoIt is very different and the top commenter clearly has a dog in the fight. Also modelling your stablecoin off what Terra has done, even to critique stable coins, is foolish.
- bb88 5y ago> In the case of this article the reserve funds are seemingly crowdfunded. The money went elsewhere rather than backing the coin. They took the money out of the fund and assumed $LUNA would be able to back it forever. Jokes on them. amiright?