Cardano’s Hoskinson honours algorithmic stablecoins, promoting them as the digital age’s gold standard
Charles Hoskinson thinks algorithmic stablecoins are the future and have the potential to disrupt the monopoly of government-issued currency. The co-founder of Cardano stated his support for stablecoins in a recent tweet, describing them as “the gold standard of the digital era” and garnering conflicting opinions from the cryptocurrency community.
“The notion of algorithmic stablecoins is the means by which nation governments are weaned off fiat currencies. It is the digital age’s gold standard,” he tweeted.
These stablecoins are supported by a blockchain-based algorithm and another cryptocurrency. There are also neutrino usd, terraUSD(UST), and frax(FRAX).
The discussion around algorithmic stablecoins has existed for some time, mostly owing to the attractiveness of a stablecoin that is neither produced by a centralized institution nor backed by fiat currencies.
Even while algorithmic stablecoins have the potential to become the golden standard of next-generation Decentralized Finance (DeFi), their consistent failure has been worrying the crypto community. This worry is primarily a result of the collapse of the Bitcoin-backed TerraUSD stablecoin in May, which resulted in the loss of more than $40 billion in investor funds.
“I respectfully disagree; Terra should serve as an example. After Terra, I would utilize algorithmic concepts with caution. One follower reacted to Hoskinson’s tweet, “As we’ve seen, things may easily go wrong.”
Another user wrote: “I believe collateralizing with real-world assets is preferable to volatile cryptocurrencies such as BTC or ADA. If they are refined and more stable in the future, then yes, but liquidations remain a major concern.” Users that donate ADA to a specified smart contract address will get $1 worth of DJED, and vice versa.