One expert believes that builders should push for stablecoins to be decentralized and have a clear purpose. Terra is causing heated debate about the trustworthiness.
Due to recent market effects caused by the TerraUSD (UST), stablecoin collapse, there are many questions that need to be answered.
Sang Lee, co-founder of crypto financial services provider VegaX Holdings, favors decentralized stabilizecoins over their centralized counterparts. However, he believes they must be coins people can trust which presents a problem for the industry.
Lee spoke with Cointelegraph Friday to highlight the importance of stablecoins in crypto ecosystem. He said that they offer traders a single unit of account similar to the United States dollar for global markets. He also noted that the “maintenance of these things is crucial”
“It is important that it holds its peg. Otherwise, that one unit of account becomes unreliable and unusable.”
Lee believes that stablecoins can only be used if people trust them. This presents a problem because people must trust stablecoins.
The discussion around the UST stablecoin is centered on trust and design. It lost its peg and drove the price down of Terra ( LUNA and Bitcoin ( TTC), its collateral. The stabilitycoin’s utility quickly declined, and so did trust.
According to CoinGecko, there are at least 97 stablecoins in the crypto industry, today. Most of them are tied to the USD. Although this number might seem large, Lee contends that there should be more than a few of them and that they should strive to be decentralized.
“We cannot have one to rule them all” because that’s why we are trying to stop it in the first place.
Only Dai ( DAI) is among the top five stablecoins in market capital. Magical Internet Money and Magical Money (MIM), however, are both aiming to become decentralized.
Lee admits it is unrealistic for the top stablecoins of the world to decentralize immediately, but he believes they should be “on a path to it in future.” He feels that this is because the only point of failure cryptocurrency is trying to fix is the “lack of transparency and accountability in central currencies.”
Lee advises crypto users to abandon a combative attitude and embrace a collaborative approach when pushing for decentralization. He stated:
“We can make the world more connected to blockchain technology, which is a positive thing.” It’s better to discuss what blockchain believes is important than shouting about how our tech is better.
