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How Terra collapse nearly killed algorithmic stablecoins

The spectacular failure of Terra has caused money to flee from algorithmic stablecoins and has seen many abandon their plans.

Justin Sun’s USDD removes 12,000 BTC without DAO approval

Despite Sun and USDD’s claims that it is governed by a DAO, there are no governance votes that seem to correspond to the change.

USDD, an algorithmic stablecoin, stores part of its collateral at HTX, a fact that no partners were willing to address.

Sun’s USDD is meant to stay priced at a dollar via a series of algorithmic mechanisms but it’s deviated 3% and currently trades for $0.97.

HTX has been including ‘collateral’ for the USDD algorithmic stablecoin in its reports, raising concerns about solvency.